When the G-20 Finance Ministers met in Shanghai, their goal was to chart a strategy to jumpstart the global economy. It would be hard to accuse them of feeling comfortable with business-as-usual, as the Ministers agreed to consider "all policy tools - monetary, fiscal and structural - individually and collectively."
But what does that mean? No doubt they will go to their conventional tool kit that includes versions of monetary and fiscal policies, as well other agenda issues like the "Brexit" and the volatility of the oil market.
Fine, or maybe not so fine, because it's time to broaden the lens of what is meant by "all policy tools" - for, the longer population aging is left off the table, the longer we miss the most important global economic question of the 21st century. Or, to put it another way, ignoring aging will perpetuate our collective unwillingness to confront the stunning misalignment between 20th-century public policies and institutions and 21st-century age-demographics.
Note to the Ministers: population aging isn't just a monetary, fiscal, or structural issue - it is a monetary, fiscal, and structural issue. It's the lens through which to get to economic growth. It's a core issue that must be on your agenda.
The setting of China made the get-together all-the-more imperative. On the surface, the Finance Ministers met in Shanghai because China is leading the G-20 in 2016. But scratch a little deeper, and China becomes far more significant. China has the world's fastest aging society; it's over-60 population will soon be larger than the entire U.S. population. Moreover, with the legacy of the long-standing "one child policy" still being felt, there are proportionally very few younger adults considered "working aged."
And just a short distance away is Japan - another country that lays claim to the world's oldest. Soon, there will be more adult diapers sold in Japan than baby diapers. Given that is leading the G7 this year, there's a symmetry emerging that cannot be ignored.
Herein lies the irony to Japan's 30-year economic malaise: the most puzzling thing about it is that we're puzzled. The whole bag of tricks has been tried: Abenomics, Womenomics, monetary policy, and structural reforms - and they've failed.
Hasn't anyone noticed that since the late 1970s - when Japan was touted as unstoppable economic tiger - until today, Japan has seen two unbending truths: its population is aging and its economy is stagnating. This is not voodoo economics. It's cause and effect; and until economic policies recognize and create opportunities from population aging, the economic arrows will not turn up.
Addressing an aging population is not a question of entitlements for seniors, but how to align the demographic realities with economic growth goals. The mistake Japan, and the rest of us often make, is to think of aging as a social issue for seniors. If "all" we had were longevity, this might be possible. But when you add to it the low birth rates that lead to population aging - more old than young--the issue is transformed. As it is now developing even more dramatically in China.
Following Shanghai, here are three things the Ministers must focus on to legitimately consider "all policy tools - monetary, fiscal and structural - individually and collectively."
First, put "aging" at the top of the global agenda and direct serious public policy research asking the question: What are the principal public policy changes for aging societies that are likely to create pathways for economic growth? There is no doubt that this will concentrate on health and retirement policies that are currently structured as though it were still 1970 or 1980 when the proportion of old to young were fiscally manageable. But it must be bigger: aging is equally about the young and the old.
Second, invite the private sector to tell them what it will take for further government support of their growth strategies based on the commercial opportunities they see in the aging of populations. The recent World Economic Forum White Paper on how longevity can create markets, which is really about how the private sector is creating the basis for economic growth through an aging strategic screen. From Nestle Skin Health and BlackRock to Vitality and Fujitsu, Home Instead Senior Care and Bank of America Merrill Lynch to Intel and Samsung, companies globally are getting it. When the G-20 plans its big Summit this fall and invites CEOs, make sure this is one of the topics in scope.
Third, pay attention to how the workplace is so fundamentally changing. For reasons of both desire and need, people are working longer and demanding greater flexibility. And organizations are recognizing that hiring and retaining older workers is not just the right thing to do, but it's good business. Older workers have skills, insights, and capabilities that their younger counterparts don't have. Policymakers should create incentives to further encourage employers to hire older workers. If Finance Ministers want growth, what is the role of the changing age demographic workplace?
It's a shame - if not a surprise - that population aging did not emerge from the G20 Finance Ministers meeting in Shanghai as a global imperative for reigniting global economic growth. But one swing-and-miss doesn't demand another. Japan is on deck: let's not miss twice.