Monday, May 26, 2008

Bad demographics?

In an article ("The Future of American Power") in the May/June issue of Foreign Affairs, Fareed Zakaria observes that the aging of populations in Europe and much of Asia has three malign effects: it increases pension burdens, decreases scientific innovation (because most scientists and inventors do their best work between ages 30 and 44), and reduces national savings and investment rates. (He also could have added that strains on health care systems increase.) "For advanced industrialized countries, bad demographics are a killer disease," he asserts (p.35).

He neglects to note, however, that aging (and therefore shrinking) populations also might have some beneficial effects: reduced traffic congestion and reduced consumption of fossil fuels and other resources, to name two.

Zakaria's main argument in the piece (drawn from his recently published book The Post-American World) is that America's economy and society are resilient and flexible, but its political system is broken. He's certainly right on the last point. He also contends, unsurprisingly but correctly, that the U.S. must accommodate itself to the diffusion of cultural and economic power to other countries: i.e., accept "the rise of the rest," don't try to resist it. But when it comes to economics, Zakaria is basically a defender of the neoliberal version of capitalism (see, e.g., his discussion of corporate taxation), so if you pick up the book don't expect anything too enlightened on that score.

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