The challenges of an ageing nation
BY MARCUS ROBERTS
One of the dominant themes on this blog is that, for many countries, the twenty-first century will see its citizens get older on average as people live longer and fewer babies are born. This will have all sorts of impacts on these societies, and one of the largest impacts will be seen on these countries’ economies. As we blogged a few weeks ago, many countries which have relied on demographic tailwinds in the last few decades are seeing those tailwinds die away or veer to become headwinds.
One country facing an ageing future is the United Kingdom, which will see its over-65 year old population increase 60% in the next twenty years. However, Stephen Clarke of the Legatum Institute (an international think tank focussed on promoting prosperity) argues that an ageing population should be seen as an opportunity as well as a risk. To this end, it has instituted a prize for essays from the “next generation” (those under 35 years old) that provide ideas “to ensure that ageing societies are more prosperous societies”.
Clarke sees three challenges that must be addressed if an ageing society is to be a prosperous one: economic; political; and healthcare. The first is fairly straightforward to explain – we will see fewer working age adults to support an increasingly adult population. One solution put forward by Clarke is to turn to “technology and changes in working practices” so that “more people work for longer and are not reliant on the state”. The political challenge stems from the fact that there will be more and more elderly people in the future and this voting demographic tends to turn up on Election Day:
“43 per cent of 18-24 year olds voted compared to 78 per cent of the over 65s. As society ages, the danger is that the needs of the elderly crowd out the needs of the young. All OECD countries spend more per capita on the elderly than on children.”The concern is that this focus on spending for the elderly will only increase as politicians pander to a growing and politically active group in society. The final challenge is healthcare – that spending requirements will only grow as the population ages. Clarke thinks that greater spending is not the solution and that “smarter use of technology, smarter financial planning, better public policies” can all help address this problem.