Idea: How demographic bonus imposes risk on next generations through new technologies

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Purpose:

This is my thought about demographic dividends in terms of policy making. I know it has many fault and gap. So this post can be used as a ruler to compare with existing theories and confirm how I was stupid at this point in the future.

 

Summary:

First stage of demographic dividend makes economical growth due to larger number of workforce and less cost of social securities. The second stage is inverse of the trend, lower workforce and bigger social securities weaken its economical growth.

On top of that, I think the negative effect at the second stage is more serious.
The baby boomers can dominates political concerns which suit to their own generation. It can impose risk on future generations who cannot determine their own environment, by new technologies that separate period of profit and loss.

I assume that such technologies are nuclear electric power generation and fossil fuel. But when you see things as how extend profitable time until receiving risk, I could categorize financial deficit, unsustainable pensions, and immigrants as such innovations.

 

Mechanism:

Imbalance of chain of concern at a election:

Note that I wrapped up a generation in 30 years bin, and I assumed that each generation regard only pre/post one generation as common destiny, meaning they concern only their parents and children generations.

If number of generations are flat at a election, the concern equally overlap throughout generations.
impose-cost-nextgen2_concern-chain1_same1
However, if a generation stand out in number, political concerns are attracted to the generation.
impose-cost-nextgen2_concern-chain2_bonus1
Obviously, unborn future generations can’t affect on election. They only receive the result. So if they are not regarded as common destiny by anyone, their benefit will be neglected.

 

Effect of having children and inheritance:

But the model above is too simple. I added other factors to the chart.

If parent generation has children, their concern to the future generation becomes more strong. It makes the game infinite where betrayal is not rational.

impose-cost-nextgen2_concern-chain4_long-chain1

In contrast, if many parent have no children with lower birth rate, chain of concern becomes more weak. It makes game finite where betrayal is rational.

In this context, betrayal means forcing risk to future generation, earning only profit at current generation.
impose-cost-nextgen2_concern-chain3_weak-chain1

Even if parents have children, when they can give inheritance to their children, parents doesn’t need concern other children in the future. I want to call it “capsulation of concern”.
This effect differs between societies. If a society has less tax on inheritance and riches can affect politics, the effect will be stronger.

 

Effect of new technologies:

Even if future generations are neglected from current political concern, they are safe unless there is no technologies to separate timing from earning profit and subjected to risk.
In relatively recent days compared to human history, such technologies seem to be used in the world, as fossil fuel and nuclear energy without waste material neutralization technique.

But in regard to the viewpoint, financial deficit, unsustainable pensions, or immigrants may be counted as the same type of innovation.
Requirement for the technologies is timespan. The technologies should delay its materialization of risk for more than one generation, 30 years, for example.
impose-cost-nextgen1_population-profitcost3_text2

 

Ideas based on the model:

Voice of unborn generations:

Of course, many technologies usually have actual effect on efficiency in economics. But if future generations hear that you must manage nuclear waste disposal for hundred thousand years , would they agree with that?
I don’t say it as moral lesson. How can I model the hypothetical voices?

 

Limiting policies to take responsibility in one generation:

There would be an assessment for policies to wrap its effect in our own generation so that future generations will not receive unfair costs.

 

Data that will support this thought:

  • Correlation between demographic dividend and policy to impose risk on future generation.
  • Data set for timely gap of profit and loss of each technology.
  • Concern for future generation in a election.
  • Analysis on how a stadium of Tokyo olympic was allowed to build with huge budget more than three times as expensive as previously the most expensive stadium in Japan.
  • Idea: How demographic bonus imposes risk on next generations through new technologies

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