Inside Money: Demographic time-bomb may be a dud

Photo / Thinkstock

We're getting old but don't worry at least two United Nations divisions - UNFPA and UNDESAD - are looking into it.

Usually, this whole aging business is presented as a major looming crisis, requiring urgent action. In New Zealand, for example, concern about the ageing population, often referred to as a 'demographic time-bomb', explains the creation of both the New Zealand Superannuation Fund and the KiwiSaver regime.

But not everyone is so downbeat about the fate of an increasingly ancient world.
Even UNFPA tries to put a positive spin on the story, titling its introductory piece 'Population ageing: a celebration and a challenge'.

"Ageing is a triumph of development," the UNFPA intro says. "People are living longer because of better nutrition, sanitation, medical advances, health care, education and economic well-being."

Despite this, UNFPA admits an ageing population does pose one or two "social and economic challenges" before concluding: "Older persons need not be a burden".

And the aged might not be such a drain on the global economy as demographic experts say, according to weekly investment newsletter Asia Confidential.

Asia Confidential argues while economic growth may be slower in an aging world, it doesn't necessarily equate to catastrophe.

The ultimate effect of an ageing population will be, naturally, a declining global population, a trend Asia Confidential says "may end up being the best thing that could have happened to us."

"Fewer people should mean reduced resource consumption and may actually save us from not having enough food to feed the planet," the article says.

In his latest newsletter, investment guru Jeremy Grantham, head of fund manager GMO, offers a similar view.

(Grantham's newsletter is a good read anyway, this month including a review of his ride in a Tesla and some thoughts on fracking.)

"I finished on the unusually optimistic point (for me) that a combination of declining fertility and eventual declining population combined with unexpectedly strong progress in renewable energy might just save our modern civilization from a slow and, no doubt, irregular descent into dystopia," Grantham writes.

"More recently, while still believing we are in this critical race, I have become increasingly impressed with the potential for a revolution in energy, which will make it extremely unlikely that a lack of energy will be the issue that brings us to our knees."

If not an energy crisis, then it might be a surplus of dodgy knees that finally brings the old world down.