Obama’s Speech: His Big Chance on Entitlement

Obama’s Speech: His Big Chance on Entitlement

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A survey just out by The Economist Intelligence Unit Ltd. opens up a whole new vista on how aging populations might be a source of economic growth, rather than a fiscal burden, as common wisdom too often suggests. The  report, “A Silver Opportunity? Rising Longevity and Its Implications for Business,” notes that business executives “overwhelmingly view increased longevity as an opportunity, rather than a risk. Seventy-one percent see it as an opportunity, compared with 43 percent who consider it a risk.” The quick takeaway here?  Aging populations, viewed as both employees and consumers, need be neither dependent nor disabled but important contributors to economic value.

The report, based on input from 583 executives worldwide, is optimistic that many industries will benefit from an increasing elderly population. Since the elderly tend to be consumers rather than savers, the potential stretches far beyond the predictable sectors of health care, pharmaceuticals, leisure and tourism. According to the executives surveyed, there is significant confidence that our demographic revolution will fuel the economy in industries such as financial services, food and beverage, consumer goods, retail, and construction and housing.

And it’s already happening, as reported in this week’s piece in The Economist, “Peggy Sue Got Old.” When the Universal Music Group created a CD for those baby boomers who are supposed to be drags on the economy, sales of the CD, “Dreamboats and Petticoats,” exploded; it’s now been officially certified double platinum. It’s inspired a London musical and at least three more albums. Now that’s how economic growth is supposed to work.

The report also found that a graying work force can be an asset to organizations, with older workers serving as mentors, subject matter experts, customer service representatives, and more. In addition, they can continue with their traditional roles with some minor adaptations. At BMW, for example, the German-based car company is adapting its manufacturing methods to accommodate older workers. So far, results are positive: Productivity is up and costs of the changes are low. 

So, as President Obama prepares to join the budget debate on Wednesday afternoon, he need not be afraid of those “awful” entitlements – if, that is, he puts forward public policy that considers America’s aging population as a source of wealth creation. The country that figures out how to treat its aging population as a source of economic opportunity will win the 21st century’s competitiveness race. 

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Executive director of the Global Coalition on Aging, Michael W. Hodin, Ph.D., is also managing partner at High Lantern Group and a fellow at Oxford University's Harris Manchester College.