The Future's Not What It Used To Be
Why we're doing this deep dive into economics and demographics
We’re entering a world with specific economic and demographic headwinds. As population plateaus and declines, the growth we’ve gotten used to changes intensity. Economic output has slowly disentangled from population, but GDP still leans on it.
We’re betting AI bails us out. The missing word is how. People everywhere are automating existing processes instead of redesigning work. That’s doing dumb things faster.
Yogi Berra said, “It’s tough to make predictions, especially about the future.” He also said, “You’ve got to be very careful if you don’t know where you are going, because you might not get there.” How we use the new technology is yet to be revealed.
Andrew Marritt, the seminal People Analytics practitioner who actually gets systems thinking, recommends two books. Charles Goodhart and Manoj Pradhan (London School of Economics) think hard about where economics meets demographics. The earlier one is The Great Demographic Reversal. The newer one is The Unanchored Central Banker. (You can tell from the titles they’re well-regarded professors.)
The core idea: demography is starting to dominate fiscal policy, and fiscal policy will come to dominate monetary policy. We’re leaving a historically unique moment behind. Several forces drove the era of abundance:
falling fertility
higher female labor-force participation
boomers entering peak working years
China’s entry into the world economy
Eastern Europe’s integration
The result was a generation of abundant workers, weak wage growth, cheap manufacturing, low inflation, low interest rates, high corporate profits, and few recessions.
Now the drivers reverse — fertility collapses, longevity rises, boomers retire, fewer young workers replace them, and scarcity replaces abundance. Two things push inflation up at once, and they work through different doors. On the wage side, scarce workers get higher pay and stronger bargaining power, and shortages persist. On the money side, aging populations spend more than they save, government outlays for pensions and health care climb, and deficits become the permanent condition rather than the emergency measure.
That’s the chain the two books trace. Demography drives the fiscal picture. Fiscal instability then drives the monetary one: when governments have to keep borrowing to cover the old, central banks lose the room to fight inflation the way they used to. Higher rates raise the cost of that debt, so the pressure runs toward tolerating inflation instead of crushing it. Structurally higher inflation isn’t just a wage story — it’s what happens when the fiscal side stops leaving the central bank a clean shot.
Most important, the burden of supporting seniors grows just as the workforce shrinks. (That’s the aging ratio from the Pyramids piece.) Health care becomes the dominant economic force. Tax revenue falls because the workforce is a shrinking slice of the population — which is exactly what feeds the deficits above.
Demographics are fixed. Today’s babies join the labor force in 15 or 20 years — we already know how many. Predicting the cohort is just math.
Even so, the problem is hard to see. Everything we know is the opposite of what we need to navigate the next chapter.
Expect management’s focus to change. Plan on organizational design and function to morph. Anticipate rethinking what we measure in the name of progress. Tomorrow’s workforce runs on people augmented by intelligent technology. The way it’s always been is not the way it’s going to be.
“The future is not what it used to be.” (Thanks, Yogi.)
These articles are a foundation for imagining next steps. Overwhelm with application volume gets replaced by the need for more. The tools built to treat today’s apparent problems are liable to become the shackles that block forward movement.