The Economic Bomb

Old couple sitting on two swings. Many could have a long, pleasant retirement, but a few could also struggle financially. Photo: Pixabay
Many could have a long, pleasant retirement, but a few could also struggle financially. Photo: Pixabay

I have a fascination for conspiracy theories. Some of them are very far out there, but once in a while I hear about one that sounds plausible. After all, governments have done some awful things in the recent past, so there are a lot of scenarios I could believe in.

I have never considered the possibility of a massive depopulation because most conspiracy theories that deal with this are much too wild, but I do believe that governments think a great deal about the need for balancing the population. A recent report from World Economic Forum suggested that many governments will have an enormous debt to the ageing population. The problem isn’t just that the population is growing, but that we have longer life spans. The report quotes University of California, Berkeley, which states that 50 percent of the children born in 2007 will live to be more than a 100 years old in countries like the USA, Britain, Japan, Italy, Germany, France and Canada. This amounts to a lot of people, and many years of pensions.

Norwegian authorities tried to prepare for the troubles ahead with a pension reform in 2011. Retirement age used to be 67, and many were forced to retire at that age. The new thing is that if you want the maximum pension, you have to postpone your retirement. The tax for pensioners has also been increased from 11 to 17 percent, which is intended to counteract the problems with the growing retirement savings gap.

Employed people finance the pensions, and as long as there are enough young people working there will be money for the pensions. What happens when this balance is shifted? There is already a retirement savings gap of $ 70 trillion worldwide, and it is expected to grow by 5 percent a year to $ 400 trillion in 2050. To put that into perspective, the world economy today amounts to $ 74 trillion. You can imagine what a challenge this will be in populous countries like the USA, China, India and Japan. The situation is especially grave in Japan because they have a low birth rate, like most rich countries, but they hardly have immigration at all. That means they lose a quarter of a million people a year.

We do have immigration in Norway, but statistics show that refugees are less educated than Norwegians and immigrants from Europe and North America, and the employment rate among Africans and Asians is also significantly lower. This would have to change if we are to successfully deal with the situation.

World Economic Forum offers a sort of advice, but I don’t know how good it is. They referred to surveys showing that people under 50 years didn’t worry much about retirement, but if you start planning ahead as soon as you start working, you’ll be more likely to manage when you don’t work anymore. They also recommend investments with higher risks and higher profit, but I am not sure this will be an option to low income families. I have heard about people who say they are not worried. They rely on the good services our welfare state has provided thus far, but there are no guarantees for the future.

I don’t believe in the most spectacular theories concerning depopulation, but I think many governments would like to see a lower life expectancy. That may happen automatically because being poor usually means that you don’t eat healthy and that you don’t have access to the best health care. There’s been some great dystopic literature and films published in recent years, but there are some pretty scary possibilities in the real world too.

We’ll live to 100 – How can we afford it?

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