The reverse of the oft-used cliche “the children are our future” is equally
true, economic experts at the Herzliya Conference noted on Wednesday: lack of
children are also our future.
Changing demographics and an
“intergenerational conflict” hold the key to understanding where the world
economy, and the politics around it, are headed, experts from Israel, China and
the US pointed out.
“This is a phenomenal issue that we have not even
begun to think about,” says Andrew Sheng, chairman of Hong Kong Securities and
The Arab Spring, for example, can be understood
through a demographic lens.
Autocrats’ inability to produce jobs in
keeping with a growing population led to large numbers of unemployed youth, rife
“Within the Arab Spring, it really is a demographic
In the next generation, there are four population groups,
amounting to nearly a billion people, projected to cross class lines: first in
China, then in India, followed by the Muslim population in Asia and then in
Africa and Latin America.
“Asia is really benefiting from that
demographic trend, but Japan in particular is suffering,” he says.
Bank of Israel governor Jacob Frenkel said in Japan, the population will remain
stable in the next 20 years, but the vast majority will be over 80 years
“If you are in any cohort below 80, you have less and less friends
In Japan, huge resources will have to be devoted to caring
for the elderly, just as the US must deal with the baby boomer generation
In China, the population will be larger and older, though the
bulge there will be in the 50+ category. In India, on the other hand, the
population will grow by over 300 million people, rising in all
“In Asia, the key issue is population,” he said.
“If the population that is born makes it, and that’s a
big challenge that comes from health problems, it will be larger than it is now
by 545 million.
It will be the largest continent.
It will be the
youngest continent, with huge implications,” says Frenkel.
If all goes
well, labor will be abundant and bring growth.
strife could permeate the continent.
Daniel J. Arbess, a partner at
Perella Weinberg Partners, agrees that much political strife can be linked to
demographic changes. Intergenerational conflict, he says, is behind not only the
Arab Spring but also the Five Star Movement in Italy and the Occupy Wall Street
protests in America.
“Disaffection, disillusionment and despair” among
young people drive all three, says Arbess. In the United States, even the
educated youth have low job prospects and higher credit standards, while sitting
on piles of student debt they are unable to pay off. Inflating student loans
might even be the next financial bubble to burst.
And, of course, the
greatest intergenerational issue is debt, which this generation takes on but the
next generation has to pay off. The debt, said Arbess, will impose unprecedented
difficulties for the next generation in the US.
“When OECD countries owe
100% debt to GDP, the real question is: Who pays? And that’s the heart of the
issue,” says Sheng.
But the demographic situation isn’t totally dire in
the US, at least. Among the reasons Arbess is confident the US recovery will
take hold is its demographic profile, which he calls the best in the developed
For China, on the other hand, sustaining an enormous population is
an economic and environmental challenge.
Niu Tiehang, editor-inchief of
the Globalization Journal, puts it in a historical perspective. Since China
began opening up its economy three decades ago, it has catapulted to the world’s
second largest economy with 10% average annual growth by building up its
exports. To continue growing, however, it needs to change its growth engines
from exports to consumption.
If the population of China starts to consume
the way Americans do, however, it will be an environmentally unsustainable
disaster, robbing the country of its natural resources.
China must find a
third way as it moves from a manufacturing economy to a knowledge economy, he
says. Their motto needs to shift from “made in China” to “created in China.”