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Part 1 > Chapter 4

Chapter 4

Cutting Up America’s Credit Card

International Demographic Trends

America is far from the fastest-aging rich nation. Almost every European country has for decades had a fertility rate well below the 2.05 children per woman replacement rate threshold and has a median age well above ours. As other countries become more prosperous, they are graying, too. Japan’s fertility rate, for example, is even lower than Europe’s, and Japan essentially prohibits immigration, so it cannot rebuild its age-depleted workforce.

For the past several decades, much of the dynamism in the world economy came from East and South Asia. As China and India opened their economies to trade—that is, to the disciplining forces of capitalist competition—their growth exploded: for China, more than 10% per year from 1980; for India, nearly 7% per year since 1991. Both followed the model pioneered by Japan, South Korea, and later other Asian tigers: high rates of domestic savings that were invested in export industries that serve the tastes of the industrialized (Western) world. China became the world’s factory, and India became its call center and IT department. More people—hundreds of millions—entered the world’s middle class in a shorter period than any time before in world hi....


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