For months now, the topic of immigration has dominated the news. Limits on immigration appear to be the central issue in upcoming elections across the Western world. While the movement of people between nations has obvious demographic consequences, there are less obvious and deeper demographic issues at the heart of the arguments between those who want more or less immigration.
I think, unlike many Europeans and Asians, most Americans have not yet fully grasped the magnitude of issues created by falling birth rates and growing aged populations. Demographers refer to this phenomenon as “the flipping of the demographic pyramid” because for the first time in history, we are on our way to having more old than young people.
This is less obvious in America because the US birth rate is only slightly below the replacement rate. So the impact of the flipped pyramid isn’t as obvious as in Japan and Germany yet, where citizens increasingly worry about the inability of their societies to deal with this change.
Many people believe that lower birth rates and longer lives are good things, but there is an enormous unintended consequence. Either trend makes it difficult for a society to fund transfer payments to seniors, which is the largest part of entitlement spending. With fewer payers and more recipients, the problem is twice as bad and getting worse quickly.
Politicians, however, seem unconcerned, at least publicly. Some candidates promise to increase government spending, despite the fact that America is already borrowing about 30 cents of every federal dollar spent. They promise new taxes, even though the economy shows signs of slipping back into recession and the debt, at about $19 trillion, grows daily. Already, new business and job creation have stalled, so it’s difficult to imagine that higher taxes will actually produce the economic growth needed to balance the books.
Historically, a major component of economic growth has been a natural increase in the total work force. More taxpayers can generate more revenues to repay government debt—but with a shrinking workforce, it will get more and more difficult to pay off debt and fund programs for rapidly growing numbers of older dependents.
Though Americans don’t talk much about this, it’s very much on the minds of Europeans and the Japanese. Recently, by the way, Germany surpassed Japan as the country with the lowest birth rate. It’s now 8.47 births per 1,000, which correlates to a birth rate of 1.4 children per woman. This BBC article hits all the important points. It quotes a German expert warning that Germany cannot maintain its economic edge unless young workers are brought into the country. German demographic decline is often cited as the motivation for allowing one of the highest immigration rates in the world.
This is an utterly fascinating development. Even Japanese opposition toward immigration has been lessening due to the country’s demographic crisis. However, I think headlines about the spate of assaults on European women by North African and Middle Eastern immigrants will probably change that.
I find the daily news stories about attacks on young women in Germany and elsewhere extremely distressing, even depressing. My guess is that the Japanese will respond to those headlines by being extremely selective about immigration for the foreseeable future, although they find it increasingly difficult to support their aged population. Read more about that crisis here if you want to know more or think that I’m exaggerating about the seriousness of Japan’s demographic challenges.
The reason that some sciences, especially economics and meteorology, are so uncertain and confusing is that it’s impossible to scientifically test hypotheses. We simply can’t do controlled studies to definitively end arguments. But Japan and Germany are taking such radically different approaches to immigration, we’re going to get a pretty clear picture of the effects of high- and low-immigration policies in decades to come.
Germany has decided to counter its declining birth rate and fix its waning economic strength by encouraging large-scale immigration. Here’s an interesting New York Times article from 2013 discussing this decision before it was implemented at present levels. One risk not discussed in the article is that the country won’t be able to assimilate large numbers of immigrants with radically different cultural backgrounds.
Whether Germany’s bet on immigration pays off or not, it has consequences far beyond the country itself. As the economic powerhouse of Europe, Germany currently subsidizes the weaker EU economies. An economically hobbled Germany would hurt all of the EU. Despite increasing voter resistance, policy makers and industrial leaders seem to agree that the economic problems created by demographic trends warrant the risks associated with massive unassimilated immigration.
The Japanese, on the other hand, have taken a nearly diametrical approach to the same problem. If you run the numbers out a few decades, the current social-services model fails. Japan, however, has not turned to large-scale immigration. Instead, the country is betting on technology.
People wondered why Japan, a longtime leader in robotics, had to borrow American industrial robots to help deal with the Fukushima nuclear reactor accident. The reason is that Japanese robotics is focused on automating jobs that can’t be filled by a shrinking workforce. Particular concern and effort is devoted to the field of eldercare. For years, Japanese scientists have been developing robots capable of lifting aged patients out of beds and bathing them.
Japan and Germany’s contrasting approaches to depopulation may be the most interesting (though accidental) experiment of our age. I find this subject fascinating because it offers a view of robotics and automation at complete variance to the fear we hear voiced that these technologies are job destroyers.
Dire predictions about robots destroying jobs, however, don’t factor in the reality of Japan’s demographic crisis. America is on the same path as Japan, albeit at a slower pace. I believe the Japanese are right to worry that their country cannot provide enough workers to fill the jobs created by the growing eldercare industry. The size of the over-65 American population will double by 2050 over 2005 levels, even as the percentage of younger workers declines.
Yet the eldercare problem is understated because the rate of dementia rises exponentially with age. As this Wolters Kluwer report states, “The incidence of AD approximately doubles every 10 years after the age of 60 years. Dementia is estimated to be present in one-half to two-thirds of nursing home residents.”
Mostly because of the need for constant care, dementia is already the most expensive medical condition. The Alzheimer’s Organization says AD alone currently costs the United States $226 billion per year, but warns it could quadruple by 2050. I don’t think America will have the workers to provide that care, even if fast-food outlets are completely roboticized.
I have two family members in an assisted care living facility now, and I visit them regularly. The number of people required to care for the aged is immense and extraordinarily expensive. We’re on a clear path to automating many jobs, but there is an enormous difference between assembling widgets and taking care of living and occasionally unruly human beings who need help eating, using the bathroom, and getting in and out of bed.
The growing need for caregivers for elderly and dementia patients, including counselors and physical therapists, could overwhelm job losses in other industrial sectors... unless major technological breakthroughs are made.
Robotics is, of course, one possible technological solution. The Japanese have also led the world in healthcare reform, lessening the regulatory burdens on stem cell therapies as well as naturally occurring compounds whose efficacy has been scientifically validated.
This burgeoning liberation of biotechnology, like European immigration policies, is also a reaction to the inverted demographic pyramid. Rather than focus on bringing new, younger workers into the workforce, it aims to keep older workers healthy longer and accomplish the same thing.
For this very reason, I’ve written much about the anti-aging revolution. I’ve also predicted that the public will eventually catch on to the potential of the biological sciences to delay or even reverse the debilitating effects of aging. When enough of us demand change, we’ll get it. That’s why I’m pleased whenever I see this new understanding making its way from scientific journals into the popular media.
This recent article from CBS News, for example, is a good sign that the educational process continues. Titled “The scientific quest to cure aging,” it contains little that I haven’t already written about. Nevertheless, it’s important because it shows that the information is spreading. Soon, the public will demand an end to “The Other Drug War.”
We know that simple genetic switches can have more impact on overall health than diet, lifestyle, exercise, and all the latest preventative medicine. And we can already flip some of those switches. Read this piece about Batuli Lamichhane, a 112-year-old woman from Nepal who credits her long life to chain-smoking, to get an idea about the potential of anti-aging medicine made possible in the modern era of genomic medicine. We’re not far from a time when we will be able to activate in everybody the genetic process that allowed Lamichhane to reach her 12th decade. Smoking, of course, is optional.
If you’re attending the Strategic Investment Conference in May, you’ll see me discuss all these things—and more—on stage. There are only a couple of days left to sign up at the early-bird rate, so don’t wait.
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