Or even Sharks and Jets, but important nonetheless.
I've forgotten who first explained the central truth of demographics to me but in a nutshell: you can't have more native-born 25-year-olds in 24 years than you have 1-year-olds today.
This is something Frau Merkel had already incorporated into her political weltanschauung when the news Germany reached a lower birthrate than Japan hit the press earlier this year.
No wonder they call it "Old Europe".
From FT Alphaville:
Kill the old, Piketty and demographics edition
Morgan Stanley are revisiting the idea that the world has seen its peak working-age population growth come and go.
They’re also, we think, revisiting a favourite slogan of ours even if they can’t say it explicitly:
The two key cohorts of the labour force – the prime working age population and the aged – are likely to find themselves in a political battle. As the ranks of the aged swell, their political clout will increase significantly. The prime working age population will not have quite the same ability to grow its influence through numbers. However, what they will have on their side is a declining supply of a commodity – labour – whose price is likely to be on an upward trend. The compensation for the loss of political power to the aged may thus be something that workers counter-balance by seeking higher wages, given that they will not be able to withhold their own supply of labour, i.e., they will not be able to quit their jobs.
This is a fight between ages, not classes. Or, to skip the faffing, kill the old.
From MS again, with our emphasis, with more on why the change in demographics might produce inflation, reduce inequality and increase wages:
1. Could demographics reverse the 35-year-old trend of falling real interest rates? We argue that they could. And it is not because ageing is going to be deflationary. In fact, we believe that ageing could produce inflation rather than deflation (see Juselius and Takats, BIS 2015).
The equilibrium real interest rate is likely to rise because savings will fall more than investment due to demographic headwinds.
Why? We see four reasons: i) China’s demographics will lead to lower savings and a smaller current account surplus. This will drive petro-current accounts lower too. This process is already under way and has further to go; ii) Inequality will fall and this means income growth is more likely to go into spending than saving; iii) The old in advanced economies show significant inertia when it comes to housing, so that further residential investment will have to be undertaken to house the young and particularly the millennials; and iv) A higher capital/labour ratio should mean that investment is better supported via the corporate response to rising wages....MUCH MORE
