The financial crisis is likely to end the concept of the welfare state. The Financial Times , for example, reports that France is looking at removing the right to retire at 60, one of the lowest retirement ages in Europe and there's more of this ahead.
As reported here, the US think tank the Carnegie Endowment says the welfare state in Europe is unaffordable. Mind you, the US financial system and those derivatives trades that gave us the global financial crisis which morphed into Europe's debt crisis is also unaffordable.
The big question is whether these changes will trigger civil unrest and riots across Europe. That would be disastrous. While the Americans say Europe can't afford a welfare crisis, the alternatives might be even worse.
Even still, Europe's crisis might see the end of retirement. Earlier this month, I looked at how Europe's ageing population is driving the debt crisis. It's also something I examine in my column here.
Put simply, an ageing population means fewer are paying taxes and at the same time, governments have to pay more for health costs. If we have more older people, we have to live with more Alzheimer's disease, cancers, heart attacks and strokes which will put pressure on health budgets around the world. That will drive up debt. As the Council on Foreign Relations warns, the longevity revolution means we need a completely new way of thinking. That means companies need to take more older employees, and older people will need more training. And governments will need to rethink pensions.
That's a much bigger challenge than notions around what to do with the welfare state.
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