Mats Persson, left, listening to Harold James during a discussion about conflicts between generations. Journalist Paulina Neuding moderated the debate.
Politicians are tempted to pursue policies that provide advantages to older people at the expense of the young, Harold James and his co-author in the EEAG-Report 2016 assert.
The idea of a contract between generations forms the bedrock of an equitable social order, stability and sustainability, writes Harold James in the report. “In many countries the public sector is now expected to replace the family by funding education and pensions, but social welfare models are facing major challenges.” Professor James writes about how to preserve intergenerational fairness by tackling issues like demographic ageing, rising healthcare costs, blocked housing, labor market flexibility and emigration.
Harold James pointed to a number of circumstances indicating that Europe may be on the way to become a gerontocracy (power is held due to old age):
- Labor regulations giving security of employment that benefit fundamentally older workers, and establish disincentives for employers to hire younger people (the dual labor market, that characterizes particularly Mediterranean Europe).
- Property ownership, in which older people have real estate, and younger purchasers (especially in urban centers) are deterred by rising prices (and cannot get onto the lower rungs of the “property ladder”).
- Pensions schemes, mostly originally designed as pay as you go systems, in which the funding of the pension entitlements of younger people looks precarious as demographic projections predict that there will be fewer new earners paying in (“as you go”).
- Socialized medical insurance systems, in which increasingly expensive care for older people dominates the cost structure.
- Government debt, in many cases incurred in order to maintain the advantages of the elderly, may become unsustainable, so that the following cohorts may not be able to fund themselves in the same way.
- Environmental damage, in which present output is obtained cheaply at the cost of future generations who will have to bear the burden of the clean-up costs.
Professor Mats Persson, Stockholm University, commented on the chapter in the EEAG Report 2016 co-authored by Harold James.
The discussion dealt with subjects such as today's influx of refugees and what this development might mean for the future of the European labor market.
The fact that comparably few children are born in Europe and how this will affect the coexistence of future generations, was one of the questions asked by the audience.