Latest news with #demographics
Bloomberg
2 days ago
- Business
- Bloomberg
Peak Humanity, House Prices and Why UK Pubs Are Vanishing
Here's a thought for the weekend. You are living in (or at least very close to) peak humanity. Populations in countries including Japan and China are actually shrinking, with China losing more than a million people a year net. At this rate, it will see its population halve by the end of the century. Japan's population fell by almost a million people last year and its government projects it will be down 40% by 2100. Across the sea in South Korea, the fertility rate is down to 0.72—that's one third of what's called the replacement rate (2.1 babies on average per woman). Fertility is also collapsing across Europe, and there's even a baby bust underway in Latin America. Here in the UK, the fertility rate is down to 1.44.
Japan Times
3 days ago
- Business
- Japan Times
South Korea faces a triple challenge ahead of its election
Few countries have transformed themselves as dramatically as South Korea has over the last half-century. A poor, authoritarian country with annual per capita income of less than $400 has become a vibrant and prosperous democracy, with direct presidential elections, peaceful transfers of power and a per capita income of more than $33,000. But South Korea lately has been grappling with slowing economic momentum, rising political instability and an increasingly fragile security environment. Can the country transform itself again and meet these new challenges? Begin with the economy. After decades of rapid gross domestic product growth — averaging over 7% in the 1970s-1990s — the economy has slowed, growing by 2% to 3% in recent years. The growth rate is expected to fall further, to 1%, over the next decade. A key reason for this is demographic decline. With South Korea's fertility rate having dropped to just 0.75 — the world's lowest — its population is shrinking and aging fast. The country is set to cross the 'super-aged' threshold, with more than 20% of the population aged 65 and older, this year. Low productivity growth and high household debt are additional brakes on consumption and investment, increasing the risk of long-term stagnation, akin to Japan's 'lost decades.' It does not help that China is becoming increasingly competitive in sectors that South Korea once dominated, such as shipbuilding, steel, smartphones and, increasingly, semiconductors. More fundamentally, the export-driven model that fueled South Korea's past success is now vulnerable to protectionist trends and geoeconomic fragmentation. Domestic political volatility has risen as well. Corruption scandals and partisan gridlock persist and both Freedom House and the Economist Intelligence Unit have reported signs of democratic backsliding. Former President Yoon Suk Yeol's attempt to impose martial law for the first time since 1980 revealed that South Korea's democracy remains fragile, though the fierce backlash — including popular protests and a vote by the National Assembly to rescind the declaration — also highlighted the resilience of public support for democratic institutions. Mounting security risks further complicate the picture. North Korea, bolstered by deepening military ties with Russia and an enduring strategic alignment with China, has continued its regular provocations, including ballistic-missile tests. Meanwhile, South Korea is grappling with the question of how to approach the escalating geopolitical competition between China, with which the country maintains close economic ties, and the United States, an increasingly unreliable ally. U.S. President Donald Trump's past threats to scale back America's security commitments and cut deals with North Korea have revived calls within South Korea for an independent deterrent capability. Recent polls indicate that a growing share of South Koreans want their country to develop nuclear weapons. While the government remains committed to nonproliferation, the pressure for South Korea to ensure its own security is intensifying. Against this backdrop, South Korea will hold its next presidential election on Tuesday. Whoever wins — whether the progressive or conservative candidate — will have to confront head-on the intertwined challenges of boosting economic growth, implementing democratic reforms and providing strategic clarity. On the economy, a top priority must be shifting from export-led to innovation-led growth. This will require major investments in research and development, as well as support for startups in frontier industries such as AI, biotechnology, green energy and digital health care. It will also require continued industrial policies in key sectors (especially semiconductors, electric vehicles and batteries), together with regulatory streamlining. Revitalizing the underperforming service sector — especially through structural reform and digitalization — can unlock potential growth and help reduce inequality. Labor-market reform is also essential. Policymakers must tackle two features of South Korea's labor market that are undermining productivity and inclusion: its dual structure ('regular' workers enjoy more job security, better benefits and higher wages than their 'nonregular' counterparts) and its focus on seniority, rather than performance, in determining wages. To help offset demographic decline, policies aimed at boosting female labor-force participation, attracting skilled immigrants and retaining older workers are also needed. For example, the government could promote lifelong education and more flexible work arrangements. As for democratic reforms, South Korea's next president should focus on measures to strengthen the National Assembly's legislative capacity, uphold judicial independence and foster a civil society and media culture resilient to polarization and disinformation. The next administration might even consider pursuing constitutional reform, to allow presidents to serve up to two four-year terms (rather than one five-year term). Above all, the winner must demonstrate a commitment to restraint, institutional integrity and inclusive governance, especially by rejecting winner-takes-all politics and engaging constructively with the opposition. Finally, to strengthen South Korea's security posture, the next administration should reiterate its commitment to the alliance with the U.S., while seeking stronger security guarantees — possibly including deployment of nuclear weapons. It should maintain and deepen trilateral security cooperation with the U.S. and Japan, particularly on missile defense and intelligence. At the same time, South Korea should pursue greater strategic autonomy. While it must uphold all alliance commitments vis-a-vis China, it should limit participation in anti-China initiatives and maintain an open economic dialogue with the People's Republic. As for North Korea, any engagement should hinge on a credible, fundamental change in the regime's behavior. South Korea has shown a remarkable capacity for renewal in the past. With wise, unifying leadership that delivers a forward-looking vision that addresses economic vulnerabilities, bridges political divides and strengthens national security, this time will be no different. Lee Jong-Wha, professor of economics at Korea University, is a former chief economist at the Asian Development Bank and a former senior adviser for international economic affairs to the president of South Korea.
Reuters
5 days ago
- Business
- Reuters
The great boomer selloff may overwhelm US stocks
LONDON, May 23 (Reuters Breakingviews) - There's no shortage of theories around to explain the stalling of the U.S. stock market this year. Possible culprits include nosebleed valuation multiples, sky-high real interest rates, extreme policy uncertainty and the sustainability of the national debt. Yet the biggest threat to the four-decade-long run in American equities lies in the United States's superannuating population. Three decades ago, the infamous "market meltdown hypothesis" predicted disaster once the baby-boom generation hit retirement age. That fear didn't play out straight away, but the idea may be about to have its day. The alarmingly named theory postulated that the age structure of the U.S. population might constitute a time bomb for the stock market. Rising to prominence in the 1990s, it rested on a simple observation. The so-called baby-boom cohort, born between 1946 and 1964, is much larger than those before and after it – a pig passing through the body of a python, as one memorable metaphor put it. Economists warned that this demographic lump set the stage for a drama in two acts. In the first, the stock market would boom, as the postwar generation entered its prime earning years and ploughed its growing retirement savings into equities. In the second, however, the process would swing into reverse. The boomers would attempt to fund their sunset years by offloading their nest eggs onto a much smaller Generation X, those born between 1965 and 1980. Since the latter cohort is much smaller than the former, the story goes, the supply of stocks for sale would swamp demand. Cue the inevitable equity market crash that gave the market meltdown hypothesis its blood-curdling name. "The words 'Sell? Sell to whom?' might haunt the baby boomers in the next century", wrote investment guru Jeremy Siegel in the 1998 edition of his classic 'Stocks for the Long Run'. "Who are the buyers of the trillions of dollars of boomer assets?" The 1980s and 90s seemed to corroborate the first part of the story. Net purchases of financial assets by U.S. private pension funds grew from an average of less than $30 billion a year in the 1970s to more than $80 billion in the following decade and over $100 billion annually in the final 10 years of the millennium. The predicted uptick in valuation multiples duly followed. By 2000, the cyclically adjusted price-earnings ratio of U.S. stocks, a widely followed measure calculated by Yale University's Robert Shiller, had climbed from a low of under 7 in 1982 to over 44. In the 2000s, however, the disastrous denouement failed to materialise, and the market meltdown panic thus receded. The dotcom crash and subsequent recovery suggested that the late-90s run-up in equity valuations had more to do with irrational exuberance than demographics. The growth of defined contribution pension schemes, alongside the traditional defined benefit ones, provided a new source of demand for U.S. assets. The boomers themselves confounded expectations by staying healthier and working longer than previous generations, relaxing the need to liquidate their savings. Successive waves of supportive economic policies also helped. The globalisation of financial markets meant that instead of struggling to offload shares onto the piddling Generation X, U.S. boomers were greeted by a global savings glut desperate to invest in American companies. U.S. monetary and fiscal policy also became notably market-friendly, with low inflation and light taxes allowing increased leverage and higher margins. Even when crises did occur – above all in 2008 – policymakers had the market's back. The meltdown hypothesis was thus forgotten. In the era of bank bailouts and Federal Reserve money printing, the market melt-up hypothesis was a much more compelling bet. Yet the dynamics that worried the demographic doomsters of the 1990s remain alarmingly intact. Perhaps the retirement-age selloff was just deferred. Last year, even the youngest baby boomers turned 60, while the oldest are fast approaching their ninth decade. U.S. private pension funds have indeed turned from net buyers of financial assets to net sellers as a result. Older defined benefit plans, which guarantee a fixed income, made the switch more than a decade ago. Including defined contribution schemes, where only the amount paid in is fixed, net flows have been negative for most quarters since 2021, according to data from the Federal Reserve. The day of reckoning has finally arrived. The boomers' mass drawdown of their savings has begun. Meanwhile, the generation of U.S. savers available to absorb the boomers' selling is as puny as predicted. According to World Bank data, there were 5.5 working-age Americans for every over-65 in 1990. By 2023 that number had fallen below 4. It was based on just such a collapse in the ratio of demand and supply that the market meltdown hypothesis Cassandras warned that stocks could easily drop by a third when the boomers sold. That might turn out to be an underestimate. Since the 1990s, two new demographic factors have emerged which threaten to make a U.S. market meltdown even more painful than its original prophets predicted. The first relates to the inflows of international capital that helped bail out the early retiring boomers after the turn of the millennium. Much of the purchases came from countries that were teetering on the brink of a demographic cliff edge themselves. Europe, Japan and China were the biggest buyers by far. In all of them, the fall in the ratio of the working-age to the retired has been as steep as, or even steeper than, the equivalent shift in the United States. In other words, just as U.S. boomers are accelerating their selling, the foreign buyers who have been picking up the slack are now facing drawdowns into a dearth of demand themselves. The second new demographic factor may be more important still. The anomalous size of the American postwar generation conferred not just economic but domestic political clout too. For more than three decades, the boomers were the largest voting cohort. As late as 2010, they still made up more than a third of the U.S. electorate. Shortly after 2015, however, that dominance came to an end. Voters born after 1981, namely millennials and Generation Z, usurped the boomers. It would be facile to ascribe the successive political earthquakes that have rocked the U.S. since 2016 to that demographic shift alone – not least because over-65s have tended to favour President Donald Trump. Yet it is surely no coincidence that it was just as the boomers' electoral ascendancy was finally eclipsed that the political settlement in favour of globalisation went into precipitous decline. The generation of millennial Vice President JD Vance just doesn't have the same vested interest in the policies that staved off the boomers' initial date with destiny. 'Bull markets don't die of old age', the market adage goes. On this occasion, however, the market adage may be wrong. Follow @felixmwmartin, opens new tab on X
Telegraph
6 days ago
- Business
- Telegraph
The woker sex are turning Britain Left-wing
Let me begin by saying I'm a firm believer in gender equality. It's why I no longer consider myself a 'feminist', at least not in the modish, man-bashing, 21st century definition of the word. But we should not pretend that, for its countless benefits, female emancipation and the feminisation of our workforce have not come with costs, trade-offs and unintended consequences. Perhaps the most pertinent of these, to Nigel Farage at least, is our declining fertility rate. In 1970, the average woman was having 2.57 children; now it's 1.44, far short of the 2.1 required to maintain a stable population. Farage wants marriage tax breaks to incentivise family formation – good policy, though it'll cost a few bob, that will do next to nothing to alleviate our demographic woes. The pro-natalist Right hope women can be bribed into having more children; evidence from Hungary, South Korea and Japan tell a different, bleaker story. We handed women choice, and they opted to hang up the apron and shove the hoover in the cupboard. Where did they go? First, to higher education, where they make up 57 per cent of all students. And from there, into teaching, nursing, the creative arts, retail, hospitality, social work and local government – all sectors where women outnumber men. Every time their representation exceeds 50 per cent, we cheer. Where men still dominate, it's evidence of the 'patriarchy'. In few areas is the female presence, or influence, more pronounced than Human Resources, where around 75 per cent of professionals and a seriously bonkers 91 per cent of administrators are women. And the turkeys are voting for veganism: consciously or otherwise women are advancing policies which cater to their own needs, irrespective of the impact on the bottom line. It suits women to work flexibly – surveys show most want a hybrid model of two to three days from home – one of the practices most ardently advanced by HR teams. Just ask the estate agent who won a payout of more than £180,000 after her boss refused to let her leave work early to collect her daughter from nursery. It also suits women to advance such causes as 'equal pay for equal work', a quasi-Marxist concept which dictates that female cleaners, for instance, ought to receive the same remuneration as male warehouse workers. Yet none of these measures appears to be improving output – productivity in the public sector is no higher than it was in 1996, before the internet took off – nor are they making us happier. Britain has one of the largest HR sectors in the world and has just been crowned the work from home capital of Europe, yet we're suffering from a worklessness crisis driven by mental health problems. They are also allowing us to overlook the plight of men, who are more likely to struggle in education and work. When studies consistently show that women are more likely than men to align with progressive ideologies, support identity politics and advocate for censorship, their dominance in HR takes on greater significance. They are, indeed, the woker sex, and their ideology is shaping institutions and businesses across the country. Firms have become excessively politicised, with corporate policies no longer focused solely on profitability or efficiency but virtue signalling and adherence to the creed of 'diversity, equity and inclusion'. Consider, for instance, when Aviva CEO Amanda Blanc told MPs that there was no senior 'non-diverse' (white male) hire made at the company without her approval. Or when Alison Rose made climate change a 'central pillar' of her leadership at NatWest. It should come as no great shock that women are increasingly voting Left – especially given they are over-represented in the public sector and perhaps therefore predisposed to big statism. The real surprise is that this gender gap has taken so long to emerge. Three out of five Reform voters were male at the most recent general election. Since 2017, women have been more likely than men to vote Labour. In response, alarm has been mounting in the Conservative tent – which is presumably why Jeremy Hunt expanded 'free' childcare at a cost of £4 billion to the taxpayer. The party now has its fourth female leader, was able to define 'woman' long before Keir Starmer, and former Tory MP Bim Afolami was the first father in British parliamentary history to vote by proxy while on paternity leave. But none of it is sticking. Perhaps Farage will reverse the trend. But for now, Britain is becoming a Left-wing country, one woman at a time.
Telegraph
6 days ago
- Politics
- Telegraph
Labour is normalising our new age of mass migration
The Government is bound to be pleased with the new net migration statistics from the Office of National Statistics (ONS). Numbers have fallen by around 40 per cent, to 431,000 last year. After the media firestorm over his 'island of strangers' speech, Keir Starmer might well feel that he's fulfilled his promise to 'finally take back control' of the borders. That would be premature, however. Net migration at that level is still a six-figure increase on the levels before the 2016 Brexit referendum, which was viewed as intolerable then. At this rate, Britain is still receiving the equivalent of the population of Bristol every year and would have added an extra 2 million people by 2029. The gross, as opposed to net, figure shows that nearly 1 million immigrants have arrived in the last recorded year. If the Prime Minister really thinks that mass immigration caused 'incalculable' damage to Britain, then he must think that it is still unacceptably high. The population of foreign-born people in Britain is at a record high of 11.4 million, with Karl Williams of the Centre For Policy Studies pointing out that a staggering 1 in 25 of people in Britain arrived here in the last four years. The number of immigrants granted indefinite leave to remain has increased, meaning that the share of the population with foreign origins will grow. That is a historically unprecedented demographic shift, which is already reshaping the country culturally. With immigration flows that high, integration will also prove difficult, if not impossible. In addition, with the number of new houses built only enough for around half of the new arrivals, the cost of housing will continue to increase. In truth, this reduction is largely a result of restrictions brought in by Suella Braverman and Robert Jenrick in the dying days of the last Conservative government. Although there have been more restrictions floated by the current Labour Government in their Immigration White Paper, these have yet to be enacted, and probably won't be for months to come. Plans for a Youth Mobility Visa with the EU, especially if it allows dependents, could easily see numbers begin to creep back up. The Prime Minister therefore needs to bring in greater restrictions soon. He can take heart that these dramatic reductions were the result of sensible restrictions on some dependents and an increase in the skilled visa salary requirement. With the new ONS figures showing that 81,000 came here on work visas but were outnumbered by their 132,000 dependents, as well as large numbers coming on family visas or student visas, further restrictions could lower numbers without affecting how many workers despite the predictions of critics, the large drop in net migration hasn't produced the economic problems they foretold. Greater restrictions will also be necessary because the net migration figures for prior years are often subsequently revised upwards. In 2023 net migration turned out to be 22 per cent higher and in 2022 it was 44 per cent higher than initially calculated. If that proves to be the case again, then the Prime Minister's promise to reduce immigration 'significantly' will end up looking very hollow.
