To combat ageing, Europe must revolutionise its democracies

by Giles Merritt*

Europeans watch the chaotic state of America’s politics with growing disbelief, but our own democracies are scarcely more healthy. As well as sliding into right-wing populism, the EU’s national electoral systems are ill-prepared for ageing that will pit generations against each other.

The tragicomedy of Donald Trump’s return to the White House may make European politics look ‘normal’, but in fact they are rooted in bygone times. The rapidly-widening gap between the needs of pensioners and those of working-age people makes Europe’s democracies no longer fit for purpose.

Forget the old adage ‘he who pays the piper calls the tune’ because it no longer holds true. Europe’s taxpaying younger voters are greatly outnumbered by the over-60s, and will be for the foreseeable future. The voting muscle of Europe’s ageing populations will enable them to protect their pensions and healthcare arrangements at the expense of the under-privileged Millennials and Gen-Zers who have to fund them.

Europe’s demographics skew its politics to favour older people. The over-50s now make up about half of the EU population, and the under-30s only 15 per cent. This ‘silver stranglehold’ is further tightened by imbalances in voter turnout, with two-thirds of over-60s regularly exercising their votes in contrast to fewer than half of younger people.

Yet the scale of ageing’s runaway costs has still to register with most people, even though it points to epic political battles ahead. In the UK, a House of Commons report has warned that ‘future generations will in effect inherit net liabilities of just over five times annual GDP. The rise in tax revenue (or reduction in expenditure) needed to plug the gap would be around six per cent of GDP.’

A similar analysis in the US suggests a 40 per cent cut in federal spending would be needed to relieve the growing fiscal burden on young people. In Germany, the Bertelsmann Stiftung points out that demographic change will mean less wealth to pay for ageing. ‘It is leading to massive income losses,’ it reported after studying the shrinkage of active workforces, when it forecast alarming reductions in real wages and spending power.

The broad trend of Europe’s ageing is well known; the over-60s will by mid-century account for a third of the EU’s population, up from a quarter today. Much less appreciated is the likely political impact. Healthcare, pensions and other social costs are snowballing while younger people’s wages are lower and housing increasingly expensive.

How this will reshape the political landscape in Europe is hard to tell. The shift towards hard-right populist parties seems led so far by older voters whose nationalist sentiments have trumped more rational arguments in favour of stronger EU-level cooperation. Younger people tell opinion pollsters they prefer more integrationist policies, yet they often don’t turn out to vote.

Whether, and how, an increasingly bitter tussle between Europe’s taxpayers and its pensioners might alter this picture remains to be seen. What is clear is that populists cannot pander to both. Perhaps this can restore the fortunes of mainstream centre-left and centre-right political parties, whose strength lies in openly debating how to reconcile competing interests.

To defeat the populists’ enticingly simplistic appeal, mainstream politicians need to overhaul Europe’s outdated democracies. A first step would be to streamline member states’ four systems of proportional representation into one, adopt the same electoral cycle and governing mandate, and introduce an EU-wide voting age of 16. Far greater use of electronic voting would also help, as would a re-weighting of taxes: over half of EU governments’ revenues averagely come from employment, about a third from consumption and less than a fifth from taxation of capital.

Reforms of this nature are a tall order, and taller still would be an overhaul of democratic structures. Could some sort of handicapping system redress the imbalance between young and old and narrow widening wealth gaps? Democracies are based on egalitarian ideals, but in ageing Europe, universal suffrage is the problem and not the solution.

*Founder of Friends of Europe
**first published in: Friendsofeurope.org