Everyone Has to Lose Something: A Fiscal Grand Bargain for the Ageing West
Editorial image generated by the author. The fiscal problem facing much of the developed world is hardly mysterious. Ageing populations are increasing pension and healthcare costs while governments carry debts accumulated through financial crises, years of unusually cheap borrowing and the pandemic. Higher interest rates have made those debts harder to ignore. Nor is there much mystery about the available remedies. Governments can raise taxes, reduce benefits, increase retirement ages, constrain healthcare spending, require people to finance more of their own retirement, or spend less elsewhere. The difficulty begins when someone has to choose who pays. That makes the problem partly one of political design. The ageing West does not lack plausible ways of stabilising its public finances; it lacks reforms capable of surviving democratic politics for thirty years. A durable settlement would therefore look very different from a conventional austerity programme. It would ...
