"ALL CAPS IN DEFENSE OF LIBERTY IS NO VICE."

Saturday, February 07, 2015

DEMOGRAPHICS AND PERSONAL RETIREMENT ACCOUNTS - THEY'RE WORKING IN 30 COUNTRIES

DAN MITCHELL:
It is widely believed that aging populations and falling birth rates represent one of biggest global challenges for long-term economic stability. How can a nation prosper, after all, if there are more and more old people over time and fewer and fewer workers? Don’t these demographic changes put every-growing fiscal burdens on a shrinking workforce to support the elderly, leading to crippling tax burdens and/or enormous levels of debt? In most cases, there are no good answers to those questions. So it is quite likely that many nations will face serious economic and fiscal challenge… Here are some charts showing the age profile of the world’s population in both 1990 and 2100. As you can see, demographic changes are turning population pyramids into population cylinders.  
 virtually every industrialized nation is undergoing demographic changes that will produce some very painful fiscal consequences. 
But not all nations are in trouble. 
…there are jurisdictions, such as Singapore and Hong Kong that are in reasonably good shape even though their populations rank among the nations with the lowest levels of fertility and longest life expectancies. And other nations, including Sweden, Australia, Switzerland, and the Netherlands, have much smaller long-run challenges than other industrialized countries with similar demographic profiles. ...
... “funded” accounts already exist in nations such as Australia, ChileSweden, and the Netherlands....there are now about 30 nations that have implemented this critical reform… 
... While trillions of dollars are needed to finance the transition to a system of personal accounts, it’s also true that trillions of dollars are needed to bail out the current system. 
…The real question is figuring out the best way to climb out of that hole. From a long-term fiscal and economic perspective, personal accounts are the more attractive option.... 
... To elaborate, it’s better to somehow find $5 trillion over several decades to finance the shift to personal retirement accounts than it is to somehow find $30 trillion over a longer period of time to bail out the current system.



More here. 


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