ARBOR WEALTH: A child in Lucca and families at Walline Park

Published: Sunday, November 11, 2012 at 10:35 AM.

On a trip to Italy awhile back I was traversing the hilly environs of the picturesque town of Lucca, a beautiful village happily engaged in Saturday shopping. I intersected a small but growing crowd clustered around something hidden from view. I peered through the edge of the group and saw at its center, in a blue buggy, a small child.  The crowd admired the baby, chatted with the mother and made an unusual fuss.

I walked on and reflected for the first time that I had seen virtually no children in Italy. It was a startling realization. Picture a Saturday at Ed Walline Park on 30A, where folks enjoy access to the beach all day, and no children in sight. Or a weekend at Rosemary Beach with no children riding bicycles. It’s difficult to imagine.

A nation’s ability to replenish its own population and to maintain a respectably sized, younger, working-age citizenry, is vital to its economic health. The solvency of our Social Security and Medicare programs, for instance, are dependent on younger, working-age citizens paying enough to support those who no longer contribute. The median age in the U.S. is just over 37.

Italy, with a median age of almost 44 years, will suffer terrible economic strain in attempting to meet its financial obligations to its retirees. Japan has the world’s second oldest population, with a median age of over 45.4. China’s median age is just under 36, and it was announced recently that they are seriously considering amending their “one-child per family” policy, and no doubt a problematic potential aging demographic is prevalent in their thinking.

Germany maintains the world’s third highest median age, at 45.3. Combined with Italy (43.8), Greece (42.8), Spain (40.9) and France (40.4), it is logical to assume that European countries will suffer economic strain as they attempt to support their retirees. It is also easy to see why Germany, with its aging demographics, is balking at providing assistance to EU countries in Southern Europe, and why Europe’s financial future is such a concern for global investors. 

Contrast these trends with the emerging market country of Brazil, whose median age is only 29.6.  Or consider the country of India. With a population near 1.2 billion, India is the world’s second largest country.  Incredibly, the median age in India is only 26.7.  For decades to come, a huge segment of India’s population will be working-age citizens who are in the prime of their earning lives and contributors to, rather than recipients of, most government financial outlays. 

The “so-what” for American investors is not difficult to discern. More and more Indian citizens are making the transition into the middle class. “In any particular category, brand awareness is penetrating the younger generation at an early age, translating into sales,” notes Namrata and Partha Sinha in a September article in The Times of India entitled “Young and Ready to Spend: Consumers’ Average Age Dips.” The average age for a mobile phone buyer, for instance, has moved to the early 20s rather than the late 30s, according to the Times’ article.

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