COVID-19 EXPEDITES DEMOGRAPHIC CHANGE / GEOPOLITICAL FUTURES

COVID-19 Expedites Demographic Change

The pandemic adds urgency to the rebalancing of education and work.

By: Antonia Colibasanu

In geopolitical analysis, we focus on the behavior of societies organized into complex, geographically defined systems – otherwise known as nation-states. 

The list of factors that shape a nation-state’s behavior is extensive and, as the coronavirus pandemic demonstrates, not always static. 

In trying to understand how the pandemic will affect geopolitics, we need to understand what COVID-19 means for demographics.

A country’s demographics dictate its socio-economic model, and through that affect its relationship to other countries in the global system. 

An older population translates into more retirees and fewer workers. When people retire, they typically consume less. 

As a larger share of the population transitions from work to retirement, the burden on society grows – there are relatively fewer workers contributing to pension systems, and labor is diverted to care for the elderly.

On a national scale, the shift in favor of retirees over workers means private consumption no longer drives economic growth, which means consumption-led economic growth must give way to either investment-led or export-led models of growth. 

Increases in private investment translate to higher national output, but if domestic consumption is declining – as it is in an aging society – then that added output must be exported.

Germany is the perfect example. 

More than a quarter (28.6 percent) of the German population is over the age of 60. 

The less Germans consume, the more they must export, and the more money is available for investment. 

At the same time, a shrinking labor pool compels Germany to invest in the development of a European supply chain to support its industry. 

This model works as long as there are no major economic crises hitting its buyers (export markets) and as long as the demographics remain fairly stable. 

In other words, as long as the system remains balanced.

Preserving this balance has been a German obsession since the financial crisis hit in 2008. 

Defending its primary export market and production network – the European continent, united under the flag of the European Union – is an existential concern. 

With the U.S. market aging and thus shrinking, Germany sought alternatives in Asia, which meant improving its trade relations with Asia’s biggest market: China. 

Moreover, Berlin’s immigration policy has been friendly to those who are interested in working in the manufacturing sector, thereby supporting the country’s export power. 

When the refugee crisis hit in 2014-16, Germany’s view was that refugees could stay as long as they integrated into the country’s socio-economic model. 

Berlin designed educational programs intended to get them assimilated into society in an effort to solve its demographic problem.

Other countries, including China and Russia, face similar challenges. 

Though their economic problems are different in nature, they too have export-dependent economies and low birth rates.

Data on how the pandemic is affecting national demographics are still limited. 

Figures from the U.S. and some European countries, however, suggest life expectancy and birth rates have dropped. 

In the United States, life expectancy dropped by more than a year, while in France it fell by six months. 

Some of this is obviously caused by the disease itself, but other factors, like increased uncertainty and stress, are also at play. 

It’s unclear how long these effects will persist, just as it’s unclear how long the pandemic will last or how COVID-19 will affect survivors later in life. 

It seems likely, though, that national demographics will change. 

The world started to change rapidly after the crisis of 2008. 

Consumption decreased, and large markets like the United States became smaller. 

For a variety of reasons, protectionism slowly returned, posing another obstacle to export-led growth. 

The crisis highlighted the global imbalance between demand and supply, and a slow rebalancing began. 

Part of this manifested in the U.S.-China trade conflict. 

Another manifestation was social strife within countries, between social classes and between urban and rural communities. 

A prominent example is Brexit, where the division between the British urban and rural realities essentially caused the United Kingdom’s departure from the EU. 

But there are others, including Russia, where the realities of urban life differ dramatically from life in rural areas. 

An important feature of the rebalancing is that governments generally had fewer and fewer resources available for the less developed, usually non-urban parts of their countries.

Restructuring is a slow process, but something governments can do rather quickly is adjust educational models to support shifts to new economic models. 

For instance, in the United Kingdom, the need to reform the university system was apparent as talks around Brexit began. 

The problem was accessibility: It had become increasingly difficult for Brits to access British education. 

Discussions on reforming the U.S. higher education system to increase affordability have also increased since 2008.

The COVID-19 pandemic amplified these problems, increasing the urgency of the rebalancing. 

As the coronavirus spread, working and studying from home became the new normal for much of society. 

Not everyone could work from home, of course, but remote studying was simpler, at least from a technical perspective.

Last month, Gallup released a report on the learning experiences of high school students in Massachusetts during 2020. 

One of its findings was that technological barriers (connectivity and hardware-related problems) prevented lower-income students – who are among the most likely to be learning exclusively from home – from fully accessing learning at a high rate. 

Studies in Europe have found similar results. 

In France and Germany, technological access is dependent on household income. 

According to an April 2020 report by the European Commission, more than a fifth of children lack at least two of the basic resources for studying at home: their own room, reading opportunities, internet access and parental involvement (for children under 10 years old). 

The same is true of other countries.

Some issues with education existed before the pandemic and will still exist after it – namely, the apparent disconnect between the educational market and the needs of the labor market. 

Learning experiences and satisfaction depend on the teacher’s engagement and pedagogical method. 

But traditional teaching methods were criticized, both in the U.S. and Europe, even before the pandemic.

The disconnect between traditional pedagogical methods and the modern world is not surprising – changes in society have outpaced changes in teaching, and some divergence is natural given the generational disconnect between the young (students) and the old (teachers). 

But in light of the pandemic and its accelerating effect on all matters, this tension is greater now than it would have been under normal circumstances. 

We’re living through a time of unprecedented social change, including a high-speed restructuring of the educational models at national levels, triggered by changing economic models. 

We don’t know how China or Germany will change as the U.S. shifts away from its role as the global consumer. 

We don’t know how Russia will reshape its economy, or how the European Union will evolve. 

But all these changes will be triggered by demographic changes that are happening faster than ever before. 

The urgent reset that all societies are going through will likely mean an increase in inequalities, something that might raise the potential for conflict at both local and international levels.