You know how politicians like to hide behind the excuse of an ageing population to justify unpopular policies? Many of them will adamantly claim that an ageing population inevitably means that retirement ages — for both state and private pensions — will simply have to rise.
People are living for longer, the politicians tell us, and it would simply be unaffordable not to raise the retirement age as life expectancy increases. Well, that’s basically bullshit!
We’ve already seen most pension schemes become drastically less generous than they used to be — a problem that has also been portrayed as an inevitable consequence of an ageing population. Now we’re told we must work further and further into old age before being allowed to retire.
Naturally, politicians don’t want to admit that it is their incompetence that means they’re struggling to find enough money to pay decent pensions at a reasonable age. If governments had invested the nation’s resources more wisely over the decades, we wouldn’t have such pressures on the public purse and we wouldn’t have to consider raising the retirement age as a possible way out of the fiscal mess we’ve got ourselves into.
Nevertheless, we are where we are. Given the situation we now find ourselves in, isn’t it inevitable that many people will have to work into old age before we can allow them to retire? Well, no, it isn’t — and anyone who says otherwise is probably either lying or is lacking any sort of reasonable understanding of basic economics.
Of course, an ageing population does bring with it certain pressures and difficulties that we will have to find a way to deal with. It will put more pressure on the health service and more pressure on the shrinking proportion of the population that are of normal working age.
Raising the retirement age, however, is only one possible approach we might take to this situation. It may not be the best one and it certainly isn’t the only one. We do have a choice and politicians and commentators should stop misleading people by falsely claiming that we don’t.
Imagine a man in his late 60s or early 70s. Having worked hard all his life, he now works in a restaurant kitchen — alternating between washing up and cleaning the floors and other surfaces. It’s hard and hot work, as most people who have ever worked in such an environment will confirm. He is in reasonably good health, but he has aches in his joints, just like most other people of his age.
This can hardly be what we would consider fair. It’s all very well to say people are living longer and so they’ll still get the same number of years in retirement, but what sort of quality of life will they have? A year of retirement in your seventies is not the same as a year of retirement in your sixties. A person ought to be able to retire when they’re still young enough to really enjoy their retirement — hopefully when they’re still mobile enough to travel a little, visit their grandchildren or perhaps take up golf or bowls. The more we delay retirement, however, the greater the risk that retirement will consist, not of travel and leisure, but of struggling with medical problems in a nursing home.
Also, whilst people may be living longer on average, lots of people obviously fall short of that average — and a higher retirement age will very likely result in more people never reaching retirement at all.
Yet, this man, working into his seventies, cleaning up in a restaurant kitchen — this is the sort of situation we’re being asked to believe is inevitable, given the ageing population. In order to pay our way in the world, it’s just going to have to be normal for people of such an age to continue in work instead of being able to enjoy a leisurely retirement at a reasonable age — or so we’re told.
Yet it only takes a minute of considering the basic economics at play here to realise that this situation is not inevitable or necessary at all — and it’s total bullshit to claim that it is.
The fundamental economics of the situation is that there is no fundamental need for this man to be working in a restaurant — for the simple reason that there is no fundamental need for the restaurant to exist in the first place. We could force this man to work into his seventies — or we could just rediscover a little basic fucking humanity, go without this particular restaurant entirely and let this man enjoy his well-earned retirement and spend more time with his grandchildren.
It’s not that people need this man to continue working into his seventies. It is merely that rich people who can afford to eat in expensive restaurants demand that he continue working into his seventies, so that they can reap the benefits of not having to cook and wash up for themselves at home. We’re asking a 70-year-old to continue working because we can’t bear the alternative of having slightly fewer restaurants and having to cook for ourselves a little more often. Have we got no fucking shame at all?
Just think — it only takes a tiny percentage of the population, working on farms, to easily be able to supply food to the entire population. There are other things we need, of course — warmth and shelter, for example — but the basic fact remains that all the goods and services we actually need can easily be produced using only a small percentage of the population.
The rest of the man-hours available to us are either being wasted or are being used in the production of luxury items that we may want, but which we don’t actually need. We could simply go without a small percentage of these luxuries and then people wouldn’t need to work into old age, so long as we have a fair and reasonable system for distributing the goods and services that we do actually need.
Alternatively, we could simply put a little bit of effort into cutting out waste and raising our appallingly low productivity levels, especially in various service industries in both the public and private sectors, and then we wouldn’t even have to go without the luxuries we’ve become used to either!
Here are the basic facts of the situation, from a competent economist’s point of view: Having people work into old age is not an inevitability or a necessity at all. It is a choice — one possible option, compared to others that could easily be far superior solutions.
Yet we are being pushed into a future of lousy pensions and late retirement, by a politically-expedient and economically-illiterate untruth that there is no viable alternative. This myth may be a politically-acceptable excuse for making people work into old age, but from an economics perspective, it is utter nonsense.
The problem an ageing population causes is not one of us no longer being able to meet our needs or maintain a decent standard of living without raising the retirement age. It is largely just a simple matter of the fair distribution of our wealth and income.
Should current generations of workers, for example, be forced to work longer in order that people who have already retired early with a fat final-salary pension scheme can continue to enjoy the luxuries and leisure time that current workers may never be able to afford for themselves?
Should ordinary workers be forced to work into old age so that much better-off people can continue to be supplied with far more luxury goods and services than they need — or should the richer members of our society be willing to give up an occasional restaurant meal in order that ordinary people can afford to retire at a reasonable age?
These are the sort of fundamental questions we really ought to be asking ourselves. Perhaps if we ask such sensible questions, we might be better able to reach some sensible solutions.