Ageing = Bad?

Many thanks for Brent Green for his Tweet about an article that discusses the influence of age on the decision of S&P to downgrade US debt.

I don’t know, nor does anybody else, if S&P took this into account when making its decision. As a very interested viewer of American politics and economics I was amazed to see the debacle about the raising of the borrowing limit. I suspect that probably had more to do with it.

The level of debt in the US and Europe is not the cause for the anxiety that is gripping investors. Banks like their customers to have debt – both consumer and nation state - BUT if looks like it cannot be paid back then panic.

That is the question. Venture Capital companies have a term about companies that will never earn themselves out of their debt burden. They are in the valley of death. Is the US there along with much of Europe?

Is there a fundamental mismatch between the level of state spending and the ability of the countries to fund? Has the gradual West to East migration of economic power accelerated into an avalanche?

Rather than having an honest discussion about the core reason we flay around looking for victims and villains.

Undoubtedly, as populations age it creates economic turbulence and yes it creates demands on the state.

Is the US or Europe in anyway ready to respond to these changes? I don’t think so.

The article quotes Ken Dychtwald (somebody who has been involved in the age business from the beginning) and somebody who is usually upbeat about the corporate world and its potential for serving seniors and profiting from serving senior markets.

He observed: “What I’ve seen in the past couple of years is a multiplication of serious minded people talking about aging in very negative ways. I think that’s because the economists have seized the subject. They’re viewing older people not in terms of their qualities of contribution and wisdom, but seeing them as a burden on the government. And the stories are turning more and more dark.”

I think he is right. Politicians can only think and talk in black and white terms. People are victims or villains.

The UK’s own David Willetts, somebody who should know better, wrote a book with the subtitle “How baby boomers stole their children’s future.” His thinking is flawed but I suspect his motivation was more about selling books providing an accurate portrayal.  Here is a senior politician who had a reputation for his intellectual rigour using inflammatory language about older people - he is a boomer.

Since the book Willett’s standing has been in a southbound direction as he has stumbled from one policy failure to another – that is a different story.

Bottom line – the real issue is that most of Europe and a lot of the US are on a downward economic spiral – some years it will go fast - some years it might improve a little – but downward it goes. State spending will be continually under pressure. Right now older people are the villains. I fear that as the decades pass they will increasingly be seen as the victims. Dick Stroud