Over in the margin, I link to Dean Baker’s Beat the Press, and I hope you all read it religiously. Here’s one reason you should.
The NYT tells us that China is facing a demographic crisis due to the aging of the population and should try to encourage families to have more kids (seriously, read the article).
It’s hard to know where to begin with this one. The articles reports onimously that “The proportion of people 60 and older is growing faster in China than in any other major country, with the number of retirees set to double between 2005 and 2015, when it is expected to reach 200 million.” This means that the share of people over age 60 will rise from about 7.7 percent to 15.4 percent over this decade. Considering that the share of the population over age 60 will be close to 30 percent at that point in the U.S., the Chinese can be forgiven if they are not too worried, as the article claims.
Let’s play with a little arithmetic here. China’s productivity is increasing at a rate close to 8 percent annually. This means that in ten years, workers on average will be producing more than 2.1 times as much per hour as they do today. Let’s say that the average retiree gets 60 percent of the income of the average worker. If the ratio of workers to retirees falls from 5:1 to 3:1 over the next decade (a far more rapid decline than is actually described in the article), then workers could still have 90 percent more income in a decade than they do today, after being taxed to support the growing population of retirees.
(The NYT article goes a step further than most in pushing the retirement scare story. It claims that raising the retirement age won’t help because it has a big problem with unemployment among the young. Okay, the scare story is too many retirees and too few workers, but the workers are unemployed, that sounds like too many workers. I guess China is suffering from too many workers and too few workers. They really have problems there.)
The rich countries have seen a consistent growth in the ratio of retirees to workers and have continued to sustain improvements in living standards for both workers and retirees. The key to rising living standards, which somehow is never mentioned in this article, is higher productivity. If China can sustain a productivity growth rate that is even half its current pace, then it has no reason to fear an aging population. (This doesn’t mean that government pension programs may not need to be adjusted.)
The conclusion of this piece — that China needs more children and a larger population, should be enough to get millions to cancel their subscription to this paper. The world (and China) does not need more people (someone please tell the NYT about global warming).
While I’m at it, here’s another on a favorite Baker theme, Social Security, health care, and the budget.
NPR joined the never ending scare campaign this morning, telling listeners that our standard of living will be threatened if we don’t get the deficit under control. Of course the whole story, as always, is the projection of exploding health care costs which, if they prove accurate, will sink the economy regardless of what we do with the budget. If health care costs are contained, as they are in every other rich country, then there would be no plausible story, based on current projections, in which budget deficits would seriously impact our standard of living.
But, NPR would apparently rather beat up on retirees and Social Security than go after the pharmaceutical industry, the insurance industry, and the doctors’ lobby.