The Changing Demographic, Social, and Cultural Environment

Age Matters. The social, cultural, and economic environment will be dramatically altered by demography. Demographic changes in the Western world and parts of Asia mean that aging populations will gray the face of Europe, Canada, China, and Japan.15 The financial warning bells are already being sounded. Even before the huge government deficits of 2009 and beyond that Western nations have been digging themselves out from under, Standard & Poor’s predicted that the average net government debt-to-GDP ratio for industrialized nations will increase from 33% in 2005 to 180% by 2050, due to rising pension and health care costs,16 if changes are not undertaken. In 2013 and 2016 they reported modest progress had been made on this debt challenge, but the problems and related societal challenges have certainly not gone away.

Although the United States will age less quickly, Europe and Japan will face a dependency crisis of senior citizens requiring medical care and pension support. By 2050, the median age in the United States is projected to be 41 versus approximately 50 in Europe. The United States will keep itself younger than Europe through immigration and a birth rate that is close to replacement level,18 though even here growth assumptions have come under question as the rate of immigration has declined in the aftermath of the economic slowdown and questions around emigration policies remain highly politicized. Even with this influx, if nothing changes, it is estimated the U.S. governmental debt-to-GDP ratio will grow to 472% of GDP by 2050, due mainly to pension and health care costs.19 Aging European countries will be around 300 –400% of GDP, despite older populations, due to more cost- efficient approaches in these areas. On the high side, Japan is predicted to reach 729%. The European Union’s population is projected to peak in 2025 at around 470 million and then begin to decline, while the United States reaches 335 million in 2020 and continues to grow thereafter to 398 million in 2050. The decline in the European Union would occur much earlier if it were not for immigration.

Throughout the world, fertility rates are falling and falling fast.20 In 1974, only 24 countries had fertility rates below replacement levels. By 2009, more than 70 countries had rates below 2.1. In some countries, the swings are dramatic. The fertility rate in Iran dropped from 7 in 1984 to 1.9 in 2009, a huge shift.