CharlesGoodhart and ManojPradhanThe Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation RevivalPalgrave‐Macmillan, 2020, 280 p., €29.99.

The globalization era that began in the decades after World War II, and may now be ending, has a prominent demographic dimension. At its outset, moves toward trade liberalization sought to recreate benign growth experience of late nineteenth early twentieth century, acknowledging harm wrought by protectionist measures interwar years. countries involved this nascent free-trade zone were those comparatively high-wage, industrialized West, soon joined Japan—together encompassing, say around 1970, population some 500 million. Inclusion, Cold environment time, aspiring market economies East Asia—the “tigers”—added (initially) low-wage workers mix but too-small numbers substantial threat Western jobs. But base changed dramatically when China, Dengist reforms, entered world trading system, adopting export orientation openness investment from capitalist was working so well for tiger economies. Tentative manufacturing Hong Kong, Taiwan, Japan China's new special economic zones found an effectively unlimited pool labor, disciplined if as yet ill-educated. Over few decades, gaining technology along with investment, these enclaves grew into immense powerhouses, skilled labor still strong wage advantage. While reaching billion 1980, leading actor drama, other endeavored follow—notably India, giant. Trade educational advances, rapidly overcame technological backwardness low productivity once offered measure protection West's high-paid workers. Offshoring industry jobs proceeded apace: chiefly, increasingly services well.** demography is discussed Demeny McNicoll (2006). central fact what Charles Goodhart Manoj Pradhan call “the largest ever upwards supply shock availability labour.” In Great Demographic Reversal, they gauge magnitude draw out, their telling, profound effects on societies. Then look future: specifically, ending contraction force—the “great reversal” title—in context widespread aging both China West. Their account change straightforward will mostly familiar anyone interest subject. Less are inferences authors it: interpretation how much our present situation roots prediction ways which forecast trends influence prospect. Based UN estimates projections, describe striking shifts dependency rate have recently taken place. For advanced economies, several rough constancy, 2010 begun slope steeply upward, trend continue perhaps midcentury. developing emerging falling ended about same time edging upward. departs latter pattern, rising sharper; India continuing fall decade. accept conventional or marking growth-promoting dividend: refer period sweet spot. souring follows hard upon. classic model lies background Pradhan's discussion case labor. vast rural drawn needed modern-sector economy—efficiently so, under hukou moving alone while children expenses left behind countryside. eventually, sump runs dry—the famous notional “Lewis turning point”—and forces unleashed: urban wages start rise. wrinkle also being diminished fertility decline, beginning 1970s short order more than halving average number per woman. oddly precise timing: “The year 2012,” write, “marked end contribution world” (p. 47–page Kindle edition). less dramatic fashion, story played out elsewhere. bottom line effective force globalized burgeoned over last half-century set decline. Of course, worldwide ages far diminishing. expects global add another 3 mainly South Asia and, especially, Africa where delayed transition offers supposedly growth-favoring youthful age distributions. A very different outlook pictured world's populations. “Most us are, society certainly is, unaware ageing future holds,” write. Long years retirement, no doubt, also, apparently, arthritis, Parkinson's, Alzheimer's. gloomy chapter titled “Dependency, Dementia Coming Crisis Caring” cites annual direct indirect costs dementia amounting $1 trillion 2018, projected double 2030. Moreover, “Ageing going require increasing amounts labour redirected towards elderly care at exactly starts shrinking” 91). So demography; consequences? Here can professional expertise: monetary economist, emeritus professor banking finance LSE; macroeconomist, formerly Morgan Stanley. against term mainstream view 30 expectations next 30. Essentially, inflation low-interest rates (and hence indifference debt) resulting sluggish aging, foreseeable future. Adjustments take place smoothly through higher taxes, later generous pensions. “Mainstream models,” remark, “are unable unwilling direction” 265). authors, ignores dominant conditions recent decades: deflationary effect integration economy. And it too situation, “no longer stands way inflation” 281). correct argument elementary: elders undersaved; government support them inescapable, financed debt setting off wage-tax spiral; swell. As run-up, becomes “a gigantic block irresistible eventually move way” 271). available solutions debt, not happen, renegotiation prove politically impossible, default, most, seen unacceptable. What remains inflation. Rising intracountry inequality attribute past surge supply, particular accession. Threatened actual offshoring work led reduced bargaining power stagnation real wages. High-skilled managerial elite, owners capital, winning side bargain, benefiting returns capital. Falling rates, therefore asset prices, helped. Together yielded glory 1980–2020 globalisation, easy money delivered heaven” 116). dismissive explanations inequality, such labor-saving (acknowledged, assigned subsidiary role), monopoly power. particular, reject Piketty's inevitable (“ineluctable” word) because long return capital inherently greater With sphere declared destiny, predict unshackle labor's foreshadowed book's title, great reversal yield diminishing inequality. rise populism related part story. Disillusioned left-behind most affected “may lost power, retained political power” 270). They turn politicians offering nativist policies. Right-wing populist leaders beneficiaries rather socialists, argue, latter's unwillingness curtail immigration. coming nationalist parties likely put major spoke wheel globalisation back clock history… [This] will, strongly adverse [inter-country] equality, exacerbate national regional tensions” 154). Are there keep benefits avoid ill-effects contracting force? optimistic. Some pointed since 1990s comforting lesson, maintaining positive modest rates. case: during swimming labour” complement abroad. “Put simply, had escape valve local workforce shrinking, options simply entire complex together” 194–195). Earlier, commenting Belt Road Initiative massive infrastructure developing-world express skepticism “China's ability create itself venture” 57). But, others would protest, rapid many countries. India's facing imminent decline expanding century; regions offer reserves demur: potential there, hobbled lack “administrative capital”—in “their execute complex, coordinated long-term strategy” 212–213). further hindered dozens often contending polities, “its system democratic checks balances [which] allow single-minded, China-esque materialise” 209). This blanket dismissal route, almost casual aside, contentious authors' prognosis. There developments might hasten accentuate anticipated changes. New data suggest lower assumed, becoming entrenched “low-fertility trap” situation. Covid pandemic, emerged manuscript completed mentioned postscript, suggests “an imperfect, inflationary doors faster we expected” 283)—specifically, “surge lockdown gets lifted. Potential blowback pandemic's hugely retrograde impact consideration. climate change, treated all, modulate economy unforeseen doubt damaging ways. Reversal admittedly somewhat crude conceptualization. blunt independent variable nuanced outcomes—for example, done, geopolitics, Jackson Howe (2008). Other experts who explored topic, group economists bankers assembled 2004 Hole Symposium, dealt reached easily encapsulated findings (Sellon 2005—reviewed PDR 31, no. 4). ask product, treatise essay. themselves task puncturing wisdom sketching brief revisionist history deliver.