If you live in the Western world, you might have guessed that the biggest threat to the stability of modern society is an ageing population.
I’m sure you’ve heard of this idea that the world is overpopulated. But this statement hides an almost more painful truth.
Indeed, what economists fail to talk about is how the West is soon going to be massively under-populated.
In fact, ageing economies in the West will affect the way we live and structure our societies more than almost anything else.
You see, the typical Western society is built on a system of progressive wealth redistribution: people who work pay the highest taxes, healthcare, and retirement contributions to pay for the elderly who no longer work (and often pay no taxes).
Although it varies by country, this system took its current form about 90 years ago – when there were enough people working and most didn’t get very old.
But this system was built on the assumption that there would be roughly 3 workers for every retiree.
As you might have guessed, we are far from that reality today.
In some developed countries, there are less than 1.5 workers for every retiree. And with an aging population, this number is expected to drop drastically over the next decades.
23 countries are expected to see their populations halve before the end of the century. And many more countries will lose tens of millions of productive workers.
This has huge implications on the way we structure our way of life. If retirees aren’t working, and there aren’t enough young people to pay into an ever-more generous social welfare net…
… who will pay taxes?
… who will pay for healthcare for the elderly?
… will retirement programs still be viable?
(the answer to this last one is already a resounding NO – the numbers are clear).
Now, a number of countries have tried encouraging their citizens to have more children by providing free childcare, enhancing maternity and paternity leave, and providing financial incentives – but none of these seem to work meaningfully.
Instead, one answer lies with immigrants.
While the West will see a literal population collapse, other countries’ populations will boom.
Nigeria’s population, for example, is expected to grow from 200 million today to 800 million by 2100.
And India is expected to have 1.7 billion citizens by 2050, up from 1.35 billion today.
Immigrants from these countries might become some of the most prized assets for a country in the future – given they’ll want to immigrate at all by then.
Another option is societal restructuring.
Right now, the West relies on generous welfare programs to support its people, including all those who cannot (or do not want to) work.
But that might well need to change. I talked in a recent newsletter about how Singapore became one of the most innovative and competitive countries to move to and do business – out of necessity.
Others may have to follow suit to stay attractive to immigrants.
Whether Western leaders adapt to a new reality might well determine whether Europe, the US, and many others will thrive in the future.
If not, the tables will likely turn. And the countries people emigrate from today might be the countries people immigrate to tomorrow.
No matter what happens, your job is to make sure you are prepared. I personally don’t have much faith in leaders who promise niceties that aren’t theirs to give out and which bankrupt future generations – just to get elected.
Instead, I prefer to take matters into my own hand and ensure I thrive no matter what happens next.