The World Economic Forum Says The World Should Save More For Retirement
A $400 Trillion retirement shortfall by 2050 isn’t worth suggesting that businesses should give people a raise.
By chance, I happened upon this article in Quartz, a sort of digital business magazine. The article, “The world is sitting on a $400 trillion financial time bomb”, is a short, interesting and mildly terrifying read. They say that the United States will see a $137 trillion shortfall in retirement savings. China is projected to take 2nd place with a $119 trillion shortfall.
Global news and insights for a new generation of business leaders.
A new generation of business leaders? Do tell. And they do:
Quartz was founded in 2012 to serve a new kind of business leader with bracingly creative and intelligent journalism that’s built for users first. We help our audience see around corners, navigate disruption in their industries, build fulfilling careers, broaden their views of the world, and enjoy lives rich with culture.
So I checked out the report they used as one of the source materials for their article, We’ll Live to 100 — How Can We Afford It?(pdf), by the World Economic Forum. It’s 24 pages long, isn’t paywalled, and it does provide a lot of useful information. Inside, there is a lot of discussion about financial literacy, the savings gap they’re projecting, and an action plan.
The WEF report has a lot to offer the business leaders of the future. The WEF itself is all about business. Says so on their About Page:
It was established in 1971 as a not-for-profit foundation and is headquartered in Geneva, Switzerland. It is independent, impartial and not tied to any special interests. The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance. Moral and intellectual integrity is at the heart of everything it does.
1971, huh? Their inception is just a few years before a change in American public policy began to decouple wages from productivity, starting in 1978. Here is one of my favorite charts from the Economic Policy Institute showing that very trend:
Now I’m not saying that the WEF was and is the biggest influence on public policy across the world. But they are based in Switzerland, a nice, expensive place to travel to. So if world leaders wanted to make any big decisions about policy changes, they’d be very insulated from the public while making those decisions.
But there is something else about their report. As much as they talk about financial literacy, the importance of saving money and collecting data to see if their efforts are working, there is no discussion about giving workers a raise. You know, if workers earned more money, they’d have more money to save for retirement. And with greater financial literacy, that could happen.
That there is a huge retirement shortfall to report says something about the leaders who are running the businesses of the world. I mean, why aren’t they reporting that there will be a huge retirement surplus and what a great business opportunity that would be for everyone? The WEF says on their membership page that:
The World Economic Forum provides a platform for the world’s 1,000 leading companies to shape a better future.
Just imagine the biggest 1,000 companies in the world getting together to discuss economic policy, once a year, every year. With lots of “collaboration” in between. They put that report together. And in 24 pages, there is not a single word about making sure that wages track with productivity.
That is what I find so interesting about the headline at Quartz, and the report together. I mean, if I were running a fortune 1000 company, I’d want to make sure that my customers were earning enough money to buy my products and to do so in such a way they’re not in hock up to their eyeballs when they retire. Isn’t that the point of capitalism?