The National Interest and Yahoo recently re-published an article I wrote in 2017 on Japan's long-term demographic, economic and fiscal outlook (version with graphs, here). Those interested in the strategic context for US immigration and fiscal policy will find this article uniquely helpful.
*****
Japan is preceding the US in demographic trends by about 15 years. Some version of events there will happen here, influencing US policy towards both legal and illegal immigration.
Indeed, some trends are already manifest. In the US, the growth of the 65+ aged group began to surpass that of the core 15-64 aged workforce in absolute numbers in 2012. In the next decade, the core workforce is forecast to expand by three million, while the 65+ age cohort is expected to rise by 17 million.
This has a number of important implications, specifically:
structurally low GDP growth
structurally low unemployment and chronic labor shortages, particularly at the low end
structurally low interest rates
large, sustained federal budget deficits and on-going fiscal pressures
a need to find cost effective alternatives to manage the well-being of seniors
The immigration-related challenges:
Caring for Seniors
Some parts of the country are already critically short on home health care, as described in this article, ‘Catastrophic’ shortage of caregivers in Maine expected to be mirrored nationwide
The disconnect between Maine’s aging population and its need for young workers to care for that population is expected to be mirrored in states throughout the country over the coming decade, demographic experts say. And that’s especially true in states with populations with fewer immigrants, who are disproportionately represented in many occupations serving the elderly, statistics show.
A coalition of progressives, elderly conservatives and fiscal conservatives will be motivated to increase guest worker visas to help ease shortages of those caring for the elderly. Market-based visas would provide a template for such an eventuality, and do so in a context in which conservatives remain in material control of migrant headcount. In other words, MBVs would provide a program which should meet conservative requirements while accommodating at least some of the needs for incremental migrants to take care of our elderly.
The Southward Invasion
We are accustomed to thinking about migration flows principally as south-to-north. In the coming decade, the greater flows may be heading south. Fiscal pressures will limit the amount of government support available for retirees, who will be increasingly pressed to look for low cost living alternatives, with Mexico and Central America key potential destinations. The numbers are large, with twice the population of New Jersey turning 65 in the 2020s. Even a small portion of these could mean one or two million Americans heading to Mexico or Central America in the next decade or so -- at a pace not too different from illegal Latin Americans heading to the US. The US government's interest is to insure the greatest scope for expat retirees' security, health, infrastructure and convenience in Latin America in order to protect the domestic consensus around and the viability of Social Security and Medicare. This can be achieved as a function of a market-based visas approach to improve Latin American governance, but in any event, the US interest is in closer integration with Mexico and Latin America, not the building of walls and barriers.
The Fertility Crisis
When I was in college, economics courses hailed Social Security as an advance which eliminated the need for people to raise children to provide for them in their old age. As it turns out, this logic suffers an internal inconsistency, in that even Social Security depends on someone having children to provide for the elderly collectively. Well, women in the advanced economies and China are having far too few children to maintain population levels, and this is emerging as a key conservative issue in the 2020s, with Russia, Poland, Hungary, and France already providing financial incentives for incremental children. This is a new kind of conservative feminism in which women can essentially name their price to provide children for society's benefit.
This has two important implications. First, taxing women and families -- and these are a critical portion of the tax base -- is going to become harder and harder, and the net burden there will have to be progressively lowered not raised. That will put incremental pressure on the federal budget. The second implication is that a failure to reproduce will create increasing demands for immigration. Thus, fertility and immigration are going to be inextricably intertwined, with outfits like CIS and FAIR likely to expand their expertise and political advocacy around fertility issues.
All this deserves a specific analysis for the US, not just Japan. For now, the key point is that the immigration debate insufficiently recognizes that the world of the 2020s will look materially different than that of the 1990s, or even 2000s. Whereas twenty years ago we could speak of excess labor, we today are facing structural shortages as far as the eye can see. Policy should not focus on withdrawing from the world, but on engaging, particularly with Mexico and Latin America, to insure that US retirees have the best prospects for a happy, safe and prosperous old age and that a sufficient supply a guest labor is available to care for our aging society.
We have an opportunity to build out controlled channels for guest workers and influence governance in Latin America with an approach which leaves conservatives in material control and demonstrates to both them and the wider US public that we can interact safely with Mexico and Central America to the benefit of their citizens and ours.
We should seize the opportunity and try a new approach, which not only addresses today's issues, but also anticipates the challenges of the 2020s.