Age of Disorder

[Extract from ‘Age of Disorder’, Deutsche Bank]

We questioned the general assumption that the intergenerational divide will worsen perpetually as the population ages thus maintaining the status quo (e.g., low inflation and political protection for asset holders, pensioners etc.). This misses the key point that the age where the intergenerational divide begins is not static. It is likely that this age will increase over time as the average age of those left behind will continue to increase as a gap has opened up in income and wealth that is very hard to bridge naturally.

As such, at some point the younger left-behind generation of voters will exceed those that have benefited from the favourable financial conditions that have been cemented in successive recent elections. When this happens (or gets closer), the possibility of seismic change in policy at elections becomes more likely. We think that over the next decade, the left-behind younger population will become an increasingly powerful electoral force, especially if it continues to be left behind due to the impact of the pandemic. In the US this Millennial crossover happens slightly earlier than in other G7 countries (see graph in the note). Interestingly Japan will be one of the last to cross even as it is far more advanced in demographic ageing. This may explain why the status quo has be maintained for so long (e.g., policies friendly to pensioners).

Never before has voting been so polarised by age so the increasing weight of Millennials and younger voters over the years ahead will have a massive impact on global policy and create disorder to the status quo.

Fuente: “Age of Disorder” note (Deutsche Bank), United Nations, Haver

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