Sunday, September 19, 2010

The Trouble with Retirement? What Trouble?

It’s the furious, impassioned debate of the moment, well, of the decade.

People live longer. They grow older. They don’t have as many children as they used to in times past—and yet the population keeps growing, how’s that for an amusing paradox? Still, it’s all horrible. We can’t go on the way we’ve been going: we can’t allow people to retire at 60 any longer (or 65 in many countries). It’s not a question of ideology, it’s a simple question of mathematics, of arithmetic: since the pension of the people who retired is paid for by the social contribution taken on the wages of working people, the growing number of old people and the dwindling number of people at work simply makes it impossible to keep the system alive as it is, financially speaking. It’s obvious to all, regardless of their political opinions. Obvious, I tell you! You cannot, you may not gainsay the Powers-that-Be! So say we all! (yeah, right)

Really, who do those, oh so wise Powers-that-Be think they’re kidding?


We live longer. Hey, newsflash: it’s a good thing, it’s a happy thing. We should be rejoicing, not gloomily spreading around predictions of doom! When someone we know retires, we congratulate him/her, we don’t start commiserating and nodding in empathy with the unhappiness the lucky person is about to experience!

Let’s go back on our beautiful, so-called unarguable mathematics: the more time passes, the less people under 60, and the more people over that age, yeah. So, what? How does that portend the doom of our pensions? Say I apply this kind of “mathematical argument” to farmers in the beginning of the 20th century: imagine, we’re in the 1900s, and I go around foretelling general famine in the country by the year 1930, since the farmers’ numbers will dwindle so much that there won’t be enough people to farm the land and feed us all anymore. Yeah, it's ridiculous, I know. But the argument is exactly the same as the ones used to foretell the death of our pensions. And it’s as invalid for farmers and general famine as it’s for the ageing population and pensions.


Simple: farmers’ numbers dwindled, but techniques improved, productivity grew dramatically, and so we compensated for the reduced numbers. We didn’t starve, did we? It’s the same here: the funding for our pensions comes from the social contribution taken out of our wages. If you take a good look at the system, it doesn’t exactly depend on an ever-growing number of people who contribute. What it does depend upon is the total amount of money coming from the social contributions. There, you have it. Of course, to completely understand, you need to know some pieces of history nobody ever cared to put in the school programs—I reaaaaaally wonder why, by the way.

As we progressed in time, as productivity rose, and industry profits along with them, social contributions were raised (them and our net incomes along the way). This resulted from a very simple, a fair equation: more profit means more money to distribute, to share between workers, CEOs, and shareholders. As Gross Domestic Products (GDP) rose in our countries, so did the social contributions, and so did the funding for our pensions, our social security system, and so on. However, that movement stopped at some point.

It happened in the end of the 1970s. That’s when the neo-liberal reform started.

That’s when Powers-that-Be, frustrated that their profits were not skyrocketing quickly enough, decided to take on what was slowing them down: sharing a fair portion of the profit with the people who do the actual work. From that moment on, they started working at unravelling our welfare system, they bought media, they bought politicians. They brainwashed us, they manipulated us into believing that all the things we have to live through, all the hardships, all the economic and social crises—all that is inevitable. Mathematical. Inescapable. Unarguable.

Don’t trust me? Well, by all means, don’t. Simply go check the numbers on the growth of the GDP in our countries over the years, and of course the numbers on wages growth, and shareholder dividends’ growth. You won’t be disappointed.

GDP has kept rising over the years.

Wages have kept rising lower and lower over the years.

Shareholder dividends have skyrocketed over the years.

So, you see, there is no problem with our pensions. None. The only problem there is, is in making the Powers-that-Be give up their ever-growing greed and thirst for more and more profit, more and more money. We need only re-distribute the profits fairly. If we do, our welfare system, our pensions will never even blink, no matter how old we grow as populations.

And that, ladies and gentlemen, is not at all impossible.

That, ladies and gentlemen, is a political decision.

And, remember, you’re the ones who vote.

You’re the ones who choose, and who put politicians in power.

So, that’s it from me for now.

I could go on, of course. I could also explain how people who’ve retired more and more remain active members of the community, and as such that their activities should be given an economical value, same as ours. I could then explain that, with this in mind, the so-called problem of the retired versus active people ratio simply ceases to exist at all…but enough with my ceaseless babblings!

Good night, and good luck (and read Bernard Friot if you can!)

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