The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival
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- Create Date：2021-07-27 09:53:00
- Update Date：2025-09-06
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- Author：Charles Goodhart
- ISBN：3030426564
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Summary
This original and panoramic book proposes that the underlying forces of demography and globalisation will shortly reverse three multi-decade global trends – it will raise inflation and interest rates， but lead to a pullback in inequality。 “Whatever the future holds”， the authors argue， “it will be nothing like the past”。 Deflationary headwinds over the last three decades have been primarily due to an enormous surge in the world’s available labour supply， owing to very favourable demographic trends and the entry of China and Eastern Europe into the world’s trading system。 This book demonstrates how these demographic trends are on the point of reversing sharply， coinciding with a retreat from globalisation。 The result？ Ageing can be expected to raise inflation and interest rates， bringing a slew of problems for an over-indebted world economy， but is also anticipated to increase the share of labour， so that inequality falls。 Covering many social and political factors， as well as those that are more purely macroeconomic， the authors address topics including ageing， dementia， inequality， populism， retirement and debt finance， among others。This book will be of interest and understandable toanyone with an interest on where the world’s economy may be going。
Reviews
Vidar
，
Interesting line of arguments against the mainstream view that AI and robots will make most humans useless economically。 Here the argument is that the world will have a lot more people in need of care and not enough active people to do all the jobs。 The result is wage inflation and a reversal of the wealth gap that has opened up lately。 It would seem that the future will probably end up somewhere between the two extremes ;）
Peter Fox
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Charles Goodhart has taken a subject matter that is and can be complicated， and broken it down into elements of understandable and digestible prose。 The Great Demographic Reversal， kept me engaged at all times and didn't encourage my mind to think of anything else beyond the concepts and constructs that Goodhart was wanting to disseminate to the general public。In general， the book looks at the aging population issue with the greatest lack of bias or overt social or political agenda that i have s Charles Goodhart has taken a subject matter that is and can be complicated， and broken it down into elements of understandable and digestible prose。 The Great Demographic Reversal， kept me engaged at all times and didn't encourage my mind to think of anything else beyond the concepts and constructs that Goodhart was wanting to disseminate to the general public。In general， the book looks at the aging population issue with the greatest lack of bias or overt social or political agenda that i have seen in comparable styles of quasi-academic material。Goodhart takes the data and research which have been generated by either him or his peers， and shares it with arm chair observer。 This does not mean that punches are pulled at any time in the book， but actual looks at the socio-economic and socio-political issues that hold back or encourage different societies， countries， continents and economies to react and develop the way they have。In reality， i should read this book again in a month or two or after i have read some more material on the developing economic changes and some core economic theories。 I have no doubt that there is material in the book that i thought i understood， but in reality i have only glossed over it due to its complexity and my lack of a deeper comprehension。The world has pivoted upon the point of Covid， and the demographic reversal discussed in this book will use it as a catalyst for a succinct and definable change in future trends。I would recommend this book to anyone who has an interest in globalisation， economics， social-economy and or international relations， because this subject matter will be a critical influencer in those fields for the rest of the century。 。。。more
Marcus Viitamäki
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Couple of the chapters and argumenting are poor。 But majority is great。 Timely and well researched。 Will need to revisit the topics consistently。
Michael Knolla
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A very interesting read， though it’s strength lays in its laying out of its concepts。 It’s analysis of broader implications runs into the inevitable issues of feedback loops though。 And it’s handling of counter arguments while not facile is less convincing than the rest。 Still definitely worth a read， especially with all the interest the subject is attracting。
Eduardo Telles
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Livro que aborda uma tese polêmica sobre os efeitos do envelhecimento e encolhimento da população。Segundo os autores， a redução da população economicamente ativa nas principais economias do mundo somadas ao esgotamento do excedente de mão de obra chinês pressionarao o mercado de trabalho e o crescimento。 O fenômeno reverterá uma tendência de menor poder de barganha do trabalho， implicando em aumento dos salários e inflação， alem da queda da desigualdade dentro dos países。 O aumento do salário es Livro que aborda uma tese polêmica sobre os efeitos do envelhecimento e encolhimento da população。Segundo os autores， a redução da população economicamente ativa nas principais economias do mundo somadas ao esgotamento do excedente de mão de obra chinês pressionarao o mercado de trabalho e o crescimento。 O fenômeno reverterá uma tendência de menor poder de barganha do trabalho， implicando em aumento dos salários e inflação， alem da queda da desigualdade dentro dos países。 O aumento do salário estimulará as empresas a investir， o que somado a uma população mais idosa （consequentemente， menos poupadora） alterará o equilíbrio entre investimento e poupança， causando subida dos juros。Para validar essa tese， o livro explora o caso do Japão， país em que o envelhecimento e redução da população ativa é mais severo e que não teve os resultados esperados。 Argumenta que a inflação anemica e juros negativos são motivados pela migração da manufatura para países em desenvolvimento， o que fez com que o mercado de trabalho não tivesse super aquecimento， causando ainda um deslocamento da mão de obra japonesa para ativadades com maior produtividade。 Esse movimento não será possível no futuro para os demais países， uma vez que o envelhecimento é uma situação que maioria dos países enfrentará。 Por fim， colocam alguns fatores que poderiam suavizar a tendência esperada， como o aumento da automação e maior utilização da mão de obra da Índia e dos países africanos。Caso estejam certos， um mundo com， juros e inflação mais altos， menos crescimento e desigualdade nos espera。Particularmente， questiono a expectativa de aumento de investimento e queda na poupança。 Acho que em mundo com perspectivas de menor crescimento é provável o arrefecimento da demanda por novos projetos。 E é provável que uma população com salários mais altos e pensões menos vantajosas aumente sua poupança privada。 。。。more
Daniel
，
I really like this style of writing。 Each chapter develops core points or responds to potential criticisms。 and they periodically just say "we took this Figure from Author X" or "go read Author Y for the full story" and this keeps the argumentation ticking over。 I'll try and summarise， would love comments on what i get wrong。 The argument centres on demographics。 Aging populations in West Europe + China mean a collapse in savings at the same time as dependency rate soars。 This means less capital I really like this style of writing。 Each chapter develops core points or responds to potential criticisms。 and they periodically just say "we took this Figure from Author X" or "go read Author Y for the full story" and this keeps the argumentation ticking over。 I'll try and summarise， would love comments on what i get wrong。 The argument centres on demographics。 Aging populations in West Europe + China mean a collapse in savings at the same time as dependency rate soars。 This means less capital investments while the primary care/health sector gobbles up more labour share。 Aggregate supply will fall （at least in relative terms） and so we'll have less goods/workers being chased by the same amount of savings， hence expect inflation。Mainstream econ discounts this possibility because Japan faced the same demographics earlier and maintained low interest rates/inflation。 But Japan went through this process as a mid sized economy who could take advantage of global deflationary pressures + there are idiosyncracies of Japanese labour market in which employees accept lower wages。 In contrast， multiple economies （including the largest， China） will be going through this process and this will overwhelm global deflationary forces。There is a question of whether India/Africa can counter-balance demographic trends in West Europe/China by generating global deflationary forces via their more favorable working age demographics。 The authors are pessimistic。 China's unrelenting deflationary force over the last 30 years resulted from strong governance that is lacking in India/Africa。Interesting argument。 I buy that wages will rise， but I'm not sure they'll rise after taking into account inflation/tax hikes。 Imo there's huge generational justice issues given personal pension savings were inadequate even while the national govt ran big deficits。 The working age population need to find their political consciousness otherwise this transfer will be voted through by the retired voting bloc。 Workers with family born in AEs will at least inherit something （at least if care costs don't eat it up）/can swallow it because it means their family is less dependent， but its incredibly unfair on immigrants who move to AEs。 。。。more
Evan Carmean
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Very interesting book。 They make a cogent case with， in my opinion， a few holes。 But that is the name of the game when predicting the future。
Naj
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Not many economists look a few decades ahead。A central these is that China had an deflationary influece on the world。This might change。As the author remarks， Covid accelerated this process。If he is right， inflation is here to stay。。。
Daniel
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Technical read needed to read through parts again but great arguments。
Tom Hyndman
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An interesting an compelling book which goes against the mainstream economic theory and suggests that the deflationary economic environment of the last 20-30 years is in fact turning due to the retirement of the 'Baby Boomers' and an increase in the dependency ratio （the ratio of non-workers （e。g。 pensioners， unemployed， children） to workers）。 This analysis of demographics therefore suggests that the decrease in size of the labour force will lead to an increase in the relative power of labourers An interesting an compelling book which goes against the mainstream economic theory and suggests that the deflationary economic environment of the last 20-30 years is in fact turning due to the retirement of the 'Baby Boomers' and an increase in the dependency ratio （the ratio of non-workers （e。g。 pensioners， unemployed， children） to workers）。 This analysis of demographics therefore suggests that the decrease in size of the labour force will lead to an increase in the relative power of labourers， thus perhaps increasing the power of unions and wage demands。 This is essentially the premise of the book and I found the main bulk of it to be insightful， weaving economic data， past historical trends and medical data （mainly about dementia and ageing populations） neatly together to present a nice little economic book。However。。。。I found the book to be too dismissive of climate change in addition to 'unknown unknowns'。 Whilst the authors admitted that they did not know much about climate change， and understandably therefore did not want to write too much about it， it is hard to trust their analyses if there is a very large， obvious key to the future economic situation that they have just ignored because they are not experts in that field。All in all， I found this book very enjoyable， if a bit dry at times and I would give it 4 out of 5 stars。 。。。more
Peter Morgan
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I know reading this is soooo Financial Times of me， but I do think it's worth thinking in these terms， even if it means rejecting the thesis of this book。 Have truly no way of critiquing this （going to have to wait for a husband to explain it to me）， but useful as an exercise。 We really do take so many constants for granted， and I suspect we may not be able to in the future。 I know reading this is soooo Financial Times of me， but I do think it's worth thinking in these terms， even if it means rejecting the thesis of this book。 Have truly no way of critiquing this （going to have to wait for a husband to explain it to me）， but useful as an exercise。 We really do take so many constants for granted， and I suspect we may not be able to in the future。 。。。more
Michael Wald
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Interesting and worth reading but the evidence remains to be seenGoodhart and Pradhan have put forth an interesting argument on why inflation should reappear。 They point to lots of evidence both with the aging of world populations and an inward-turning China。 Whether these traits lead to a re-inflation of the economy will have to be seen。 One of their arguments is that a decline in the 25-54 age population will reduce the number of producers as opposed to consumers and this will be inflationary。 Interesting and worth reading but the evidence remains to be seenGoodhart and Pradhan have put forth an interesting argument on why inflation should reappear。 They point to lots of evidence both with the aging of world populations and an inward-turning China。 Whether these traits lead to a re-inflation of the economy will have to be seen。 One of their arguments is that a decline in the 25-54 age population will reduce the number of producers as opposed to consumers and this will be inflationary。 I seem to recall that when the baby boom generation entered the workforce in the 1960-70s， they expanded the number of producers relative to the US population and were blamed for the increase in inflation at that time。 Whether the traits cited by the authors have the effects that they predict （and whether the results can be traced back to demography alone） remains to be seen。 Correlation is not causation， as they say。 。。。more
Harsha Varma
，
The crux is simple。 In a world which is rapidly ageing， there are more dependants to workers than earlier。 Workers generally produce more than they are paid and hence are a deflationary impulse。 Dependants who do not work， on the other hand， consume and do not produce。 Dependants are inflationary。 Over the past three decades， due to the integration of China and Eastern Europe into the global supply chain， there has been a huge supply shock to labour。 This decreased labour’s bargaining power， lea The crux is simple。 In a world which is rapidly ageing， there are more dependants to workers than earlier。 Workers generally produce more than they are paid and hence are a deflationary impulse。 Dependants who do not work， on the other hand， consume and do not produce。 Dependants are inflationary。 Over the past three decades， due to the integration of China and Eastern Europe into the global supply chain， there has been a huge supply shock to labour。 This decreased labour’s bargaining power， leading to low wage growth， resulting in low inflation。 Over the next few decades， with populations ageing， working-age population in ‘advanced economies’ will be on a downward trend。 This demographic change will lead to a homecoming of inflation。 As a wise man/ woman said， "Predictions are hard， especially about the future。" Reality will of course be shaped by unknown first-order events that will have a more direct and significant effect but it’s helpful to know what the underlying trends are。 It is an interesting read。 。。。more
Drtaxsacto
，
The main premise of this book is that the assumptions used by macroeconomic writers on why we have been able to simultaneously expand deficits and keep interest rates low did not come from the brilliant policy of the central bankers and politicians but from a unique confluence of demographics （more low priced workers surging into the system from places like China and Eastern Europe） and benefits of technological changes that helped moderate inflation。They also argue that in coming decades with r The main premise of this book is that the assumptions used by macroeconomic writers on why we have been able to simultaneously expand deficits and keep interest rates low did not come from the brilliant policy of the central bankers and politicians but from a unique confluence of demographics （more low priced workers surging into the system from places like China and Eastern Europe） and benefits of technological changes that helped moderate inflation。They also argue that in coming decades with rising levels of elderly in most of the developed countries （and the concurrent increase in needs for support and care） that the trend is about to turn。 And it will become nasty。IF you are not interested the issue - you should be。 With the debt to GDP ratio in the US at more than 125% the future looks perilous - even if their assumptions about what caused the moderation in rates are mistaken。They argue that there might be some ways to solve this dilemma but none of their suggestions seem especially compelling。I am decidedly not a macroeconomist - so some of the arguments in this book may have been lost on me。 And from what I do remember about the field I think the authors are a lot more confident in the tradeoffs of the Phillips Curve （employment v inflation） than the last three decades of experience would tell them to be。 This book is not light reading but the assumptions made about whether brilliant policy or confluence of deflationary trends caused the moderation are worth thinking about。 。。。more
David
，
A dry but deeply informative read that exams aging， inflation， labor， inequality， and what the consequences of a shift in demographics will mean for China， America， globalization， and the near future of the world。 The bulk of Boomers are set to retire in 2022 - 2024。 This will make consumption and investment-led growth near impossible。。。in most countries。 America still has the Millenials to draw on for both of these but the rest of the world never had a Millenial generation of any size。 Export-l A dry but deeply informative read that exams aging， inflation， labor， inequality， and what the consequences of a shift in demographics will mean for China， America， globalization， and the near future of the world。 The bulk of Boomers are set to retire in 2022 - 2024。 This will make consumption and investment-led growth near impossible。。。in most countries。 America still has the Millenials to draw on for both of these but the rest of the world never had a Millenial generation of any size。 Export-led growth will come under pressure if the American market is unavailable。 Dark times are ahead。 A good author to read alongside The Great Demographic Reversal is Peter Zeihan。 Zeihan's three books， The Accidental Superpower， The Absent Superpower， and Dis-united Nations， are more accessible and tell much the same story。 Highly Recommended Read。 Rating: 4 out of 5 Stars 。。。more
Charles Okealam
，
A salient contribution is the skill with which macroeconomic factors， financial indicators and demographic and health trends are interwoven。 The dexterous presentation of those linkages provides a uniquely strong basis for arriving at conclusions。 In particular， I enjoyed， and very much agree with the discussion on China and Japan， inflation expectations and rising debt。 On the demographic outlier Africa， I was left with a question; in the absence of improved governance， what does the expected h A salient contribution is the skill with which macroeconomic factors， financial indicators and demographic and health trends are interwoven。 The dexterous presentation of those linkages provides a uniquely strong basis for arriving at conclusions。 In particular， I enjoyed， and very much agree with the discussion on China and Japan， inflation expectations and rising debt。 On the demographic outlier Africa， I was left with a question; in the absence of improved governance， what does the expected high population portend？ There are so many （and in some cases new） structural imbalances that meaningful prediction is quite difficult This well researched and excellently written book not only makes for a lively read， but also shines some light on what we might reasonably expect。 。。。more
Gabriel Stein
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Excellent and thought-provoking An excellent， well researched and thought-provoking book about one of the key challenges facing the world over the coming decades - changing demographics。 More importantly， the authors go beyond the usual consequences to draw important social conclusions as well as the economic ones。 A must-read。
Richard Marney
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