Tuesday, August 31, 2004

The aging population – Central Bankers put in their two-pennies-worth.

Today’s FT has an article (sorry it is subscription) titled “Greying baby boomers pose demographic conundrum”. It gives a quick summary of The Federal Reserve's symposium on demographic change, held in the US at the weekend.

Central bankers from round the world, together with other officials and economists from academia and Wall Street had a couple of days to try and decide what we should be doing about the aging population and all of the economic and social changes this creates. I am sure the findings will all be posted on a web site but right now you can only read the opening speech given by Alan Greenspan (Chairman of the Federal Reserve).

A few interesting comments:

"The policy approaches are clear and obvious," said Allan Meltzer, professor at Carnegie Mellon University. "The problem is governments are elected for 4-5 years and are asked to solve a problem over 20 years or more." I think the same could be said about marketing directors!

Donald Johnston, secretary-general of the OECD, said its members had talked about the need for these reforms for years without making headway. He called on central bankers to press the agenda in their countries. Introducing reforms early, and phasing in changes, would avoid the need for more abrupt adjustments later. Where I have heard this before? A lesson the corporate world can learn.

Alan Greenspan pointed to the beneficial effects of higher productivity growth in the US but indicated that recent elevated rates were unlikely to be maintained. The Fed chairman stressed the need for improved education and training to help maintain productivity improvements over time. Higher productivity growth in other countries would help to ease the demographic transition, participants said, stressing the need for flexible labour markets and more efficient financial systems. God help the EU with its endemic low productivity, inflexible labour markets and decaying education infrastructure!

Nothing very new about what is being said. I wonder if our politicians will be reading any of the conclusions. I doubt it. Dick Stroud: www.20plus30.com

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