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the aging demographic effect


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This has been on the WFC thread but I wanted to start it's own topic to bring that thread back to WFC.

 

Is it necessarily true that a demographic with a higher average age would be less beneficial to economic growth as compared to one with a declining age?

 

What is it about the age alone that is negative for economic growth?

 

I can understand quite easily that a slow rate of increase in the population will produce lower growth, but why fear the same result when paired with an increase in retired dependent persons more than the same result when paired with an increase in underage dependent persons? 

 

If spending translates to GDP growth, don't an added 5,000,000 75 yr olds translate to more spending as compared to 5,000,000 additional 5 yr olds.  No?

 

One argument is that a new baby boom would, in 15 or 20 years, create an overall more productive demographic.  But any future forecasting can tell you that we'll have more robots in the future -- isn't a robot paired up with a 75 yr old just as good as a productive 30 yr old?  And do we want the potential civil unrest if we have too many idle 30 yr olds displaced by robots?

 

Sure, 40 yr olds are peak spenders in part because they have kids.  What if they instead spend on elderly (through taxation) rather than kids?  Or if that same amount of tax/spend is spread amongst all wage earnings to support that extra elderly dependent, is that any different from a GDP perspective than the impact of the concentrated spending of a 40 yr old with a dependent child? 

 

Again, I understand that the rate of overall population growth matters, but do we need to be so stressed about the aging component of it?  Do we fear that robots are coming, or do we fear that they won't?

 

 

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This has been on the WFC thread but I wanted to start it's own topic to bring that thread back to WFC.

 

Is it necessarily true that a demographic with a higher average age would be less beneficial to economic growth as compared to one with a declining age?

 

What is it about the age alone that is negative for economic growth?

 

I can understand quite easily that a slow rate of increase in the population will produce lower growth, but why fear the same result when paired with an increase in retired dependent persons more than the same result when paired with an increase in underage dependent persons? 

 

If spending translates to GDP growth, don't an added 5,000,000 75 yr olds translate to more spending as compared to 5,000,000 additional 5 yr olds.  No?

 

One argument is that a new baby boom would, in 15 or 20 years, create an overall more productive demographic.  But any future forecasting can tell you that we'll have more robots in the future -- isn't a robot paired up with a 75 yr old just as good as a productive 30 yr old?  And do we want the potential civil unrest if we have too many idle 30 yr olds displaced by robots?

 

Sure, 40 yr olds are peak spenders in part because they have kids.  What if they instead spend on elderly (through taxation) rather than kids?  Or if that same amount of tax/spend is spread amongst all wage earnings to support that extra elderly dependent, is that any different from a GDP perspective than the impact of the concentrated spending of a 40 yr old with a dependent child? 

 

Again, I understand that the rate of overall population growth matters, but do we need to be so stressed about the aging component of it?  Do we fear that robots are coming, or do we fear that they won't?

 

 

 

 

A lot of good questions to think about.  I don't think 40yr olds are peak spenders because they have kids. I think they are peak spenders, because they have more income.  I had kids in my 20s and 30s, yet spend more now in my 40s even though my kids are grown.  You can't spend, save, or invest what you don't have.  I spend more, save more now, and invest more now than I did back then.

 

I think that people in their 20s-50s are the most productive, even with robots you will need innovation and creativity.  Having a large amount of people in their 20s is better for that than a large number of people in their 80s.

 

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I don't think 40yr olds are peak spenders because they have kids. I think they are peak spenders, because they have more income.

 

Here is another question:

 

In an impossible world where there are no 40 yr olds, would an increased number of 20, 30, 50, and 60 yr olds earn more to relatively offset the loss of the 40 yr olds?  No change in overall income.  We still have those high-paying jobs that the 40 yr olds otherwise occupied, don't we?

 

I'm trying to think of the demographic as if it's silly putty.  Put pressure on the middle and it bulges out the top and bottom, but the mass hasn't changed.  But is it fair to compare people to silly putty? 

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I don't think 40yr olds are peak spenders because they have kids. I think they are peak spenders, because they have more income.

 

Here is another question:

 

In an impossible world where there are no 40 yr olds, would 30, 50, and 60 yr olds earn more to offset the loss of the 40 yr olds?  We still have those high-paying jobs that the 40 yr olds once occupied, don't we?

 

 

Of course, but the curve is still there.  At some point it starts declining.  There will be some age at which it peaks and then declines.  That age might be 120 if people live healthy to that age and then decline and die at 150-200.  The same is true with creativity and innovation.  Most people are at their peaks closer to 25 than to 75.  At some point it starts to decline.  Risk taking is another factor.  Most people have more appetite for risk when they are young and thus more willing to try some crazy business idea that hasn't been done before.  I think having younger, more creative, more innovative, people willing to take risks is more beneficial than having a large number of people past their prime in all of these categories with robots taking care of them. 

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I think having younger, more creative, more innovative, people willing to take risks is more beneficial than having a large number of people past their prime in all of these categories with robots taking care of them.

 

I agree. 

 

However, in theory it should be possible to tune our immigration policy towards cherry picking creative minds from elsewhere.  I don't know if that can be pulled off to an increasing degree relative to the past.

 

Musk is from South Africa.

 

A lot of young people simply don't work creative jobs and those are the ones that are likely to be automated -- some of those people can be more creative through automation.

 

I don't see robots taking care of old people.  I see robots doing the non-creative work that younger people once did.  And some of the old people  once did those uncreative jobs themselves so losing them from the workplace to retirement is of no big consequence in terms of productivity.

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I think having younger, more creative, more innovative, people willing to take risks is more beneficial than having a large number of people past their prime in all of these categories with robots taking care of them.

 

I agree. 

 

However, in theory it should be possible to tune our immigration policy towards cherry picking creative minds from elsewhere.  I don't know if that can be pulled off to an increasing degree relative to the past.

 

Musk is from South Africa.

 

A lot of young people simply don't work creative jobs and those are the ones that are likely to be automated -- some of those people can be more creative through automation.

 

I don't see robots taking care of old people.  I see robots doing the non-creative work that younger people once did.  And today's old people, and tomorrow's old people, once did those uncreative jobs themselves.

 

That is an interesting thought.  My comments are simply based on the fact that not everyone is creative, so having a large pool of people in those ages are more likely to produce more creative risk takers.  If you had someway to bring them in, or at least attract them specifically, that would probably work too.  One way to attract them, I think, is with low taxes and few regulations on business.  Make the US the place to start, grow, and operate a business from start up right through to global corporate goliath.  Having a local market and workforce is important now, but with travel, working from home, robots, and shipping all likely to get better and easier, if running your business from Singapore or some other tax haven is easier, cheaper, and makes more sense then people will go there not here.

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I think having younger, more creative, more innovative, people willing to take risks is more beneficial than having a large number of people past their prime in all of these categories with robots taking care of them.

 

I agree. 

 

However, in theory it should be possible to tune our immigration policy towards cherry picking creative minds from elsewhere.  I don't know if that can be pulled off to an increasing degree relative to the past.

 

Musk is from South Africa.

 

A lot of young people simply don't work creative jobs and those are the ones that are likely to be automated -- some of those people can be more creative through automation.

 

I don't see robots taking care of old people.  I see robots doing the non-creative work that younger people once did.  And today's old people, and tomorrow's old people, once did those uncreative jobs themselves.

 

That is an interesting thought.  My comments are simply based on the fact that not everyone is creative, so having a large pool of people in those ages are more likely to produce more creative risk takers.  If you had someway to bring them in, or at least attract them specifically, that would probably work too.  One way to attract them, I think, is with low taxes and few regulations on business.  Make the US the place to start, grow, and operate a business from start up right through to global corporate goliath.  Having a local market and workforce is important now, but with travel, working from home, robots, and shipping all likely to get better and easier, if running your business from Singapore or some other tax haven is easier, cheaper, and makes more sense then people will go there not here.

 

Musk didn't come here because the taxes were low, he came here to get a degree from Stanford.  From there he was arms length away from all of the engineering minds that he needed to start Tesla.  Also, California is nice.  He didn't forego all of that for a lower tax jurisdiction.

 

I mean, look at what we charge international students for tuition?  I think there are ways to bring those people into the country For example, tuition assistance or waiver.  Why leave your home country which pays for your tuition in order to come here and pay a fortune for that same education?

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I think having younger, more creative, more innovative, people willing to take risks is more beneficial than having a large number of people past their prime in all of these categories with robots taking care of them.

 

I agree. 

 

However, in theory it should be possible to tune our immigration policy towards cherry picking creative minds from elsewhere.  I don't know if that can be pulled off to an increasing degree relative to the past.

 

Musk is from South Africa.

 

A lot of young people simply don't work creative jobs and those are the ones that are likely to be automated -- some of those people can be more creative through automation.

 

I don't see robots taking care of old people.  I see robots doing the non-creative work that younger people once did.  And today's old people, and tomorrow's old people, once did those uncreative jobs themselves.

 

That is an interesting thought.  My comments are simply based on the fact that not everyone is creative, so having a large pool of people in those ages are more likely to produce more creative risk takers.  If you had someway to bring them in, or at least attract them specifically, that would probably work too.  One way to attract them, I think, is with low taxes and few regulations on business.  Make the US the place to start, grow, and operate a business from start up right through to global corporate goliath.  Having a local market and workforce is important now, but with travel, working from home, robots, and shipping all likely to get better and easier, if running your business from Singapore or some other tax haven is easier, cheaper, and makes more sense then people will go there not here.

 

Musk didn't come here because the taxes were low, he came here to get a degree from Stanford.  From there he was arms length away from all of the engineering minds that he needed to start Tesla.  Also, California is nice.  He didn't forego all of that for a lower tax jurisdiction.

 

I mean, look at what we charge international students for tuition?  I think there are ways to bring those people into the country For example, tuition assistance or waiver.  Why leave your home country which pays for your tuition in order to come here and pay a fortune for that same education?

 

Right.  That goes back to my question about the workforce needing to be local.  Also education as well.  What if Trump could have moved to Hong Kong and still gotten his degree at Stanford and hired the best engineers in the world?  The world is becoming more global.  Communication, travel, manufacturing, and shipping is all going to get a lot easier and cheaper in the future.  I'm not sure what the answer is, I'm just thinking out loud.

 

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What if Trump could have moved to Hong Kong and still gotten his degree at Stanford and hired the best engineers in the world?

 

That's not a bad thought.

 

Keep in mind though that such technology allows our creative people to work in creative fields no matter where they live. I'm sure some bright people across America are working noncreative jobs as IT people for their local governments because it's the only tech jobs they have locally -- these people may be better utilized as creative engineers.

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Aging because people are dying less and later is good; aging because people are having fewer kids is bad.  If you think about it, things like "a much older and dependent population" don't really matter over time.  Suppose it was the other way: people die shortly after they can no longer work, and therefore don't require sustenance from the working population.  There would then be little reason for them to save and defer consumption either. 

 

I think considerations about superstar entrepreneurs are also irrelevant.  What you need is a capable and healthy population composed of individuals who tend towards autodidactism and think it worthwhile to save and invest in themselves.  Here's a portrait of England around the turn of last century,

 

There were many cheap mass-market series of ‘classics for the masses’ in the 19th century, and organised working-class educators made full use of them. In London, the Working Men’s College became nationally famous under Sir John Lubbock, its principal between 1883 and 1899. Lubbock drew up a list of the 100 books it was most important for a working man to read. The proportion of classical authors is remarkable: Homer, Hesiod, Marcus Aurelius, Epictetus, Plutarch’s Lives, Aristotle’s Ethics and Politics, Augustine’s Confessions, Plato’s Apology, Crito and Phaedo, Demosthenes’ De Corona, Xenophon’s Memorabilia and Anabasis, Cicero’s On Duties, On Friendship and On Old Age, Virgil, plays by all the tragedians, Aristophanes’ Knights and Clouds, Herodotus, Thucydides, Tacitus’ Germania, and Livy. In addition, two famous works on ancient history, Edward Gibbon’s Decline and Fall of the Roman Empire (1776-89) and George Grote’s A History of Greece (1846-56), make it on to the list as necessary reading for any educated person, along with the most popular novel then in existence set in antiquity, Edward Bulwer-Lytton’s The Last Days of Pompeii (1834). After 1887, the classical riches on the bookshelf of the working-class self-educator can, in large measure, be attributed to Lubbock’s ideal curriculum.

 

Yet the standout name in translated classics is the Everyman’s Library series, launched by Joseph Malaby Dent in 1906. Everyman’s printed 1,000 titles in its first 50 years. Forty-six are listed as ‘classical’ in genre – most standard works of Greek and philosophy, poetry and prose, from Marcus Aurelius’ Meditations (the first classical text released), through the dramatists and epic poets to Aristotle’s Metaphysics, the 1,000th volume published.

 

Dent was the son of a Darlington painter-decorator who joined a Mutual Improvement Society and caught the literature bug. With his editor Ernest Rhys, he founded the Everyman label. Born into a middle-class family, Rhys began his working life as a coal engineer at Langley Park in County Durham, where he sought to enrich the lives of his co-workers. To the consternation of his conservative line manager, who considered mineworkers to be interested only in drinking and gambling, he established a library in a derelict worker’s cottage. Plato’s Republic was on the inaugural reading list.

 

An ethos where the bottom third are not impoverished and the middle third have the self-regard to read, work and have children will invariably result in a top percentile that is "entrepreneurial" and "risk taking". 

 

(And while I'm sure it may be worthwhile, my point isn't that reading the classics causes GDP growth either...  Rather, a proxy for a broader form of "self-investment" that includes but isn't limited to saving a lot in a 401(k) or learning Javascript). 

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Guest cherzeca

"In an impossible world where there are no 40 yr olds..."

 

I agree as to no, but weren't the 50s-60s a period where there were fewer 40 year olds due to WWII?...or not enough to make a difference?

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Assume higher spending in the 65+ brackets. If only because boomers (in quantity) fundamentally change everything they touch.

Assume higher spending in the 75+ brackets, AND more brackets. The US is morbidly obese, and has been for a long time; if you are not dead from obesity/complications by age 80, odds are that you're probably healthier, more apt to spend, and have a lot miles left on the dial :)

 

Don't assume the same market share of the worlds best creatives going forward. US market share has been materially inflated ever since the end of WWII - simply because opportunities/living conditions were so much better than everywhere else, and the flow of information was less restricted (former communist blocks). Not so much anymore; and often it's better to work in the US - but NOT actually live there (outsourced talent).

 

SD

 

 

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Don't assume the same market share of the worlds best creatives going forward. US market share has been materially inflated ever since the end of WWII - simply because opportunities/living conditions were so much better than everywhere else, and the flow of information was less restricted (former communist blocks). Not so much anymore; and often it's better to work in the US - but NOT actually live there (outsourced talent).

 

SD

 

Good point about the share of the worlds best talent.

 

Will the pool of the world's best talent grow much faster than world population (perhaps via expanded and cheap online education)?

 

I have a question:  what percentage of today's best talent are currently impoverished and underutilized, not making it into engineering programs? 

 

When I was at Microsoft, I kept bumping into Indian engineers and it seemed as though not one of them grew up dirt poor, even though so much of the country is dirt poor.

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I have a question:  what percentage of today's best talent are currently impoverished and underutilized, not making it into engineering programs? 

 

When I was at Microsoft, I kept bumping into Indian engineers and it seemed as though not one of them grew up dirt poor, even though so much of the country is dirt poor.

 

I think by definition very few of the impoverished manage to break through to get into engineering programs, etc.

 

For example, even in Soviet Union if you lived in a village, the school was pretty crappy. So if you were a genius, you probably could have broken out to get into university, etc. But if you were just above average (let's say good enough to work at Microsoft with right education), then you had slim chances because the school was not good enough to prepare you for university entry exams/etc. On the other hand, if you lived in a large city, the schools were better and you had way more opportunity to be prepared to get into university.

 

I think similar or worse situation is common in developing countries. Very few if any of children in a poor village or city slum would have opportunities to make it into universities or similar engineering programs.

 

Maybe you can take population of school age children under poverty line and/or living in villages, multiply it by some factor to adjust for overcounting, then multiply by let's say 10% to get the "really good" ones. And that would be a potential of impoverished/underutilized talent.

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Don't assume the same market share of the worlds best creatives going forward. US market share has been materially inflated ever since the end of WWII - simply because opportunities/living conditions were so much better than everywhere else, and the flow of information was less restricted (former communist blocks). Not so much anymore; and often it's better to work in the US - but NOT actually live there (outsourced talent).

 

SD

 

Good point about the share of the worlds best talent.

 

Will the pool of the world's best talent grow much faster than world population (perhaps via expanded and cheap online education)?

 

I have a question:  what percentage of today's best talent are currently impoverished and underutilized, not making it into engineering programs? 

 

When I was at Microsoft, I kept bumping into Indian engineers and it seemed as though not one of them grew up dirt poor, even though so much of the country is dirt poor.

 

Depending on the source, there are 2B+ people world-wide who are 'unbanked'.

The target of most free solar panels, free computers, free water-bores, free high-speed internet, etc. The close follow-up being on-line health, drone delivery of medicine in the field, and diminished spread of disease. Street smarts leveraged by technology, doing things in the places that really matter.

 

The harder sciences (medicine, engineering, etc) have always been the preserve of the rich - because only they could afford the cost of the training; but it just doesn't produce enough of them. The industrialist's solution was to find the best of those who couldn't afford it, send them to school (Oxford, Mining Schools), apprentice them under their best men in the field, and give them free reign in the running of their various enterprises around the globe. The technologist's solution is essentially the same, but with the addition of technology to leverage the output.

 

Find the tadpole in that huge ocean, and with minimal competition - you can quickly grow it into a whale.  And at 2B+ people, there are going to be quite a few tadpoles - and a % of them are going to go on to become Noble Prize winners. No different to looking at space, and recognizing that there MUST BE life 'out there', simply because there are so many planets.

 

And kind of telling that the founder of SpaceX, is a man that straddles both worlds.

https://en.wikipedia.org/wiki/Elon_Musk

 

SD

 

 

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What if Trump could have moved to Hong Kong and still gotten his degree at Stanford and hired the best engineers in the world?

 

That's not a bad thought.

 

Keep in mind though that such technology allows our creative people to work in creative fields no matter where they live. I'm sure some bright people across America are working noncreative jobs as IT people for their local governments because it's the only tech jobs they have locally -- these people may be better utilized as creative engineers.

 

I just noticed that I typed Trump rather than Musk.  My fingers not listening to my brain.  Weird.

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What if Trump could have moved to Hong Kong and still gotten his degree at Stanford and hired the best engineers in the world?

 

That's not a bad thought.

 

Keep in mind though that such technology allows our creative people to work in creative fields no matter where they live. I'm sure some bright people across America are working noncreative jobs as IT people for their local governments because it's the only tech jobs they have locally -- these people may be better utilized as creative engineers.

 

I just noticed that I typed Trump rather than Musk.  My fingers not listening to my brain.  Weird.

 

Okay, now it's a bad thought  :)

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Good point about the share of the worlds best talent.

 

Will the pool of the world's best talent grow much faster than world population (perhaps via expanded and cheap online education)?

 

I have a question:  what percentage of today's best talent are currently impoverished and underutilized, not making it into engineering programs? 

 

When I was at Microsoft, I kept bumping into Indian engineers and it seemed as though not one of them grew up dirt poor, even though so much of the country is dirt poor.

 

I grew up poor in India but I was not not dirt poor compared to other kids around me. I grew up with no electricity and filtered water supply. But I had food on my table each day and didn't have to think about it. There were kids with me who had to work in evening to help their families to earn money. There were some kids who used to wear 2 set of clothes  entire year. I had like 4-5 sets. So I was much better off.

 

I picked up or I should say I was forced to learn english when I was 15 years old due to preparing for IIT(It's an Engg institute in India and you have to give tests in English).

 

I had around 2000 bathcmates in my engg, I won't call them genuius or anything like that. Probably handful of them were really great but rest of them, including me, were fine. Now out of that crowd, 20% came to US for higher studies, but that was probably better off portion of entire 100%. My family wasn't that better off so I had to borrow for air ticket despite getting full coverage for tution and living expenses.

 

Now subset of people who manage to come here end up in Microsoft.

 

Point is simple. Very few , who grew dirt poor in India, will manage to get in some university which will allow them to work in Microsoft here. Unless you are from a reasonably well off family, it's not likely that you will end up in Microsoft.

 

Coming back to your original question, I think a large portion of world is talented but underutilized due to poverty and also not speaking dominant language like English. It will be a very large number.

 

- Rohit

 

 

 

 

 

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...

I just noticed that I typed Trump rather than Musk.  My fingers not listening to my brain.  Weird.

Multiple jokes spontaneously came up but there is always the risk to offend. From purely mechanistic and anatomic standpoints, cognitive ability cannot arise from your fingers. If this corresponds to anything repressed and you have unusual dreams involving somebody naked with short fingers, wearing a long tie and a red cap, you can share. i won't judge. :)

-----

Growth will be a function of 1-the employment-total population ratio and 2-productivity.

1- has been on a downward trend for various reasons but an aging population has played and will continue to play a significant role. It should be noted (this is quite significant since the GFC) that an increasing participation of the older population has partly mitigated, so far, the lower participation trend at the population level.

2- has been on a downward trend for various reasons but an aging population has played and will continue to play a significant role. It is interesting to note that an older profile tends to directly influence productivity and also the older group tend to 'spend' in very unproductive sectors (services, healthcare etc).

 

We will adapt (probably through unforeseen developments) but the key will be to improve the very poor productivity trends that have secularly become entrenched.

Take Japan as a potential leading indicator. Historically, Japan has been a leader in manufacturing productivity and has tried, with some successes, to transfer those skills to the services sector but, at this point, productivity measures at the aggregate level show an increasing difficulty to mitigate the close-to-zero productivity growth in the services sector.

 

Japan is a leader in the robot sector, also for the care and support of their growing share of older individuals. Robots can be involved in institutions and in individual homes. Robots can be useful for: task delegation, physical assistance, monitoring, position transfers and basic hygiene care. These are all business opportunities. The most impressive opportunity though (IMO) is in the use of companion robots (typically looks like a pet). Older people affected by loneliness and/or cognitive decline react very positively to such device and don't seem to be affected by the negative effects of technological addiction manifested by other segments of the population.

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