The former chief economist at
In advanced countries, the financial crisis has made the problem more acute. It has brought forward a lot of issues that we would have had to have dealt with anyway, about the affordability of current laws governing age-related spending, mainly pensions and healthcare.
Aren't the Chinese very thrifty?
They are, and there are many reasons why their household savings rate is about 25 to 27 per cent of GDP. They save a lot because they have to pay for their own health care and support their elders. Sixty per cent of Chinese households pay for their own medical bills, for example.
Does ageing mean
This kind of demographic transition means that
You wrote that the future belongs to
The growth in the world and the enrichment of the middle class is clearly going to be in
During the next 20 to 25 years, the increase in
What can the Indian government do?
There may be issues about re-allocation of public expenditure.
How do you see the future of sub-Saharan Africa?
A lot of people think that recent growth of 5 to 6 per cent is breaking the mould. Unfortunately, I'm not quite comfortable about extrapolating this. A lot of it still has to do with
In your book you conclude that the role of the state will have to expand to cope with the pension crisis. Since then, states have been running out of money. Where does that leave us?
I do think still that the state will have a very important role in making sure that we avoid things like pensioner poverty and that, at least in advanced countries, we don't allow the economic implications of rapid ageing to undermine our potential for economic growth completely. But there is no avoiding the fact that self-provision of pensions will have to become more important, because of the inability of the state to be able to fund all the promises which were built up during the past 40 years.
So how are we all going to save for retirement?
Do you foresee inter-generational war between the Baby Boomers and the younger generation?
There is an undercurrent among young people that the Baby Boomers had it all -- and there is some truth in that. It sticks in the throat of younger people that if you bought your house in 1970 or 1980, then house price inflation has made you very wealthy without you having to lift a finger. Now, of course, getting on to the property ladder is clearly very difficult. I understand this but I pull back from the idea that I owe something to my children or to their generation. We all have to make our own way in the world. But at the same time, they should not be punished with an excruciating tax burden to pay for the ageing of society. That is clearly something that would be unfair and unproductive. We have to find different kinds of coping mechanisms.
Such as what?
There are other ways, and they are more complex and difficult. You might consider, for example, a more open immigration policy. That is obviously difficult politically. You could take a different way. The two groups of workers who are typically under-represented at work are older workers, aged 55 and above, and women. If we could make progress in the next 10 or 20 years in getting a higher proportion of older citizens to stay on at work or to come back to work, and for women to be able to have easier choices when it comes to childcare, this would expand the pool of labour. The economic effect of having people in work until 66 or 69 is quite powerful.
What if we don't want to work longer?
Who could blame individuals who say they have worked all their life and they want to retire at 58 or 59? But actually we have to recognise that rising life expectancy has changed the financial metrics of providing security in old age. In some countries even where official retirement ages are going up, there is still a big gap between the mandated age of retirement and the de facto age of retirement. If people want to retire early, they will have to provide for themselves.
Is the EU too old to recover from its economic crisis?
The biggest thing that worries me about
You write about the crisis of ageing, but what do you feel personally?
Luis Bunuel said: 'Age is not important unless you're a cheese.' As I sit here talking with you as individuals, I think it's a perfect motto. But once you think about this as a social and economic issue rather than our expectations in retirement, then the perspective changes. Population ageing is a fundamental economic problem.
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(c)2013 Tribune Media Services, "The Age of Aging"