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Thursday, July 26, 2007

The Economist and Demography

Well for some time now I have been waging a kind of single-handed battle with the Economist to try and get them to change their emphasis when it comes to the weighting they give to demographic factors in economic processes. All of this reached a high point a couple of weeks back when I put up a piece on A Fistful of Euros, complaining about a couple of rather sloppy details of journalism more than anything else really, but the background to the issue was a demographic one. Well the accusation seemed to have stung home, since it warranted a reply from their central European correspondent.

Well, give some people an inch and they grap a mile, and Claus and I just couldn't resist the opportunity to go over a nail a whole shopping list of complaints on their back door.

Now maybe it is just pure coincidence, but guess what? The Economist has a cover photo, a leader article on population decline, and a special study about the impact of ageing on Japan. And guess what else? The emphasis has changed. Ever so subtly, but it has. Here (below) is just one extract, and with which I personally would hardly disagree at all. But the best advice I have for you is to get on over there, and have a good read of both pieces.

If the world's population does not look like rising or shrinking to unmanageable levels, surely governments can watch its progress with equanimity? Not quite. Adjusting to decline poses problems, which three areas of the world—central and eastern Europe, from Germany to Russia; the northern Mediterranean; and parts of East Asia, including Japan and South Korea—are already facing.

Think of twentysomethings as a single workforce, the best educated there is. In Japan (see article), that workforce will shrink by a fifth in the next decade—a considerable loss of knowledge and skills. At the other end of the age spectrum, state pensions systems face difficulties now, when there are four people of working age to each retired person. By 2030, Japan and Italy will have only two per retiree; by 2050, the ratio will be three to two. An ageing, shrinking population poses problems in other, surprising ways. The Russian army has had to tighten up conscription because there are not enough young men around. In Japan, rural areas have borne the brunt of population decline, which is so bad that one village wants to give up and turn itself into an industrial-waste dump.

Change like this is more than welcome, whatever the actual reasons which lie behind it. None of this is easy, since this is really the first time that something like this has happened in systematic fashion, so all of us are really only feeling our way.

So to my friends on the Economist, if any of you are reading this. Well done. A start is a start, even if, as Jimmy Cliff would remind us, we all still have "a hard road to travel" on this one.

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