The New Old World: The Politics of Aging

The Project on America and the Global Economy (PAGE) and the AARP Global Aging Program held the second in their series of meetings on the challenges and opportunities posed by aging societies in the major industrial democracies. The second in the series focused on the “The Politics of Aging.”

Mary McIntosh, Vice President, Princeton Survey Research Associates, and Bruce Stokes, international economic correspondent with the National Journal set a popular context for contemporary politics by drawing on the data from the Pew Global Attitudes Project, taking a special look at the attitudes of those age 50+. The Pew Project covered attitudes in 44 nations from Angola to Vietnam. Using a total of 70 languages, Project personnel interviewed 38, 000 people in 2002 and another 16,000 in 2003.

McIntosh covered the broad outlines of the polling results that showed a sharp decline in positive attitudes toward the United States. On broad cultural questions, there were generational differences with regard to culture – with young people more likely to embrace American music, movies and television. In Stokes’ presentation, he noted that all generations had a generally supportive view of their nation’s social safety net. There was a considerable degree of free market reforms, but a general apprehension that national cultures were at risk.

Against the background painted by McIntosh and Stokes, John Rossant, Europe Editor for BusinessWeek, detailed a picture of a Europe struggling to deal with a stagnant economy and an aging population. In addition to the weak economy, several other trends were pressing on the current members of the European Union. As an example, Rossant pointed to Germany, which has experienced two recessions, record bankruptcies and 74% decline in the stock market. Over the next 30 years, the size of the German and Italian workforce will decline from 50 to 33 million workers. In France, the failure of the existing health system contributed to some 15,000 deaths, most of them older persons, in the summer 2003 heat wave. As the European Union expands, current members will have to meet the competition from some 70 million low-wage workers in Eastern Europe. Much of Europe is now exposed to the competitive challenges from around the world.

Rossant saw Europe at an ‘inflexion point’ where voters had to make serious choices about the future of the European economic model and the extensive European welfare state. At the same time, Rossant saw a ‘new reality’ in Europe that allowed for serious discussion of social welfare subjects that would have been politically unthinkable just a short time before. He quoted German Chancellor Gerhardt Schroeder as saying, that with regard to the social safety net, there are no taboos. In France, there were calls to dismantle the 35 hour workweek and trend to decrease public employment. In Italy, labor unions are at least “at the table” talking with government about a proposal to raise the retirement age.

Rossant also suggested some of the elements of a future social compact in Europe. The key element was an acceptance that economies must grow. He saw labor unions becoming more flexible in response to fiscal or market conditions. Greater competition would be embraced as part of the overall growth formula. Increased investments in higher education and research would be critical parts of a European growth strategy.

The future course of European politics will also be affected by the growing mobility of retired people. He pointed to a number of northern Europeans who were retiring to Spain or southern France. In the American context, the shift to retirees to Florida has affected local politics and the role of Florida in national elections. There may be something similar coming in Europe.

Andrew Saidel, President and COO, Dynamic Strategies Asia LC, discussed the politics of aging in Japan. With the world’s second largest national economy, Japan’s success in dealing with its own demographic challenge will have an impact on Asia, the United States and the entire world economy.

In Japan, older Japanese have had five decades of leading Japanese politics. At the grass roots, it is retired people that have the time to volunteer in campaigns and attend rallies. Older voters have been an electoral anchor for the Liberal Democratic Party (LDP) that has ruled Japan for most of the post-World War II period.

The LDP has repaid the elderly with a complicated social contract that included publicly supported health system, social security and long term care. In the private sector, about a third of the Japanese had lifetime employment with larger firms. Though carrying the same obligation, smaller firms also strove to avoid layoffs. While there was a gap between the ordinary retirement age and the start of social security payments, many older Japanese found employment in an elaborate distribution system that included large numbers of mom and pop stores. For many years, laws limiting the size of retail stores protected the distribution system from mega-store competition.

A combination of an aging population and a decade of slow growth are making the current social compact unsustainable. By 2025, there will be one Japanese over 65 for every two Japanese in the workforce. Much of the health care system is suffering from deficits. Recent college graduates are struggling to find adequate employment.

With the social compact under stress, Saidel foresaw a new kind of activity by seniors and shifting alliances within Japanese politics. Japan would have to look for alternatives to today’s policies.

Ceci Connolly, National Staff Writer, The Washington Post, discussed the impact of seniors on American politics. She noted that today’s older population was different from those who formed part of the original FDR generation. Today’s older Americans are generally better educated, more affluent, more suburban and less likely to be Democrats. In 1996, former Senate Majority Leader, Robert Dole carried 44% of the voters over 60. In 2000, President George W. Bush did even better with 47% of the older vote.

Older Americans are a large, growing and electorally active voting bloc. In an off year (non-presidential) election they constitute as much as 25% of the total vote. Their impact is magnified in some key states – Florida, Pennsylvania and West Virginia – with large numbers of older voters.

Connolly did not think that traditional older voter issues would be the major focus in the 2004 election. In the past, Republicans have been vulnerable to the charge that they were not sufficiently supportive of Medicare. According to Connolly, after the 2002 election, however, current Senate Majority Leader Bill Frist led an effort to neutralize the issue by proposing Republican alternatives. In addition, President Bush and Majority Leader Frist have continued to push to assure seniors of greater coverage for prescription drugs.

Connolly believed that the 2004 campaign would concentrate on Iraq, the economy and homeland security. The question of health care would return in future elections. With the coming retirement of the baby boom generation, insurance premiums rising at a double digit pace, and a steady stream of expensive, new technologies, Connolly believed the current health care system was not sustainable. There will be the added questions of increasing numbers (more than 43 million in 2002) of uninsured, the still rising costs of prescription drugs, and need for long term care.