« The Peterloo paradox | Main | Smart consumers. stupid voters »

August 18, 2019

Comments

Kevin Carson

Capitalist self-valorization is a ponzi scheme. If an ever-expanding portion of social life isn't incorporated into the circuit of capital, capitalism will die.

Blissex

Many male and low-income workers (mostly from the north and left behind areas) are already dead by 67, 75 would mean most of them would be dead before collecting paid or much state pension even if they paid the NI tax all their life.

This would ensure that most state pension payments would go to those inclined to vote tory, in order to kee them so inclined.

Most of the time it is commodification, sometimes it is just sordid electoral calculation.

Davis X. Machina

It's hard to whip support for provision of a public good in a nation where a major political party, and half the political nation, doesn't believe the word 'public' points to any actually-existing referent.

James

with respective to pension age, in Marx's conception, an increase is more akin to an increase in the rate of exploitation, than commodification

Blissex

«already dead by 67, 75 would mean most of them would be dead before collecting paid or much state pension even if they paid the NI tax all their life.»

To make clearer the impact of raising the state pension age to 75, currently expected age of death at age 65 is 82 for men and 85 for women, therefore:

* A cut from 65 to 67 was a cut of 2 years out of 17 for men, around 12% of the value of the state pension for men and 10% for women.

* A cut from 67 to 75 would be a cut from 15 years to 7, a further cut of around 53% of the value of the state pension for men, and 44% for women.

And that's for people who do reach age 65 (or 67) or 82, which for a large minority of men and low income workers does not happen.

Jon Davies

So is raising the retirement age going to drag down long term economic growth, by locking up more money in pensions than in spending?

rogerh

Consider how things will look 20 years from now. The current boomers will be shuffling off in numbers freeing up housing, the new boomer crop will be a good bit poorer - pensions, house inflation etc, McJobs. But allegedly there will be 3.5M more people. Does anyone really expect to get any useful work out of the 67+ cohort that could be more usefully done by the 18+ cohort? Probably not the point, as said the real point is to cut the state payout.

The problem seems to be how to run an overdeveloped, over mature economy with too large a middle class drawing too large a pension pot. Some severe pruning necessary.

Swami

This article, and all the comments, are a twisted attempt to force an obvious funding problem through a dysfunctional Marxist lens. If all you have is a hammer and a sickle...

I am not from the U.K., but I would guess that just like everywhere else, the problem with state funded pensions is that politicians bought votes by promising better pensions than they supported via taxes (and growth). Thus there are three possible solutions (or a combo), raise taxes/funding, reduce benefits, or delay the age of collecting benefits. To frame this as a nefarious neoliberal plot to increase fund manager profits and commoditize retirement is just goofy.

The usual reason that publicly-provided pensions are often less affordable than private pensions is that the public ones often include a significant amount of redistribution. Thus it is an insurance plan and a redistribution plan. Certainly it is not difficult to combine private and public pensions into a low overhead (including profit which is an essential ingredient in markets) system which is adequately funded.

I would suggest (at least in the US) a simple option offered to everyone of either paying more into SS or retiring later. Everyone could choose what is best for them. Problem solved.

Oh, and again, I am more familiar with the US, but there has been no stagnation in average or median wages here. The median wages adjusted for taxes, benefits, and PCE inflation is up between 40 and 65 percent over the last forty years (depending on how we adjust the numbers). IOW, the richest large diverse nation in the world continues to become wealthier. Marx must be turning in his grave.

Blissex

«The median wages adjusted for taxes, benefits, and PCE inflation is up between 40 and 65 percent over the last forty years»

The honesty of describing precisely the claim as to "median wages" is admirable, therefore let's look at the "details"...

That's 1% real per year, rather anemic, and using the PCE index is rather questionable: cost of living inflation for median income people has been above 2.5% per year of the PCE for 40 years, even the CPI for urban consumers has risen on average 3% for 40 years, and this despite heroic efforts from the BEA to improve its "accuracy" using every "methodology" they could devise, Boskin commission onwards. Using the 3% figure cuts the growth rate to 0.5%, and that's for relatively well-off median workers, below median workers haven't had it so good.

That 1% or 0.5% though includes rampant healthcare cost growth, at 5% per year compared to 2.5% for the PCE inflation, that is high healthcare cost inflation is misreported as an increase in total compensation instead of massive redistribution from workers to healthcare industry executives, investors and professionals.

Discounting that probably reduces considerably that low 1% per year real growth to negligible levels, and considering a more realistic inflation index than the PCE means that total net wage growth over

Conversely adjusting for taxes is pointless: they are an expense like any other, decided by consumers in their role as voters; it is like adjusting wage net of housing and car costs. Do you think that in the house there are more people who pay taxes than people who live in houses or have cars? :-)

As to pensions, I also wonder whether you are including in the calculation above as to "benefits" the value of the pension, rather than the contributions, because in the past 40 most pension benefits have been cut to 1/3 of what they used to be; plus stocks have been growing for 40 years at nearly 9%, making building up a DC pension far more expensive than 40 years ago.

The overall picture is that starting in 1973, 1980 and in 2001 something profound changed in the USA economy:

https://fred.stlouisfed.org/graph/fredgraph.png?g=oFkm

Ralph Musgrave

".... if we can only get our pension later we will have to save more via private pensions. This increases the profits of fund managers."

Not necessarily: if people enjoy fewer retirement years than now, then my guess is they'd save LESS via private pension schemes than they do now.

Swami

Thanks for the comment, Blissex

Here is a link explaining median income growth

https://www.minneapolisfed.org/publications/the-region/where-has-all-the-income-gone

Note it doesn’t even compensate for lower taxes, addressing your point. Pardon me for being misleading. My bad.

This thread is in response to the line on "capitalist stagnation." As the article makes clear not only were Americans the richest human beings this planet has ever seen back in 1980, we have become substantially richer in the 40 years since. Depending how we calculate it, by 40 to 80%.

You are certainly correct that something happened around 1980 to slow down the rate of growth in median income. The best summaries of this IMO are by Autor et al. The basic narrative is that for the first time ever, one billion relatively low skilled workers entered the market system within a generation, driving down wages for lower skilled labor in developed countries while simultaneously increasing returns to skilled labor, service industries and entrepreneurial capital. Net result was slower growth in median income in already high income areas, unprecedented growth in median incomes in developing nations, and higher inequality as the market signals supply and demand imbalances and profit opportunities.

Net result, is not of failure of "neoliberalism" it is of the greatest advance in median standards of living GLOBALLY in history, with a billion people in 4 decades emerging out of the chains severe poverty which had been forced on them by Marxist/Communist ideology.

The comments to this entry are closed.

blogs I like

Why S&M?

Blog powered by Typepad