The Next Euro Crisis: Aging Populations
By MICHAEL HODIN,
Posted: October 22, 2012
Reports from the European front might be positive today, but the optimism is sure to fade again. Bailing out struggling banks, consensus on a tighter union, and a stimulus fund to create jobs and economic growth, not only sound good, but have some concrete specifics attached.
Urgent steps have been taken to fortify financial systems in Greece, Spain, Portugal, Italy or, we might recall, even the normally financially solid and fiscally reliable Dutch. Yet, as European leaders conclude their 22nd Summit in Frankfurt, Germany on the debt and financial crisis, they have ignored the more compelling problems of an aging society.
Skepticism comes from the facts on the ground, where results are elusive and worse: Will it be the 25th or 50th Summit when European leaders take the bold step of acknowledging the more profound structural condition they are facing: a demographic transformation of more people over the age of 60 than their 20th century social welfare construction can handle. The fix might be a continent wide dialogue around the fiscally sustainable model of health and retirement benefits.
Consider the facts: Over the next two decades well over 250 million Europeans will be passing through that 60 age barrier bolstered by government supported health care financial support. As these “seniors” figure over 1/3 of the overall European population the arithmetic simply doesn’t work. A scholarly paper already several years old, “Ageing and Fiscal Sustainability in Europe” by Dr. Werner Roger put it simply and clearly, “An increase of the old age dependency ratio between now and 2050 implies, either that benefits (relative to wages) must fall or contributions must rise” or as they say in middle school, DUH! Which brings us back to the curious puzzle of why European leaders continue to believe their summits focused only on the immediate symptoms ought to work?
And might it be that a different kind of summit – the one in Newcastle, UK held Wednesday this week -- just before the Leaders got together will be seen by history as closer to the mark of what is needed to address the European economic challenges? The Newcastle initiative takes the reality of our 21st century aging population and is turning it into a positive force for economic growth, wealth creation, innovation and hope. It’s part of a growing number of cities – from New York to Calcutta, Chicago to Qiqihaer, Newcastle and Manchester in that old industrial corner of England -- in and around the WHO Age Friendly City network.
In other words, in places where we live, work, and retire these city leaders, along with business, NGOs, the older citizens themselves, local universities and research centers are robustly engaged in transforming the over 60 demographic into active and independent. This is the game changer of our fiscal and economic crisis. If you were in Newcastle on Wednesday, instead of Brussels on Friday, you would have heard and seen innovations like, “research applied to broad institutions across a wide range of activities…that are medicines to address age-related NCDs, technology for smart homes and city infrastructure that enables active aging, and new learning centers for educational needs later in life…all of which will lead to greater financial security as the Newcastle population ages, and sustainability for its public finance obligations…” Not bad!
At Newcastle, it got even more interesting, as there were real discussions with concrete plans to create a “Campus for Ageing and Vitality” at the local University. The design is for a campus environment for innovation in aging; collaboration among business, academia, healthcare services and the public; an investment of 40 million pounds; and development of age-friendly transportation for the campus itself as well as an enabler for learning in the wider community.
So, as political leaders met in Brussels to focus on the symptoms of the continent’s financial troubles, local innovators, business executives, NGO visionaries and citizens of Newcastle’s aging population met in that city to implement solutions that keep them active, independent and economically contributing well beyond the official retirement age still accepted by political Brussels.