The more time goes by, the more staggering population statistics become: in 2050, people over the age of 65 will represent a quarter of the population in the most developed countries, against 16% today. The rise to power of the older generation disrupts companies, institutions, and policies. After publishing an interview of Francis Mer, former Minister of Economy and Finance of France, ParisTech Review continues its analysis of the upheavals caused by an aging population.

Many people are concerned about the social and economic consequences of the aging of the population, including inequities between working and non-working populations and the questioning of intergenerational solidarity. Yet, the greatest challenge is perhaps not what one expects. “The risks facing democratic societies are not those that are generally put forth,” says Roland Hureaux, author of Le temps des derniers hommes (Hachette Littérature, 2000). According to the essayist, Western democracies function through a subtle balancing act: in the short term, they alternate majorities; in the medium term, they use social movements and revolts, which are generally initiated by the country’s youth. “Without this interplay, sclerosis, single thought, and propensities to ideology would set in,” he says. The end result: a society that gets bogged down and endangers its own democratic system.

Are the Elderly Conservative?

Marketing studies show that there is a natural propensity to conservatism with advancing age. Professor Gilles Laurent of the business school HEC Paris, member of ParisTech, explains that “there is a gradual tendency to decide earlier and less often, consider fewer alternatives and be more faithful to one’s past choices. An older woman may change her perfume but will do so less often than a younger woman and will opt for a perfume not newly introduced but that has existed for 15 years at least.”

On the political front, the phenomenon is more subtle but leads to a similar result: the older look mostly to the conservative camp. Here it may not be an effect directly related to age, but rather the social stand of a generation. More specifically, today’s seniors have social characteristics that predispose them to liberal conservatism: possession of a heritage, religious practice, and so on. This is what experts call the “cohort effect”: the major characteristics of the period in which members of a same generation were born, grew up, and evolved partly explain their group behavior, and this effect follows them through time.

Take, for example, the viewpoint of someone born in Western Europe between 1945 and 1960: his childhood took place in a period of strong growth; his entry into the workforce, during a period of full employment; and his level of pension income is more or less guaranteed. If he was born 25 years later, his childhood would be spent in the midst of a crisis, he would enter the workforce in a period of structural unemployment, and he would probably retire at a later age, with no guaranteed pension and below the level of contributions. On the one hand, you have the cohort of “The Glorious Thirty,” and on the other, that of the crisis. And so, we go from the colorful, “acidic” vision of the Beatles to the nihilism of the Sex Pistols.

The Soft Dictatorship of Seniors, a Real Threat to the System

This phenomenon, which causes political tensions between generations, becomes a problem when the balance between the different age groups is threatened. The empowerment of a generation – in this case, the older one – dangerously affects the long-term political dynamics.“Gentle dictatorships are likely to emerge everywhere, characterized by a general decline in the dynamism of investment, innovation, entrepreneurship and responsiveness,” says Hureaux.

The looming imbalance between generations provides seniors with considerable political weight. But it is in no one’s interest: “society’s old, by the ‘narcissisation’ of their behavior, produce an overly cantankerous, anti-gerontocratic young generation. The privilege of the old contains the threat to the old,” explains political scientist and sociologist Emmanuel Todd. “If we go towards rupture, the failure of organized social systems of health and retirement may lead to invisible geronticide, such as experienced by Russia when the Soviet Union collapsed,” adds Hureaux.

Solution: Rethinking Democracy

In 1976, Emmanuel Todd predicted the downfall of the Soviet Union based notably on demographic data indicative of the population’s suffering, such as infant mortality. The author of the La Chute finale (The Final Downfall) observes today in developed countries a “slowdown of the political and ideological life, a slowdown – and not an end – of history. There is a fossilization of democracy, a monopoly of social wealth by the older age groups.”

This fossilization is so manifest that the political scientist does not hesitate to question the founding tenets of Western democracies. “In a way,” he says, “our institutions were not designed for societies where the typical citizen is 55 years old. The entire political philosophy, from Socrates to Hobbes or Rousseau, is articulated around a citizen in his thirties. We do not know now what impact this shift of the center of electoral gravity is to have on the democracies.” He continues: “However, it is certain that the electoral inability of young voters would be lifted by the abolition of universal suffrage.”

Others, like Francis Mer, interviewed recently by ParisTech Review, indicate a need to think differently in politics. The former French Finance Minister proposes, for example, to drastically limit the number of mandates, which would prohibit a career in politics. Such provisions would help to prevent that too many collective decisions be made based on the interests of a single group with the strongest voting power.

The Problem of Corporate Governance

The need to rethink governance is not just an issue of national policy. At the organizational level, the reversal of the age pyramid poses a real problem of competitiveness.

For Todd, behavioral flaws are independent of hierarchical position. “The horizon of the worker and the CEO is the same: the former wants to reach the retirement age before his post is deleted, the latter wants to line his pockets before the organization files for bankruptcy. It is the rational human being (the homo economicus) of the Apocalypse: ‘after me, the deluge!’”

Elie Matta, professor at HEC Paris, and Paul Beamish, professor at the Richard Ivey School of Business, have studied the perverse effects of executives nearing retirement age on their organizations. The interests of outgoing leadership can cause them to push the organization in a direction counter to the interests of shareholders, employees, stakeholders, and the overall company, by the simple desire to preserve their reputation and heritage.

Thus to enhance their performance, companies must, like political leaders, take into account the aging population into their governance. This will include greater consideration of the career aspirations of seniors: only renewed opportunities for training and development can prevent the effect of “lull and capitalization” that is potentially harmful to the interests of the company.

References

Academic
  • Malmendier, Ulrike, and Stefan Nagel. 2007. Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?
  • Matta, Elie, and Paul W. Beamish. 2008. The accentuated CEO career horizon problem: evidence from international acquisitions. Strategic Management Journal 29 (7):683-700.
  • Park Denise C., Gary Lautenschlager, Trey Hedden, Natalie S. Davidson, Anderson D. Smith, and Pamela K Smith. 2002. Models of visuospatial and verbal memory across the adult life span. Psychology and aging 17 (2):299-320.
  • Yoon, Carolyn, Gilles Laurent, Helene H. Fung, Richard Gonzalez, Angela H. Gutchess, Trey Hedden, Raphaëlle Lambert-Pandraud, Mara Mather, Denise C. Park, Ellen Peters and Ian Skurnik. 2005. Cognition, persuasion and decision making in older consumers. Marketing Letters 16 (3-4):429-441.
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