Peter Zeihan is an American Geopolitical strategist. Here is a summary of his explanation about how the number of humans on the planet "stacks up" (demographics) to form a pyramid shape on a population diagram.
So, normally there are very few retirees at the top of the stack, and a lot of children on the bottom (everyone else stacked up in between) . But after world war 2, health improved and child mortality reduced . This has turned the pyramid diagram for the UK in to more of a chimney shape. This is the balanced economic structure (balance between consumption & production of goods & services) that is familiar to us these past few decades.
When there is a pyramid shape (meaning more younger people at the bottom), prices are likely to go up because the country cannot produce all the stuff it wants to consume , and also probably has to import goods & services. This is therefore an inflationary situation.
Here is the UK chimney shape (go to ONS , scroll down to Section 6, Fig 7):
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| UK population pyramid (source ONS) |
Main population groups in developed counties
The main consumer group with most economic activity is people who are under 46years. Their activities include things like having children, buying cars and houses, go on family holidays.
The next age group up to 65yrs are experienced and productive, and preparing for retirement - reducing expenses, paying off mortgages, saving for the retirement. Lots of money and with Incomes are often the highest they will ever be. Many of this group will buy stocks & bonds which drives the investment part of the economic equation.
After 65yrs most people retire and the consumption and economic activity decreases.
Problems with population numbers
As birth rates drops there are fewer babies so the bottom starts to narrow. As more people survive to old age the top gets wider and wider until there is an inverted pyramid. The stellariasacademy website shows that Italy is getting a bit top heavy.
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| Italy population pyramid 2021(stellariasacademy) |
As a country starts to run out of people below 40, the older experienced very productive people and those approaching retirement who tend to have more money, become the dominant group. You then have a very productive workforce who cannot consume everything that they have built.
The shape of the world
- Base pyramid shape - Meaning more children in countries early in their industrial period. Includes much of the Arab world, and sub Saharan Africa, and latin America, and South Asia.
- Pyramid starts to open up - means developed countries who have kept birth rates stable eg USA,France Also, countries in early stages of advanced industry such as India, Turkey, Brazil, Mexico.
- Inverted pyramid - Examples are Italy, Germany, Thailand, Korea. In the current decade, these countries no longer have enough people having children. so as people reach very old age countries risk having no consumption, no production , and no investment = no economy.