Last updated on July 21st, 2018
Last Updated on July 21, 2018 by Steven Meurrens
In today’s Daily Reckoning, Dan Denning analyzes the age demographics of numerous Western countries to determine the attractiveness of government treasuries. He summarizes the relationship between aging countries and government finances as follows:
Through either low immigration or low birth rates, or a combination of both, aging countries face some grim demographic math. Pension (private and public) pensions are likely to increase even as the tax base shrinks. Taxes go up on younger people. But government borrowing probably increases too, unless benefits get cut. If the borrowing is not from domestic savings (where it would then NOT go to private enterprise) it must be done on global markets at whatever the market price for money is.
Mr. Denning presents numerous US Census Bureau charts showing population tendencies for certain Western countries (and Iran).
I have reproduced some of these to analyze how Canada compares to other Western countries.
Amongst anglophone nations, however, Canada’s low fertility rate – currently 1.6 – results in their being fewer children than in the United States (with a fertility rate of 2.1), Australia (1.8), and the United Kingdom (1.9).
Accordingly, if Canada is to maintain a comparable population demographic to other anglophone nations, it is going to have to rely on immigration. I do not see any other alternative. After all, these numbers are extremely difficult to change, and to a certain degree are “locked in”. The number of 10-year olds in Canada in 2020 will be roughly the number of people born in 2010. The only thing that will make it higher is immigration.
So what do you think? Does Canada have an aging issue compared to other anglophone nations? If yes, should we care? If yes, should increased immigration be the solution?