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A New Generational Contract: Visions for Business, Politics and Society

Topic leaders at the 2022 St.Gallen Symposium gathered to discuss intergenerational fairness, government reform and a younger voting age.
Source: HSG Newsroom

6 May 2022. Focusing on the intergenerational contract and asking what generations owe each other, an international and intergenerational panel gathered on the stage at the St.Gallen Symposium. Considering changes in demographics, unprecedented debt levels, and environmental concerns, how can leaders once again start a dialogue between the generations and promote intergenerational fairness?

Associate Professor of Political Science at the University of St.Gallen Christoph Frei immediately set the scene by pointing out that with issues like war, pandemics and other headlines grabbing topics of the day, there are other imperative issues that societies seem to pass over. The topic of an intergenerational contract at its core deals with what generations give and what generations take from each other… but what is the responsibility of one generation to the next?

Joining Frei on stage were the Co-President of Club of Rome Mamphela Ramphele and the State Secretary for Youth, for Austria Claudia Plakolm. The Chairman of the Christian Democratic Union (CDU) Friedrich Merz joined discussions digitally.

Before turning questions to the panel on intergenerational cooperation, Frei was quick to point out that for most, and especially politicians, words come easy… but the deeds that back up promises are more difficult.

Short-term focus

Frei first turned to Mamphela Ramphele, who is a South African activist and medical doctor and a political thought leader. Ramphele perceives the greatest challenge to intergenerational cooperation as short-termism. This excessive focus on short-term results at the expense of the longer term is displayed in the way we overconsume and have little regard for the next generations.  This also has an effect on business—where many keep their eyes on profits and stock prices but perhaps not on the overall health of the company.

She also pointed out that Indigenous wisdom points to a value system that looks always at the future. Reverence for life and nature needs to passed on from one generation to another. She believes that we have lost this belief system and believes that we need to have the willingness to change our mindset. “We have to become human in a new way.” She is convinced that by changing how we value each generation will change our short-term thinking to longer term.

Friedrich Merz is not only the chairmen of one of the largest political parties in Germany, he also works to create and enhance more cross border cooperation in Europe. When asked about intergenerational equity, Merz first pointed out that the Russian invasion of Ukraine is the start of a new world order. He stated that this invasion is not just a regional event in East Ukraine, but that it is a global event that will affect us all.

Merz agreed with Mamphela Ramphele and thinks that we need new priorities that need to be reflected in government investments. He argues that we need to consume less and we need to revamp our pension system. Currently in Germany, 1/4th of the German federal budget is spent on pensions, and not on other expenditures that would help the next generation like education, sustainability and infrastructure. He continued, saying that the priorities of the federal budget need to change.

Better off than the one before

The State Secretary for Youth in Austria Claudia Plakolm, who was first elected to Austrian Parliament at the age of 22 pointed out that the same challenges facing Germany are also facing Austria. She noted that the average Austrian in 1970’s was retired for 7 years, and now they enjoy a pension for an average of 22 years. The assumption previously was that every generation was better off than the one before. This notion no longer seems to be true.

Moderator Christoph Frei confronted Ramphele on her philosophical approach to generational change asking her to specifically respond to war in Ukraine and how Africa is dealing with intergenerational challenges. In response to Ukraine, Ramphele quoted an African proverb: When elephants fight, it is the grass that suffers. She sees Ukraine as affecting us all globally. She then quoted fellow South African Desmond Tutu who said, “If an elephant has its foot on the tail of a mouse, and you say that you are neutral, the mouse will not appreciate your neutrality."

Leaders clinging to power

Dealing with the next question, Ramphele stated that Africa is blessed with the youngest population but has the oldest government leaderships… After serving their time, African leaders did not or have not stepped aside and let the next generation lead. She said that the beauty of being young is not being afraid of change. The younger generation are the change makers… each generation much find its mission to free the future. She appealed to the young people to start a human revolution that seeks to change mindsets. But in the end, we are in this together.

Setting his focus on Merz, Frei pointed out that German governments seem to prioritize austerity before acting boldly on issues such as climate change.

Merz pushed back noting that he believes the German government focuses on fiscal responsibility not austerity. Being disciplined, gives us the flexibility to maneuver. To focus on new priorities, we need to first spend responsibly. He is convinced that consumption needs to slow down and that a re-priortisation would give them the path to being able to invest in education, infrastructure, etc.

Suffrage at 16

To wrap up the discussion, Plakolm noted that Austria is one of two European nations that have set their voting age at 16. She believes that this has changed a focus for Austrian governments to include the perspective of the new generation when designing policy. In dealing with the coronavirus pandemic for example, many lockdown measures were primarily implemented to protect the older generations. Now we are seeing that these measures had a negative effect on the younger generations such as distant learning and mental health. She sees Austria as leading the recognition of these maladies that the younger generation are now facing.