Greying generation is an old problem

If you can read today’s FT there is a fascinating article by John Kay, somebody who has forgotten more about economics than most of ever know. (Greying generation is an old problem).

The basic argument is that Europe and the US has been through significant demographic changes and somehow the economic and social structure has always taken the strain. He uses the analogy of today’s position with that of the 1980 when you had a relatively small amount of people retiring (as a result of the First World War). Forty years afterwards, this created more young people entering the workforce than retirees leaving it . The result was not catastrophic, but wage rates fell as the employment market absorbed the glut of younger people.

Today’s position is the reverse. Kay believes the result will be harder for people to take early retirement and the tendency to greater wage inequality will be reduced.

He concludes the article: “Visions of apocalypse meet a deep-seated human need. The intellectual history of the last three centuries is full of mostly unfulfilled prophesies of doom. Future demography is a problem for the world economy. But before panic sets in, we should appreciate the extent to which that economy has absorbed demographic changes in the last two decades without anyone really noticing.”

So there you go no need to panic – maybe. Dick Stroud www.20plus30.com