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Intergenerational Justice

Industrialized Countries Gamble with Younger Generations’ Future

February 21, 2020 | by PIA SCHMIDT and THORSTEN HELLMANN

Fridays for Future Protests in Berlin, November 2019. Photo by Leonhard Lenz via commons.wikimedia.org, CC0

Through the Fridays for Future protests, young people around the world vent their frustration with political short-sightedness – yet little is being done to tackle intergenerational justice.

While young people around the globe have rattled politicians with loud calls for to safeguard their futures and combat global warming, the recently published Social Justice Index reveals that over the past decade most industrial countries have done little to close the gap between young and old. This inaction jars with the urgent need to address issues such as aging societies, in particular, the burden on younger generations due to climate change and growing financial burdens. In fact, more than half of the 41 EU and the Organisation for Economic Co-operation and Development (OECD) states have even recorded slight declines in terms of intergenerational justice in recent years. However, there are major differences between the countries regarding the efforts to fairly balance the interests of younger and older generations.

The ecological legacy of the industrialized countries

Millions of young people have taken to the streets worldwide to protest environmental degradation and climate change which will blight their future. Although many of the SJI’s experts point to a growing political tendency to take environmental concerns more seriously, no quantum leap has been achieved in advancing environmental sustainability. The sad truth is that in 19 of the 41 countries assessed, greenhouse gas emissions have actually increased from 2017 to 2018. Australia, the United States and Canada, which continue to emit nearly 20 metric tons of greenhouse gases per capita, are among the biggest polluters.

In general, we see a large divide when it comes to climate change and environmental protection policymaking. On one hand, we have ambitious countries such as Sweden, which has steadily reduced its greenhouse gas emissions to 5.24 metric tons per capita and is expanding its share of renewable energy. On the other, we have the countries that do too little to curb the impact that climate change and environmental degradation will have on future generations. The latter are clearly in the majority. Only three of the 41 countries included in the sample obtain more than 50 percent of their energy needs from renewable sources.

Intergenerational justice in aging societies

The diminishing prospects for young people are not only reflected in the lack of climate action. In all industrial countries, low birth rates and higher life expectancy are increasing the percentage of people who are no longer of working age. Part of the challenge in aging societies is the increasing risk of poverty among the elderly and growing financial insecurity for younger and future generations. To safeguard a state in the long run, it is just as crucial to have a sustainable pension policy as a strong family policy. In many countries, there are scant efforts to cope with demographic changes. While policies often focus on the interests of the older population, the Nordic Countries generally don’t balk at introducing necessary reforms. In Denmark, for example, the government has begun linking the pension age to rising life expectancy.

Fiscal Sustainability

Sustainable fiscal policies are key to ensuring justice between generations. High debt levels, for example, will spell enormous financial burdens for younger generations. A large number of countries have once again been able to significantly reduce their debt levels since the crisis, thereby creating the financial breathing room needed for present and future generations. Nonetheless, we observe continued high levels of debt, particularly in Japan, the United States and the crisis-stricken countries of southern Europe. In Greece, for example, the country with the second highest debt level of 183.3 percent of gross domestic product (GDP), following a rise of four percentage points compared to 2017. With an extremely high national debt of 237.1 percent of GDP, Japan’s debt level weighs heavily on future generations. Within the context of its demographic structure, Japan’s high public debt looks even more worrying when the debt is calculated per child. In that case, the debt currently amounts to 816,000I$ for every child under 15. As it turns out, the financial scope of action for urgent, future-oriented investments available to present and future generations in these countries is severely limited.

However, it is not simply a country's national debt level which determines its financial sustainability. Future-oriented investments like expenditure on R&D, contribute to intergenerational equity by fostering innovations necessary for competitiveness. In addition to the top performers of Israel and Korea, Sweden, Switzerland, Austria, Denmark and Germany feature comparatively high expenditures on R&D in an effort to advance innovation. In contrast, Bulgaria, Romania, Malta and Cyprus land at the bottom of the ranking with less than 0.3 percent of GDP being spent on this future looking sphere within the public sector.

Greater risk of poverty for children and youth

A growing gap between young and old is also reflected in the risk of poverty. In two thirds of the industrial countries, including those with a strong welfare state, more children and youth are threatened by poverty than those over 65. In Sweden for example, the poverty risk of under-18s is 12.3 percent, nearly two and a half times as high as that of those over 65. In Norway and Denmark the risk of poverty for children and youth is even six and four times as high respectively. However, poverty among the elderly remains a widespread problem in many EU and OECD countries and there have been clear signs of an increase in old-age poverty as a result of growing demographic pressure.

For the future of the industrial countries it is vital to provide young people with good prospects and to split resources fairly between generations. In order to restore intergenerational justice, it is of utmost importance to halt environmental degradation and climate change. Meanwhile, looking ahead, it is key to share the financial burden between the generations and make future-oriented investments. If the industrialised countries continue at this pace, however, the younger generations will have a bad hand in the game about their future.

Pia Schmidt is co-author of Bertelsmann Stiftung's Social Justice Index. She is working on issues of sustainable development and intergenerational justice. Dr. Thorsten Hellmann is responsible for and co-author of Bertelsmann Stiftung’s Social Justice Index. He is an economist and expert on comparative political science.

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