Now we're talking --- James Galbraith goes against the tide

Now We're Talking

by digby

Here's James Galbraith with a very unusual article. It doesn't sound like something you've read before a thousand times:


The most dangerous conventional wisdom in the world today is the idea that with an older population, people must work longer and retire with less.

This idea is being used to rationalize cuts in old-age benefits in numerous advanced countries -- most recently in France, and soon in the United States. The cuts are disguised as increases in the minimum retirement age or as increases in the age at which full pensions will be paid.

Such cuts have a perversely powerful logic: "We" are living longer. There are fewer workers to support each elderly person. Therefore "we" should work longer.

But in the first place, "we" are not living longer. Wealthier elderly are; the non-wealthy not so much. Raising the retirement age cuts benefits for those who can't wait to retire and who often won't live long. Meanwhile, richer people with soft jobs work on: For them, it's an easy call.

Second, many workers retire because they can't find jobs. They're unemployed -- or expect to become so. Extending the retirement age for them just means a longer job search, a futile waste of time and effort.

Third, we don't need the workers. Productivity gains and cheap imports mean that we can and do enjoy far more farm and factory goods than our forebears, with much less effort. Only a small fraction of today's workers make things. Our problem is finding worthwhile work for people to do, not finding workers to produce the goods we consume.

In the United States, the financial crisis has left the country with 11 million fewer jobs than Americans need now. No matter how aggressive the policy, we are not going to find 11 million new jobs soon. So common sense suggests we should make some decisions about who should have the first crack: older people, who have already worked three or four decades at hard jobs? Or younger people, many just out of school, with fresh skills and ambitions?

The answer is obvious. Older people who would like to retire and would do so if they could afford it should get some help. The right step is to reduce, not increase, the full-benefits retirement age. As a rough cut, why not enact a three-year window during which the age for receiving full Social Security benefits would drop to 62 -- providing a voluntary, one-time, grab-it-now bonus for leaving work? Let them go home! With a secure pension and medical care, they will be happier. Young people who need work will be happier. And there will also be more jobs. With pension security, older people will consume services until the end of their lives. They will become, each and every one, an employer.

A proposal like this could transform a miserable jobs picture into a tolerable one, at a single stroke.

When I was young, a long time ago, it was conventional wisdom that you wanted the oldsters to get out of the job market to make way for the youngsters. Now perhaps that was a function of the boomer generation but it used to be common to hear this kind of talk in discussions of the future. But somewhere along the line it became an article of faith that anyone who didn't want to work until they dropped dead was a spoiled parasite who expected young people to keep them in style by working 20 hour days.

In a modern, civilized world in which people were trying to find economic answers to the problem of how to deal in a humane way with an aging population in a time of economic transition, Galbraith's prescription would at least be part of the discussion. Unfortunately, we are not in a civilized world -- we are in some weird Randian/Calvinist era in which our leaders seem to have confused economics with moralism and have decided that the average folk have had it too good for too long.