With his government in shambles, Macron has agreed to postpone the raising of the retirement age from 62 to 64 until after the next presidential election. France's government debt is more than 3.4 trillion Euros, 113% of GDP, and they are running a huge deficit. The main item in the budget is what France calls "social protection," which is mainly for pensions, unemployment benefits, and subsidies to parents. Various calculations set this amount at between 23.3% and 30.6% of GDP. (Note: that's not a percentage of the budget, but a percentage of the whole economy.) Health care is also an issue, but the French have a pretty good system for controlling those costs. The real driver of the crisis is pensions.
Macron is the only politician in France who seems to care; his rivals on both the right and the left have promised huge increases in social protection spending. French pensions are also quite generous; there were claims last year that the wages of the median French retiree were higher than those of the median French worker.
How did we end up here? How did retirement at 62 become the hill on which millions of Frenchmen are prepared to die? Or at least to ruin their country?
I saw recently that a German commission found that the only way to keep their pension plan solvent is to gradually raise the retirement age to 73.
This seems to be one of the major unsolvable problems of our democratic age. Or really, the intersection of two problems: a refusal of people to pay taxes high enough to cover the benefits they think they deserve, and our ever lengthening lives.
3 comments:
Yes, but the specific dilemma is asking the (working) electorate to pay more for a pension scheme they're almost certainly not going to benefit from themselves.
When the UK state pension was created, there was something like 5 workers for each retiree. It's now 3.4. If you have fewer people paying into the scheme, they either have to pay more to maintain the current pension, or the pension has to be reduced. The latter is political suicide given the fact older voters turn out to vote, while younger voters often don't bother.
Everyone can see the system is broken. It's obvious it's going to collapse. But pensioners and those close to retirement vote solidly for parties who promise to keep pensions generous, even if that means screwing over everyone else.
Macron should be respected for making what is -- fundamentally -- quite a modest proposal. The UK pension age is already 66 and scheduled to rise to 67 next year, and 68 some years later. That such reforms are proving to be impossible says something about the way European nations (including the UK) are really struggling to deal with the reality of their ageing populations and indifferent economic growth. Immigration is seen by the economists as a quick fix -- young, educated workers would can pay into the system for a few decades -- but this as been deeply unpopular and helped to fuel the rise of the far right populists.
"The only way to keep our pension plan solvent is to raise the retirement age!"
"...what about increasing taxes to cover the costs - particularly taxes on the rich?"
"Whoa, now! That's just crazy talk! That could never work!"
"Because the amount needed is too large?
"No! Because if we tax the rich, they won't finance our election campaigns!"
That's not an exaggeration, by the way. We could cover the costs with taxes on the rich quite easily - we just lack the spine to even consider it, because the rich are the real owners of western society, and we dare not offend them.
If we went to the Top 1% of Americans and taxed them in a manner that took away 2% of their collective household wealth to be redistributed, you could then give enough money to the Bottom 50% of Americans to DOUBLE THE WEALTH OF EVERY SINGLE ONE OF THEM.
But the rich won't stand for a proposal that leaves them with a mere 98% of their staggering fortunes - even if that would mean virtually completely eliminating poverty and hardship for hundreds of millions of people. They'd sooner see the poor dead - quite literally.
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