1. AGING, ECONOMY & NATIONAL DEFENSE *the Pax Geriatrica

2. Range: 0 - 21 Population Age 65+ (%) Afghanistan2 Saudi Arabia2 Yemen2 Jordan3 Iraq3 Iran5 Egypt5 China8 United States12 Russia14 Japan21 Source: PRB 2007 World Population Data Sheet

3. Except for Japan, the world’s 15 oldest countries are all in Europe. The U.S. population is relatively “young” by European standards, with less than 13 percent age 65 or older, ranking as the 38 th oldest country. The aging of the baby-boom generation in the United States will push the proportion of older Americans to 20 percent by 2030; it will still be lower than in most Western European countries. The older share of the population is expected to more than double between 2000 and 2030 in Asia and Latin America and the Caribbean. Aging is occurring more slowly in sub-Saharan Africa, where relatively high birth rates are keeping the population “young.”

6. Number of Years for Percent of Population Age 65 or Older to Rise from 7% to 14% More developed countriesLess developed countries Speed of Population Aging in Selected Countries

7. Why is the Developed World Growing Older? Decreased birthrates Increased life expectancy

8. Fertility Rate China –6.38 in 1968 –1.92 in 1992 –1.85 in 2004 –1.75 in 2007 –1.70 in 2050 United States –2.46 in 1968 –2.05 in 1992 –2.04 in 2004 –2.09 in 2007 –2.19 in 2050

9. Life Expectancy (US) The age for social security (65) was set in 1935 12 years was the average life expectancy after retirement. (77 male) 1997 life expectancy 80/84 2070 life expectancy 83/89 Retirement age would be 72 if life expectancy was indexed based on 1935

10. Percent of Elderly (65+) in China’s Population, 1950-2050 Aging in China Source: World Population Prospects: The 2004 Revision (2005).

11. Costs of Aging When workforce shrinks so does GDP –Japan & Russia workforce will decline 34% by 2050 –China 3% Elderly tend to be more conservative –Less entrepreneurship? Reduced productivity –Reduced savings? Higher interest rates

12. Costs of aging (cont) Pressure on Government resources –Retirement/health care costs Pay as you go retirement systems –Current workers support current retirees By 2050 the US will spend 20% GDP on social programs for the elderly –Government Revenues (tax) only supply 18% GDP

13. Implications of Aging The United States will experience a significant increase in population over age 65. The United States will still be in better shape than most of the world (including our chief rival China) Aging populations will necessitate massive outlays of government funds. Funding this outlay will likely result in retrenchment of overseas obligations. Elder care will shift the paradigm from compassion to national security

14. United States Youngest of all G-8 nations Highest fertility rate Highest immigration rate Working age populations are on the decline except for US which predicted to increase 31% by 2050.

15. China 2050 the median age will be 45 Dependency rate rises from 10:1 to 2.5:1 in 2050 Unprepared to pay the bill –80% of households have less than 1 year of savings –75% of workers have no pension coverage One child law and urbanization have destroyed traditional elder care structures

16. PAX AMERICANA GERIATRICA Population aging will ensure American dominance into the 21st century –Massive costs of elder care combined with economic slowdown will inhibit increased military spending –Military will have to choose between personnel and R&D costs –US is aging to lesser a extent and is better prepared to absorb the shock States will have to crowd out military spending for elder care –This is already happening in Japan

17. Some bad news No great power can overtake us but crowding out of military spending will possibly mean the end of coalition actions Rising costs will not allow to maintain our current level of power projection

18. The War on Terror In 2000 45% of all citizens in middle east were 15-29 years old –Unemployment higher than 26% By 2030 these youth bulges should subside and help bring stability. Aging is the key to victory?

19. DEMOGRAPHIC ISSUES WILL BE THE KEY DRIVERS OF THE ECONOMY AND NATIONAL DEFENSE

20. Questions?