ESG Season4 18th meeting
DATE: 7th Oct. 2012 10:00-12:00
PLACE: Kanda, Tokyo
MEMBERS: Ogawa, Murakami, Shimada, Yoshida
ESG Season4 18th meeting
PLACE: Kanda, Tokyo
MEMBERS: Ogawa, Murakami, Shimada, Yoshida
The next crisis:
Sponging boomers
The economic legacy left by the baby boomers is leading battle between generations.
From Finance and Economics
Why I pick up the article:
Kazuhiko Toyama
who is a CEO of IGPI(経営共創基盤), a business
consultant says in his book I recently read that the next social revolution
will happen between generations as a result of expanding gap between them. His
words are extreme and unique but he grasps the inner essence of today’s
problem. This article also focuses on the same issue, so I picked up the
article
What I want to discuss
How to cope with
the crisis in the case of individuals?
Should we move to
make a “revolution” to improve our future? What should we do?
Summary:
The struggle to
digest the swollen aging baby boomers threatens to strangle economic growth. Baby
boomers in developed countries have lived a charmed life and enjoy benefits of
a rise in labor supply, working women, smaller households and better education.
But these gains are
one-off so younger generation cannot benefit from them. And they also cannot
expect decades of rising asset prices. Having lived through a spectacular bull
market, baby boomers now sell off their assets to finance retirement putting
pressure on equity prices and younger generation to be wealthy.
More worrying is
that they have political influence so they can influence to make government to
put better tax policy for them (slashed tax rate in their prime earning years).
Actually those aged over 60s in 2010 may receive $330 billion more in benefits
from they pay in taxes, 17 times larger than those aged 25.
(1) Faster growth
would help but debt left by baby boomers burdens growth.
(2) Austerity is another option but it would require 35% cut to fix fiscal imbalances in America, where over 60s share of voting will rise from 17% to 26% in 2030.
(3) Third option is inflation that helps shrink debt but generational divide makes this plan hard to sell because older are typically creditors so they dislike it.
(2) Austerity is another option but it would require 35% cut to fix fiscal imbalances in America, where over 60s share of voting will rise from 17% to 26% in 2030.
(3) Third option is inflation that helps shrink debt but generational divide makes this plan hard to sell because older are typically creditors so they dislike it.
The political
power of boomers is formidable. But sooner or later, it cannot escape the
maths.
Other Discussions
The Euro: The rage in spain from Leaders (Murakami)
Industrial robots: Baxter gets to work from science and technology (Shimada)
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