Book Review: The Age of Decay by Shamil Ismail
For some time I have looked for a book which would properly "game out" the future in a shrinking world. There are some terms that are stated frequently without elaboration -- such as "permanent recession." What would that look like? What problems would society face? And more importantly, how could we adapt?
In many ways, The Age of Decay by Shamil Ismail the book I've been looking for.
During the COVID-19 pandemic worker shortages and supply chain disruptions led to rising costs of labor and goods - effects we are still seeing today. Ismail suggests that this experience might provide insights into a future with prolonged population decline, particularly due to the loss of essential workers who are needed to perform these tasks.
The author suggests that the critical statistics in society are not the birthrate itself but the (1) number of essential workers necessary to provide services and maintain infrastructure, (2) the proportion of the workforce that needs to be dedicated to these essential tasks, and (3), the dependency ratio -- that is, the number of workers whose taxes support the aged.
Critically, he observes that as the population ages and the workforce shrinks (as a proportion of the total population), the number of essential workers required remains fairly constant. Therefore a higher percentage of the total workforce must be dedicated to essential roles, which in turn reduces the number of workers available for "non-essential" work like research and innovation.
This could distort the labor market in meaningful ways. When the ratio of workers-to-aged-persons drops below 2.0 the labor crunch becomes exponentially more severe1.
Consider the following: despite its low birthrate Korea's global economic and cultural influence is probably higher than it has ever been. Korea is extremely productive and currently has a worker-to-aged person ratio of 4.6 (compared to 2.0 in Japan and 2.9 in Germany). By 2040 these are expected to fall to 1.7 (Korea), 1.5 (Japan), and 2.0 (Germany)2. Much has been written, even on this blog, to Korea's expected population collapse. But the clearly the birthrate itself only tells part of the story; a nation can lose much of its dynamism as more and more of its resources are dedicated to maintenance of infrastructure and care for the aged.
The mathematics above demonstrate that several nations may be faced with severe labor shortages in the next century. Provocatively, the author also suggests that sheer economic necessity could eventually overcome rising anti-immigrant sentiment in the developed world. We can already see this happening in some places. Ismail cites Portugal as one nation which has taken steps to speed visa processing for citizens from the Community of Portuguese Language Countries (including Angola, Mozambique, Brazil and others). And now Spain has rushed to legalize about half-a-million undocumented migrants.
In light of this, how might AI affect the workforce of the future? Essential labor has proven resistant to automation, but non-essential roles have not - one imagines a future workforce dominated by human tradesmen and care workers and AI agents performing knowledge work.
Later chapters examine the population problem from several angles. Chapter 10 discusses urban infrastructure and property values, Chapter 13 examines how African nations may benefit from their relative abundance of human capital, Chapter 18 concerns financial markets and investment in a world with collapsing demand, and Chapter 22 discusses climate impact. These are all interesting topics that are discussed in detail.
I think Age of Decay was a fascinating book and would recommend it to anyone seeking or understand our post-growth future. There is much more - you can see the author's website here.