Your Macroeconomic Edge

Chapter 4

Cutting Up America’s Credit Card

International Demographic Trends

America is far from the fastest-aging rich nation. Almost every European country has for decades had a fertility rate well below the 2.05 children per woman replacement rate threshold and has a median age well above ours. As other countries become more prosperous, they are graying, too. Japan’s fertility rate, for example, is even lower than Europe’s, and Japan essentially prohibits immigration, so it cannot rebuild its age-depleted workforce.

For the past several decades, much of the dynamism in the world economy came from East and South Asia. As China and India opened their economies to trade—that is, to the disciplining forces of capitalist competition—their growth ...