Thursday, April 7, 2011

And You Thought I Was Kidding?

In a special report on pensions, Hiring Grandpa, The Economist makes the pseudo case for working longer: "it boosts output and reduces the length of time for which pensions need to be paid." Actually, theses two benefits are conditional -- output of WHAT? paid by WHOM? If pensions are a form of deferred wages, then reducing the period of payment is simply a retroactive claw back of wages. In a world in which economic "output" is increasingly separated from utility, boosting output can really mean a decrease in utility (see Bartolini).
That's where the Economist's catch-all reactionary rhetoric comes in handy:
A potential barrier to older people staying on in the workforce is the “lump-of-labour fallacy”—the belief that there is only so much work to go around. In the old days this was used by men to argue against women joining the workforce, and it is still cited by those opposed to immigration today. But it seems obvious that it is better for the economy if a 60-year-old does a productive job than if he is sitting idle, supported by the taxpayer. And the data clearly disprove the fallacy. In Europe the participation rates of those aged 20-25 and 55-59 respectively are positively correlated; in other words, if more older people are working, the chances are that younger people will be too.
And you thought I was kidding?

2 comments:

  1. "But it seems obvious that it is better for the economy if a 60-year-old does a productive job than if he is sitting idle, supported by the taxpayer."

    But from the 60-year-old's perspective, isn't the opposite true? Sitting idle, supported by the tax-payer, better for the 60-year-old's economy?

    And, doesn't that perfectly describe the situation of the average bureaucrat and place-man/woman? Look at Gordon Campbell's appointed Translink board as exemplars: his replacements of a conscientious and opposing board by inexperienced political appointees whose first piece of business was to appoint themselves huge pay raises. Lumps, yes: useful labor, no.

    When political stuff irrupts into the economic models, I suppose you can expect such distortions of that model that they can actually approach day-to-day life.

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  2. But it seems obvious that it is better for the economy if a 60-year-old does a productive job than if he is sitting idle, supported by the taxpayer.

    And yes, from my 64-yr-old perspective the opposite is true -- most emphatically so.

    I guess anything can be obvious if you get to frame the debate. Never mind that my pension is deferred pay they I earned long ago and have been waiting for ever since, and that SS is an annuity that I payed for out of pocked for over 4 decades.

    Or that virtually every penny I receive these days gets funneled back into the economy, just about immediately.

    But I guess velocity and multipliers don't matter either.

    WTF!?! Really.
    JzB

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