Demography Is Destiny
The latest data from the U.N. Demographic Commission, displayed in
Figure 8-3, show clearly the aging of the developed world. In the United
States in 1950 there were seven people of working age (20 to 65) for
every retiree, and even today, there are almost five. But by 2030, when
the last of the baby-boom generation retires, that ratio will fall by nearly
one-half, down below three to one.
The aging of the population in Europe and Japan is even more ex-
treme than in the United States. In Japan by midcentury, the ratio of
workers aged 20 to 65 to retirees will fall to just over one for one. At that
time the most populated five-year age segment in Japan will be those
aged 75 to 80, and the same will be true in such European countries such
as Italy. The demands of the retirees from Europe and Japan will raise
the prices of goods bought and sold in international markets, so there is
no way the United States, despite its younger population, can shield it-
self from the demands arising from the aging populations abroad.
134 PART 2 Valuation, Style Investing, and Global Markets
FIGURE 8–3
Ratio of Population Aged 20 to 65 to Population Aged 65 and Over234567892.721.291.80110
United StatesEuropeJapanPAST FUTURE1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
SOURCE: Data obtained from the U.N. Demographic Commission.