Not creating more old people is not the answer to poorly structured pension and labor policies

A commenter on google plus to an article that I wrote.

The article I wrote indicated that people have the wrong intuition about aging, longevity and economics.

The commenter responded with the following wrong intuition about aging.

The assumption that if (for example) lifespan is increased 10 or 20 years, that the productive period of life will be similarly extended. If what happens is that you get too weak to work at 75, just like now, and then instead of having 5 years of bad quality of life, you have 15 – that drags down the economy. And at the current time, there’s little evidence that any major increases in longevity will include major increases in productive lifespan as well.

For a worked example, see the current problems with the graying population of Japan, where there’s an increasing supply of elderly who are retired

The economic problems related to social programs being structured incorrectly is not something that needs more life extension to cause insolvency. The existing amounts of longevity have already exposed the problems with the old social contracts and policies. Countries like Canada have already switched to solvent policy systems by increasing the time to full retirement benefits by adding about 3 to 4 months per year to the age of full retirement. Japan’s main economic problem is that they have too few children and no immigration. Russia has similar demographic and economic problems of a shrinking population, but they do not have the increasing longevity of Japan. So how does the theory that longevity causes financial doom fit with Russia where people are living shorter lives work. Where Russia has economic problems from a shrinking population. Fewer kids and shorter lives. Should not the shorter lives be making the Russian economy stronger ? Also, clearly healthspan has been extended from the 19th century when life expectancy was about 40, because now there are many healthy and productive people well into their 60s.

The World Economic Forum examined the global issue of aging populations in an 148 page 2012 study.

Another reason for an emphasis on aging today is that “doomsday scenarios” abound. These alarmist views typically assume a world of static policy and institutions, continuing trends involving low fertility, and constant age-specific behavior and labor outcomes. The resulting scenarios yield stark and shocking images of workforce shortages, asset market meltdowns, economic growth slowdowns, the financial collapse of pension and healthcare systems, and mass loneliness and insecurity.

Such tales are strongly reminiscent of the work by Paul Ehrlich and the Club of Rome in the late 1960s, which predicted mass starvation and human misery in the 1970s and 1980s as a result of rapid population growth, or what was termed “the population bomb”. But lessons can be learned from this experience. Although the world population did double from 1960 to 2000 (from 3 billion to 6 billion), at the same time per capita income increased by 115%, life expectancy rose by more than 15 years, and literacy shot up as primary school enrollments became nearly universal in many.

Demographic forecasts without radical life extension

• At the global level, the share of those 60-plus has risen from only 8% of world population (200 million people) in 1950 to around 11% (760 million) in 2011, with the dramatic increase still ahead as those 60-plus are expected to reach 22% (2 billion) by 2050.

• At the global level, the share of those 80-plus has edged up from 0.6% of world population in 1950 (15 million) to around 1.6% of world population (110 million) in 2011, and is expected to reach 4% (400 million) by 2050.

• The global population is projected to increase 3.7 times from 1950 to 2050, but the number of 60-plus will increase by a factor of nearly 10, and the 80-plus by a factor of 26.

A recent econometric study (referenced in Chapter 6 of the World Econonic Forum report) shows that increases in older-age dependency do not significantly impede the growth of income per capita, unlike increases in youth dependency. These results support the view that the negative impulse that high fertility conveys to economic growth cannot be offset by behavioural and institutional changes, unlike the negative impulse of increased
longevity, which can be offset by changes in behaviour and policy.

Moreover, when people expect to live longer, they have an incentive to save more for the years after they are no longer working. In economic terms, savings translates into investment, which fuels the accumulation of physical and human capital and technological progress, the classic drivers of economic growth.

Older people do not need to be frail

Population ageing also signals the advent of a tidal wave of chronic diseases (non-communicable diseases, or NCDs), which are currently responsible for roughly 60% of all deaths and nearly half of the loss of actual and effective life years owing to disability and death. They strike a wide segment of the global population, from high-income to low-income countries, and from young to old. The most important ones are cardiovascular disease, cancer, chronic respiratory disease, diabetes and mental health conditions (including Alzheimer’s). Many of the leading chronic diseases share four modifiable risk factors – tobacco use, physical inactivity, unhealthy diets and the harmful use of alcohol – and one non-modifiable risk factor, which is age.

Osteoporosis – bone less mainly in women as they age is a condition that can be treated and avoided.

Sarcopenia is the common but not universal condition of muscle loss as we age. Sarcopenia needs to be treated more aggressively . I believe that myostatin inhibitors should be further developed and used. Selective androgen receptor modulators (SARMs) [safer steroids] are also in late stage clinical trials for sarcopenia.

Sarcopenia and cachexia are significant medical problems with a high disease-related burden in cardiovascular illness. Muscle wasting and weight loss are very frequent particularly in chronic heart failure and they relate to poor prognosis. Although clinically largely underestimated, the fields of cachexia and sarcopenia are of great relevance to cardiologists. In cachexia and sarcopenia a significant number of research publications related to basic science questions of muscle wasting and lipolysis were published between 2010 and 2012. Recently, the two processes of muscle wasting and lipolysis were found to be closely linked. Treatment research in pre-clinical models involves studies on a number of different therapeutic entities, including ghrelin, selective androgen receptor modulators (SARMs), as well as drugs targeting myostatin or melanocortin-4. In the human setting, studies using enobosarm (a SARM) and anamorelin (ghrelin) are in phase III. The last 3 years have seen significant efforts to define the field using consensus statements. In the future, these definitions should also be considered for guidelines and treatment trials in cardiovascular medicine.

From the time you are born to around the time you turn 30, your muscles grow larger and stronger. But at some point in your 30s, you begin to lose muscle mass and function, a condition known as age-related sarcopenia or sarcopenia with aging. People who are physically inactive can lose as much as 3% to 5% of their muscle mass per decade after age 30. Even if you are active, you will still experience some muscle loss.

Although there is no generally accepted test or specific level of muscle mass for sarcopenia diagnosis, any loss of muscle mass is of consequence, because loss of muscle means loss of strength and mobility. Sarcopenia typically accelerates around age 75 — although it may happen in people age 65 or 80 — and is a factor in the occurrence of frailty and the likelihood of falls and fractures in older adults.

Although drug therapy is not the preferred treatment for sarcopenia, a few medications are under investigation. They include:

Urocortin II. This peptide has been shown to stimulate the release of a hormone called adrenocoticotropic hormone (ACTH) from the pituitary gland. Intravenous urocortin II has been shown to prevent muscle atrophy from being in a cast or taking certain medications; it has also been shown to cause muscle growth in healthy rats. But its use for building muscle mass in humans has not been studied and is not recommended.

Hormone Replacement Therapy (HRT). When a woman’s production of hormones is diminished at menopause, hormone replacement therapy has been shown to increase lean body mass, reduce abdominal fat short-term, and prevent bone loss. However, in recent years there has been controversy surrounding the use of HRT due to increased risk of certain cancers and other serious health problems among HRT users.

Other treatments under investigation for sarcopenia include testosterone supplementation, growth hormone supplementation, and medication for treatment of metabolic syndrome (insulin-resistance, obesity, hypertension, etc.). If found useful, all of these would complement the effects of resistance exercise, not replace them

Pensions – Math formulas that are not dependent upon demographic ratios

Population ageing also raises questions about the viability of various types of pension systems. Publicly funded pay-as-you-go (PAYG) pension systems face serious issues, as the number of beneficiaries will increase while the number of contributors will decline. Fully funded systems, which lie at the other end of the spectrum of pension options, are not necessarily a panacea because they need a long time before they can deliver substantial pensions. For the baby boomers who have not saved so far, it is simply too late to accumulate sufficient funds. When such systems are voluntary, they suffer from procrastination; at the same time, mandatory funded systems can be prone to vexing issues of governance, especially because there are so many options for fund management and the returns can be highly uncertain. A mix of PAYG and fully funded systems may be the solution to minimize risk. Some countries, such as Germany and Sweden, have successfully solved their pension problems by effectively converting their defined benefit systems into a special form of defined contribution systems, where actual pensions depend on the ratio of workers to retirees, augmented by a compensating funded system.

The Swedish system relies explicitly on “national defined contribution” accounts. In Germany, the defined benefit formula was amended by a “sustainability factor” that reduces the annual pension increase in proportion to population ageing. Other countries have mimicked both types of pension reform. Switzerland has taken the unusual step of allowing a pension fund to be established for a child when he or she is born. Efforts to raise the statutory retirement age are also under way in most developed countries, although they are often highly
contested and accompanied by popular protests

Japan has few children, no immigration and policies that encouraged early retirement

In Japan, the government has been wrestling with these issues because its public pension system still uses an earnings test, which encourages early retirement and part-time work and thus deprives the country of a capable and willing older workforce. Compounding this problem is the predominance of mandatory retirement practices, typically at age 60. In addition, Japanese workers over age 45 seeking new employment are often deterred by maximum hiring ages. However, workers in general still have a strong motivation to continue working after age 60, according to a survey by Japan’s Ministry of Health, Labour and Welfare.

To turn the situation around, the Japanese government has started to raise the pension-eligible age from 60 to 65 and to require employers to extend employment to age 65. These steps have had a significant impact, with the labor force participation rate for men aged 60 to 64 increasing from 71% in 2006 to 77% in 2009 – considerably higher than in Australia, Canada and the United States

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