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The Future of Low-Birthrate Populations.

In a real sense, this volume is a logical extension of the author's earlier book |2~, which warned that continued population increase in industrialized countries would threaten their quality of life. This book is designed to examine the consequences of the fact that "... fertility in |these~ countries has begun to follow the course we advocated ..." (xiii). Day argues that these fertility changes and their demographic consequences (aging, potential population decline) are inevitable and that what are needed are both policies to adjust to them and an appreciation of their inherent benefits.

The book begins with a review of the current demographic situation in the industrialized world and follows with a chapter on the probable future course of fertility and mortality. The following two chapters are those which will be of greatest interest to economists, dealing with the financing and provision of health and related care for the elderly and the economic and labor market aspects of the new demography. The final three chapters deal with demographic and non-demographic policy alternatives as well as "compensations" (environment and others) associated with the allegedly immutable change. The geographical focus is somewhat variable, but is noteworthy for its exclusion of Japan and other non-European populations with an apparently similar demographic present and future.

Day makes the important point that concern with the macroeconomic and social effects of population aging must recognize that chronological age is, in and of

itself, not a valid marker for potential economic, health or behavioral problems. Yet, until something other than chronological age can be developed as an alternative marker for pension or (in the U.S. context) publicly funded health insurance eligibility, the prospective effects of population aging will continue to be denominated in the context of chronological age.

Throughout the book, Day takes a decidedly long-run perspective, which, in the context of trying to provide an alternative to the "alarmist" point of view is quite appropriate. The inherent difficulty in taking this position, though, in a work which does focus on policy questions, is the basic incongruity of this time horizon with the much shorter one which is at least now so predominate among those who develop and implement policy. It is comparatively easy for the academic observer to argue for long-term gain at the expense of short-term pain; it is much more difficult to be retained in elective office by so advocating.

Day's treatment of the direct costs of a larger older population focuses largely on health and to a lesser extent on "custodial" care; the economist may be disappointed by his minimal treatment of pension costs on the grounds that these are "uniquely different", apparently meaning that Day feels that it is operationally difficult to fund them entirely from private savings as might be socially or economically desirable. Day suggests that public pensions could be better funded by their complete incorporation into the general income tax structure, so that a higher share of social security income for the affluent would be subject to taxation. The net effect of this would be a redistribution from the better-off toward the worse-off segment of the pensioner class. In this context, one might recall the resistance of the organized lobby for the U.S. elderly to a similar suggestion with regard to the Medicare program a few years ago.

Day recognizes the role which health care costs play in the economic base of an aging population and raises the real concern with the prolongation of life accompanied by increasing morbidity and fraility. Cost reduction through decreased reliance on high technology intervention for the terminally ill as well as adoption of some sort of care rationing are endorsed here. To these is added the potential of transfer of resources from military procurement, "superfluous and pretentious" road systems and (for the U.S.), the savings and loan bailout. Ultimately, according to Day, the matter comes down to reordering the priorities of those with the power to set and act upon them.

Day analyzes the economic aspects of population aging in the contexts of the relative size of the labor force, incentives for investment, inflation, and the outlook for employment. He dismisses concerns about an inadequate supply of labor by arguing that flexibility and greater reliance on "marginal" workers could alleviate any shortages; lacking in the discussion is any treatment of the "pay-as-you-go" mechanism inherent in the public funding of pensions and health care. In light of the increase in the absolute and relative size of the older population and in light of the aging of the older population itself, such an omission is far from trivial. The treatment of the other three issues is quite short and may generally be characterized as concluding that the role of demographic change is minimal and that institutional change and flexibility can adequately deal with whatever problems might arise.

Day devotes two chapters to policy considerations as a means of coping with the economic and noneconomic difficulties inherent in the new demographic reality. Theoretically, increases in fertility, mortality and immigration would each act to retard the process of population aging, but, according to Day, at considerable ethical and social costs. Efforts to increase fertility by changing the parameters in which fertility decisions are made are dismissed for the reason that he does not accept the rational-decision making economic model of fertility. Day notes that extending assistance to parents is supportable for reasons of social justice, but such assistance would be unlikely to have more than a marginal impact on fertility. Immigration is viewed as having probable short run ameliorating labor force consequences, but in the longer run, Day views the adverse social and personal aspects of increased immigration as being of greater importance.

The nondemographic policies are undoubtedly well-intentioned, but rather utopian in nature. Day presents three "ultimate" goals (enabling the aged to care for themselves more effectively; enabling them to live in dignity as participating members of society; developing for all elements of personality, lifestyle, social organization and physical layout to facilitate both personal "coping" and the willingness to assist others). This could be accomplished by the attainment of "intermediate" goals such as reduced automobile usage; rebuilding cities to a more human scale; development of additional social services; less reliance of chronological age as a social/economic marker; development of personality traits associated with coping and caring; and, greater "equity" in the distribution of income and wealth. Day does recognize that possible macroeconomic effects of redistribution through more progressive taxation, but ultimately comes down in favor of the steady state economy as advocated by Herman Daly |1~ and others.

In sum, Day's work can be viewed as a reasonably well balanced and quite well written summary of some of the broad issues facing aging societies. The economist will frequently find Day's dismissal of economic theories and constructs to be irritating and ill-founded. Certainly, analyses of these issues from a more rigorous economic perspective are readily available (for example, Schulz, Borowski and Crown |3~) and should be consulted first by the economist with an interest in this question. Day's work is, however, a useful reference for the reader who wishes to gain an understanding of the consequences of aggregate aging and some strategies for dealing with these consequences from a broader social science perspective. It is regrettable that the price of this short volume may preclude many interested economists from doing so.


1. Daly, Herman E. Steady-State Economics. San Francisco: W. H. Freeman, 1977.

2. Day, Lincoln H. and Alice T. Day. Too Many Americans. Boston: Houghton Mifflin, 1964.

3. Schulz, James H., Allan Borowski, and William H. Crown. Economics of Population Aging: The "Graying" of Australia, Japan and the United States. New York: Auburn House, 1991.
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Author:Serow, William J.
Publication:Southern Economic Journal
Article Type:Book Review
Date:Oct 1, 1993
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