Could anyone have imagined the U.N. would have more relevance to our economic and fiscal future than such revered global financial institutions as the IMF and the World Bank? Last week in New York, the U.N.’s General Assembly convened an historic summit on the rise of non-communicable diseases such as cancer, cardiovascular disease, and Alzheimer’s, as well as strategies to combat these diseases, which are sharply on the rise worldwide as people live longer. The summit marked a vital turn in how the organization is positioning itself to deal with global demographic change.
Yet as finance ministers opened meetings in D.C. this weekend, they were met by the IMF’s recently released doom-and-gloom Global Financial Stability Report, which says nothing at all about how aging populations will influence our future economic success. It’s not as if the IMF had to uncover anything new. About a year ago, S&P detailed how aging populations would crush public finances if we didn’t find new models of aging and retirement. S&P’s loud and clear call, however, fell on deaf ears. The Asian Development Bank, on the other hand, seems to have been listening. In its 2011 Outlook Report, it focused on aging populations and lower fertility rates, clearly stating that Asia must “prepare for the very different demographic landscape of the future … characterized by population aging.”
The IMF report does provide valuable insights into the causes of the global economic recession. But this only makes more egregious the fact that it ignored the elephant in the room. When discussing how “strained public finances” are creating fiscal policies that prevent growth, it’s essential to place aging populations at the center.
In rich countries, enormous percentages of domestic spending are tied up in state-funded entitlements and first-class health care for aging populations. As this will continue to shape the economy, aging populations – those living longer, but with far fewer in the traditional working cohort due to stunningly low fertility – must be added, as a subject, to the discussions. Which was also not in evidence this weekend, by the way, from the new IMF chief, Christine LaGarde.
If the IMF and the world’s finance leaders are failing to speak to the massive economic challenge, so, too, is the popular press. USA Today, for example, makes much of the stagnation of U.S. economic growth and its connection to Obama’s ill-conceived jobs plan but says nothing about the omission of the structural and longer term impact of aging populations. The Wall Street Journal notes how the IMF report will alter upcoming meetings and policymaking sessions, but it, too, says nothing of what the report missed.
As we try to dig ourselves out of an ongoing fiscal mess, we can’t continue to miss the role that new approaches to issues faced by aging populations will play in our economic recovery. We need long-term solutions that, as the U.N. acknowledged, address how the planet’s aging populations will drive economic growth. How better to achieve this than to view spending on age-related diseases as investments in our future? Who would have thought the U.N. could have such insight, while our economic and finance institutions did not?