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Thursday, July 24, 2003

Ageing and Productivity

OK, Eddie sent me a point a couple of weeks ago that I think is worth addressing:

How would you reconcile what you considered an obvious conclusion from the EU study …

“ the marginal productivity of workers tends to start to decline in their early to mid 50’s; and worries that enthusiasm for reform and overall levels of dynamism and innovation in an economy may be detrimentally affected by having an ageing labourforce. “

with Kurweil’s law of accelerating returns?

If we get the exponential within exponential and within just a few decades, then there’s that intriguing possibility that the marginal productivity of workers doesn’t necessarily decline with an ageing labor force? Technological progress takes on a life of it’s own? (You made a reference to the question of limitations) And I wonder if in the process of businesses fighting for survival, we’d see an acceleration in extracting greater value from technology.

As usual eddie puts his finger on an important question. The first point I would wish to make is that when I talk about the future, I try very much to restrict myself to what I regard as the immediate future. This for me means between now and 2005, and the medium term, which means between now and 2010 (say). Outside of noting that the demographic background (which is in large part already determined) has certain defined characteristics which will be unlikely to change, I am not prepared to enter into speculation about a longer term future, in part because I am not a futurologist, and since I have difficulty extrapolating forwards to 2005, long-term long-term, the only thing I know is that, as the man said, we are all dead. And even this sems to be in question if you read the most ambitious claims of the genetic-bio-engineering enthusiasts.

So what I am concerned about is the future as we can see it now. What we know is that the OECD countries are living through an important demographic change, and that that demographic change is having an impact not in 2012 but now. This is the only real explanation I can see for the problems of eg Germany, Switzerland, Taiwan, Hong Kong etc (and if, as I keep saying, Italy takes a surprise hit, then I'll damn well know I'm right).

Now the point I am trying to make is that the changes I am talking about are arriving in the here and now, and that it is the flexibility of our ageing population in this relatively short term which preoccupies me. Here in Europe I see a large group of people arriving at the mid-fiftees with one thought in mind: retirement. They are often more psychologically than physically exhausted. Stress appears to be a major factor. Now what I find hard to believe is that on the basis of a short term labour and pension reform, this group is going suddenly a find a new sense of life, and a new enthusiasm for a second working career, possibly as a tennis playing entrepreneur. Going back for a moment to Eamonn, I too saw Lance Armstrong fall off his bike and climb straight back on. Some heroic individuals are capable of this, but allow me to doubt how many.

Now this is important. Techology changes, enterprise organisation changes, and we change, but all three perhaps do not change at the same pace. Attitudes to change are culturally driven. This I feel is the fundamental US error in Iraq. This is what my hero Luigi Cavalli Sforza discovered when he went to look at the African rain forest pygmees: he found in fact that this group did not change, despite having the world of agriculture right under their noses, so to speak.

Long term we are part of an evolving complex system, and we will adapt to all the extra longevity we may have. Clearly there is a lot to be said for a working life that starts at thirty and goes on to eighty. I will vote for it any day you want. But we are not there yet. the generation arriving now at the threshold of their sixties has lived another epoch, and I doubt they will change so quickly.

There is another point. All this is not happening in a void. We are in a period of global restructuring - again the question is only of timing, of when. But some countries with a plentiful supply of young people are about to come on line eonomically speaking. My feeling is that some of these countries will be able to take very good advantage of the technological exponential over exponential that Kurzweil talks about. I mean it is anecdotal, but the likes of Google, Amazon, Yahoo etc were not founded by ageing hippees, but by bright young well educated people. The ageing hippees of the likes of Vivendi, Bertellsman, Terra-Lycos etc here in Europe have not been a notable success. Obviously this is a topic where some empirical investigation would be interesting, but until someone really shows me the contrary I continue to believe that the young are the natural 'early adopters'.

Now this doesn't mean that there isn't a bright new, technological future a la Kurzweil, it's just that maybe the OECD countries won't be the best positioned to take advantage of it.

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