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Futile to resist rise in tax

April 7th, 2010

I’m still working through the backlog that built up while I finished my book manuscript. In the process, I forgot to post my Fin column from Thursday 25 March, which points out that we will, sooner or later, need more tax revenue. Here it is


Futile to resist rise in tax

In the early 1970s, radical American economist James O’Connor was among the first to detect the arrival of what he called ‘the fiscal crisis of the state’. As O’Connor realised, the combination of growing demands for services such as health, education and publicly-funded pensions with the costs of the US military machine could not be met from available tax revenue.

Connor anticipated that the resulting crisis would provide an opportunity for the left. In fact, of course, the ‘tax revolt’ which began in the late 1970s paved the way for a resurgence of market liberalism in the 1980s. The resurgence was led by Ronald Reagan and Margaret Thatcher, and emulated around the world

The advance of social democracy, which had seemed unstoppable for most of the 20th century was halted and then put into reverse. Governments everywhere reduced taxes, and particularly top marginal rates of income tax. The welfare state was cut back. Governments tried to shed their responsibilities for infrastructure, handing them over to ‘Public-Private Partnerships’ assembled by financial institutions.

For a while this seemed to be working. Deficits were reduced and debt levels stabilised. But in the wake of the global financial crisis, the fiscal crisis of the state has re-emerged with a vengeance. Governments everywhere are looking at empty coffers and wondering if they will be able to repay their debts.

A fairly common set of responses is emerging. First, governments around the world have finally bitten the bullet on the need to increase the eligibility age for pensions. This process is painful and uneven, but it looks likely that a pension age of 70 will be the norm in most countries by 2050. That is, broadly speaking enough, to restore the solvency of publicly-funded pensions.

In other areas such as health, education and infrastructure,however, the demands on governments are only going to increase. Structural change has led to an increase in the proportion of national income needed for social and physical infrastructure.

At the same time, the financial sector, which seemed to offer painless ways of providing such infrastructure without drawing on the public purse, has turned out to be part of the problem, not part of the solution. Even after the costs of the current crisis have been met, the requirement for the state to guarantee financial stability will represent a huge contingent liability.

The only solution is an increase in revenue. For most governments, the simplest way to raise a lot of revenue is to increase the rate of value-added taxes such as the GST.

Income taxes present a bigger problem. Although both the US and UK have increased the top marginal rate of taxation, this is still in the ‘too hard’ basket for most governments. Instead the main focus so far has been on broadening the base, particularly by attacking tax avoidance and evasion. After decades of delay, the OECD has finally taken action to shut down the international tax haven industry. Individual governments have gone further, going in to the market for bank employees willing to sell lists of tax-dodging clients.

Finally, there are some new options. One is revenue from a carbon tax or emissions trading scheme. This has been overstated by some proponents, and even more by detractors, as in Tony Abbott’s Great Big New Tax on Everything. The revenue from pricing carbon is unlikely to amount to much more than 1 per cent of GDP, a fair bit of which will be need to compensate vulnerable households and to fund adaptation and mitigation measures.

Then there is the appealing prospect of making the financial sector pay for the government guarantees that allow it to keep on making outsize profits. The current betting is on President Obama’s proposal for a levy, but the long run solution must surely be a tax on financial transactions, as proposed decades ago by Nobel Prize winner, James Tobin.

Compared to the rest of the world, Australia’s position is relatively strong. Our debt levels are comparatively low, the hard decisions on the retirement age have been taken, and top marginal tax rates were never cut to unsustainably low levels. Our biggest constraint is the virtually impossibility of raising the GST rate. The Henry Review will make interesting reading.

Regardless of how we do it, taxes must rise to meet the demands of a modern society. Tony Abbott gave an eloquent demonstration of that point recently when he proposed his own Great Big New Tax to finance paid maternity leave.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland.

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  1. April 7th, 2010 at 09:22 | #1

    “Regardless of how we do it, taxes must rise to meet the demands of a modern society. Tony Abbott gave an eloquent demonstration of that point recently when he proposed his own Great Big New Tax to finance paid maternity leave…” – Touche John ;)

  2. April 7th, 2010 at 10:01 | #2

    PrQ,
    Perhaps some statistics showing that the total government tax take had dropped as a proportion of the economy or perhaps even in absolute terms during the 1980s and 1990s would have added some weight to your contention that “[g]overnments everywhere reduced taxes”. Perhaps you could use the OECD data. Except that it shows the exact opposite of what you were contending. Sure, personal income tax revenue did drop (slightly) as a proportion of GDP (the last table) – with this drop being more than counterbalanced by increased social security “contributions”, but virtually nowhere did governments reduce the tax take in GDP terms in the 1980s or 1990s and nowhere did they reduce it in absolute terms.

  3. wilful
    April 7th, 2010 at 10:14 | #3

    Andrew Reynolds, do you write for publication in newspapers? First thing an editor would take out. And even if true, it doesn’t diminish the central argument at all, in fact it kinda makes it stronger..

  4. April 7th, 2010 at 10:47 | #4

    Perhaps, wilful, but at least it would have been correct. The current contention is not factually correct.

  5. jquiggin
    April 7th, 2010 at 11:10 | #5

    AR, I agree that this was sloppily stated, and invited confusion between tax rates (which were cut) and tax revenue (which was stabilised as a share of GDP, but not cut). It would be more accurate to say that the fiscal crisis of the state brought an end to the rapid expansion of the tax share of GDP, but did not put it into reverse. Even though the state withdrew from many areas of economic activity, growing demands in core areas like health and education more than offset this. I have spelt this out more carefully on other occasions and can only plead pressure of time and space.

  6. derrida derider
    April 7th, 2010 at 11:14 | #6

    As I keep saying, google “Baumol effect”. As it gets ever easier to make food and widgets, an ever bigger proportion of human effort goes on services to other humans. And governments provide services.

    And yes, the line that “governments everywhere reduced taxes” is very arguable. The startling thing about the Reagan and Thatcher revolutions was how unsuccessful they were in reducing government spending as a proportion of GDP – and as Milton Friedman said “to spend is to tax”. The lack of success, of course, is basically because they were fighting that Baumol effect.

  7. jquiggin
    April 7th, 2010 at 11:34 | #7

    The Baumol effect is critical to be sure

  8. April 7th, 2010 at 11:40 | #8

    PrQ,
    The data, though, does not even support a statement about stabilisation, it has clearly and unambiguously continued to increase as a share of GDP with only minor and temporary reductions in some countries.
    Even the statements about personal tax rates is of questionable correctness once social security “contributions” (a word I had always associated with some measure of being voluntary) are taken into account. All that seems to have occurred was that a rapid increase has been replaced by a more sedate increase.
    .
    As for any withdrawal from areas of economic activity (while I recognise this is more contentious) I would doubt that. While (for example) the government now owns less banks than they used to, they have a large amount of regulatory powers they they still continue to use and extend. Perhaps this could be (IMHO) more accurately be described as a “refocussing” of control methodology, rather than any “withdrawal”, as (to me at least) a withdrawal would imply that they no longer have any significant control.

  9. TerjeP (say tay-a)
    April 7th, 2010 at 13:31 | #9

    In terms of physical infrastructure an alternate payment option is user pays, even if the government owns and operates.

    In terms of funding hospitals a quite viable alternative to government funding is government financing in the form of HECS style income contingent loans with Medicare cards acting merely as a payment system.

    Whilst affluence may lead us to use more services it does not follow that all these services must be government provided or even that they will be health or education related. Our use of telecommunications services is much higher than it used to be and this now almost entirely provided by the private sector.

    Given Australia has superannuation then it is hard to see why we would need any sort of aged pension in 2050. And if we did the eligibility age could be higher than 70.

    If we capped government spending per capita for 10-15 years then assuming normal economic growth we could abolish income tax over that period. That would be quite an accomplishment with no cut to services or revenue. As such revenue increases need not mean we can’t have cuts in tax rates. Nor that we shouldn’t.

    If governments can’t reduce tax rates the main cause is a lack of creativity in policy formulation.

  10. Rationalist
    April 7th, 2010 at 15:50 | #10

    Privatise each Department of Education as a start.

  11. Tristan Ewins
    April 7th, 2010 at 16:29 | #11

    John: Good to see you challenging complacency on tax – especiall given arguments about funding Health – and the prospect of a Federal takeover. But I cannot bring myself to accept a retirement age of 70.

    Retirement should be an opportunity for personal development, civic activism, time with famlily – and finally just time to relax. We glad to have the extra dollars in our pockets now that comes from such ‘reform’.

    But when our bodies and minds are aching – and many are tired of drudgery involved in work – then I think many would prefer that we maintain a threshold of 65 for aged pension applicability. Someone should really take those issues up- -as it is really a basic question of quality of life – and of setting priorities. Quality of life in retirement needs to be a very high priority.

  12. Peter T
    April 7th, 2010 at 16:55 | #12

    I think the inability of governments to reduce taxes, points to deeper causes. One such might be the effect of demographic bulges on demand for education and patronage opportunities argued by Jack Goldstone – in which case some of the pressure will subside as the baby boomers fade away. Another might relate to diminishing returns relative to social complexity. Signs that this is among the drivers could include the way governments and employers have been able to shift risk on to the less powerful, together with the increasing concentration of administrative structures (private as well as public).

    Terjw – as an aside, you might want to think about whether people who only pay taxes indirectly feel they have any stake in their governmental or social arrangements. Poll taxes go with pitchforks.

  13. April 7th, 2010 at 18:17 | #13

    Tristan,
    Some people I know are still happily working at 85 and others are stuffed at 55. To me at least the idea of a single day where you magically become “past it” is a silly one. When 65 was first settled on it was because most people died before they got that far. We should be able to decide for ourselves when we have had enough.
    Private super allows for this well by allowing us to decide when we have enough to retire on and to make choices on our own circumstances. I would agree with Terje – let’s move towards getting rid of the pension completely.

  14. TerjeP (say tay-a)
    April 7th, 2010 at 18:18 | #14

    Peter – I’m not in favour of poll taxes and I didn’t mention poll taxes so I’m not sure what you are getting at. All welfare payments with the exception of disability pension are subject to income taxes so any reduction in income taxes also benefits people who receive welfare income. I’m not sure why you think paying income tax is necessary for feeling like you have a stake in government. Please elaborate.

  15. Alice
    April 7th, 2010 at 18:36 | #15

    @Andrew Reynolds
    Andrew – Ive never heard a sillier comment than this “I would agree with Terje – let’s move towards getting rid of the pension completely.”

    You just dont understand that the social costs of such a move would far outweigh any benefits. This isnt a third world country but some are trying to make it one..most people are in private super – mandatory private super. Is it enough when employers use every method possible to minimise super payments – case in point – universities. They pay a double rate to staff on permanent or part time positions – but then they hire enormous amounts of casuals on half the super rate.

    Ahh but its all private isnt it? Well its just plain not enough and people know if they can barely afford their mortgages (which many cant – the stats are out there – financial distress looming large already – private debt through the stratosphere).

    Im wondering Andy, whether you live in the real world. I dont think so. You “individual free choice peddlers really worry me…as if many people even have the choice of private super extra payments when they are trying to feed their families and keep their houses.

    Clearly you have the choice Andy but what makes you think the majority live like you?

  16. TerjeP (say tay-a)
    April 7th, 2010 at 19:51 | #16

    Alice – the majority have enough to pay their own way. For the minority we have disability pension and unemployment benefits. I’d suggest we ought to have a negative income tax or general social wage instead. Either way we don’t need a benefit for oldness. The case for the aged pension at this point in time is that it was part of the setup when currently old people were paying taxes. However with mandatory super and plenty of notice we ought to be phasing out the aged pension. The way to do this is to increase the retirement age over time until it is irrelevant. The ALP was quite reasonable in making a start on this.

  17. Alice
    April 7th, 2010 at 19:58 | #17

    @TerjeP (say tay-a)
    The majority have barely enough to pay for their own roof..let alone the electricity impost the state govt is planning.

    You do live on a different planet when one in four are facing housing induced financial stress Terje. What affluent suburb do you live in that you cant see outside its borders?

  18. April 7th, 2010 at 20:02 | #18

    Aly,
    Which “real world” do you live in? The one where people hit 65 and all want to immediately leave the workforce or should get forced to do so? The point with private schemes is that you get the flexibility that a government pension cannot provide. There is also no (or limited) intergenerational subsidy.
    The pension (as opposed to unemployment benefit) was put in place to be a reward for those few that managed to live to what was then a ripe old age. It is no longer that and as we all age more than we used to (thanks, in no small part, to more wealth for us all) it has become a de facto indication of the point at which companies can expect us to leave the workforce.
    The reason I say work towards getting rid of it is simple – I disagree with a one size fits all world.
    There are plenty of providers out there that would be able to provide appropriate schemes for most, if not all – the unions, credit societies and others like them notably amongst them.
    Note that “private” does not necessarily mean “for profit”.

  19. Freelander
    April 7th, 2010 at 20:44 | #19

    Why not consider Dr Jonathan Swift’s ‘modest proposal’? The poor would then become transformed from a public liability into a public asset. And, perhaps most attractive, the problem would be solved through the bounty of the wondrous ‘free’ market. That said, Dr Swift’s excellent proposal would almost certainly run into food safety, so-called, concerns.

    Shouldn’t all the solutions to life’s problems be sourced to the 18th Century?

  20. Monkey’s Uncle
    April 7th, 2010 at 20:51 | #20

    When the aged pension was first introduced, the average life expectancy was only around 65 years. The pension was designed as an insurance measure so that people who happened to live longer than usual could receive assistance. It was never remotely intended as some sort of entitlement to retire at the taxpayers expense.

    The problem with all government programs is that they tend to breed a sense of entitlement, and the sense of entitlement tends to last long after the programs have ceased to be affordable.

  21. Monkey’s Uncle
    April 7th, 2010 at 21:04 | #21

    Terje has a valid point that there is no inherent reason for a government payment based solely on being old. If a person is unable to work due to age-related problems of declining strength and poor health and they lack other means of support they could just be paid a disability pension. There is no reason why an individual should have an automatic right to income support without having to seek employment based on age alone, regardless of how fit or qualified or not one may be.

    The only valid objection is that beyond a certain age the likelihood of significant impairments becomes high enough that it is easier and less costly to simply guarantee income support than assess for disability. But given increased life expectancy and an aging population, that age should be revised upwards.

  22. Alice
    April 7th, 2010 at 21:05 | #22

    @Freelander
    Agree Freelander – can Andy be oustourced to the 18th century solution?

  23. Alice
    April 7th, 2010 at 21:10 | #23

    Ditto Monkey’s Uncle? He who takes anti ageing tablets every day and thinks he is going to live and work forever young and has no tolerance for age (unless it is constantly revised upwards)? I too would like my work aptitude revised upwards infinitely a long with it my pension age..who knows? They might even invent the eternal life pill in my lifetime…but until they do and until I am fit enough to work forever…Id suggest you and Terje keep your young men;s opinions where they belong (with selfish youth who dont want to support the aged that gave them a reason to exist). That is not the way life goes MU.

  24. Freelander
    April 7th, 2010 at 21:20 | #24

    @Alice

    He might be a bit sinewy…

  25. Alice
    April 7th, 2010 at 21:25 | #25

    @Freelander
    Agree Freelander – sinewy = too tough to digest!

  26. Monkey’s Uncle
    April 7th, 2010 at 21:57 | #26

    “Id suggest you and Terje keep your young men;s opinions where they belong (with selfish youth who dont want to support the aged that gave them a reason to exist). That is not the way life goes MU.”

    Alice, I believe our host has warned you before about making hostile generalisations based on age, gender etc. We can really do without these foul-tempered and bigoted outbursts every time you cannot maintain an argument on its merits.

  27. April 7th, 2010 at 22:07 | #27

    Aly,
    Just because something is old does not make it useless. This applies as much to ideas as to people. You seem to want to condemn both on the same basis.

  28. Peter T
    April 7th, 2010 at 22:23 | #28

    Super as support in old age relies on the continued smooth functioning of financial markets. This is not guaranteed. And those who retire in a market downturn will not be happy.

    BTW, pensions were invented when it was obvious that previous community systems (parish relief as a backstop, but the obligation on landowners and families to provide) had irretrievably broken down. Old age is not new.

    Terje – my tax return gives me a good idea of what I have paid, and I have a good, if rough, idea of what I get for it. And it tells me what the scale is for others. Historically, complete reliance on indirect taxes goes with lower class resentment and unrest – people tend to feel they are carrying an unfair share of the burden, and have no way to check. And yes, I know income tax came in in Britain only in 1806 or so, but landowners paid land tax.

  29. sdfc
    April 7th, 2010 at 22:25 | #29

    Considering most pension recipients have put in a life of work, I reckon they deserve to be paid enough to at least maintain a reasonable standard of living. Let’s face you’re not going to be living high on the hog on the pension. Anyway it would be political suicide.

    The best way to reduce future pension obligations is to up compulsory super to the original 15% target. This could also have a dampening effect on wage inflation, which could be pretty handy if the rosier forecasts turn out to be correct.

  30. Monkey’s Uncle
    April 7th, 2010 at 22:53 | #30

    Peter T :
    Super as support in old age relies on the continued smooth functioning of financial markets. This is not guaranteed. And those who retire in a market downturn will not be happy.

    True. But funding aged pensions and every other government program still relies on sufficient economic growth to maintain the revenues to fund them. Given that virtually every developed nation is already experiencing major financial problems in terms of large budget deficits and public debt, things can only get worse as populations age? What is happening in Greece at the moment is merely a harbinger of the economic and societal collapse that could well happen more broadly.

    Government provision often creates the illusion of security, but actually increases insecurity as people come to depend on things that are not sustainable. At best governments can delay the reckoning by borrowing against the future up to a point.

    I agree that there has to be a safety net for those whose investments tank or for other reasons can’t adequately provide for their old age. But it is not wise to encourage too many people to be dependent on government.

  31. TerjeP (say tay-a)
    April 8th, 2010 at 00:50 | #31

    Greece seems destined to experience a reduction in the size of government the god awful hard way.

  32. Alice
    April 8th, 2010 at 07:36 | #32

    @Monkey’s Uncle
    MU. Kindly point to where you beleive I was warned by the host re comments on age or gender. You are making things up as you go along MU. I was alluding to the fact that it is somewhat easier for the young to be resentful and to express that resentment vociferously about those who receive the old age pension and having to contribute with their taxes (which some resent even more especially in this blog)…of course until its their turn to be old or in need. My comment had nothing to do with being either ageist or sexist and to label my comment ‘bigoted” is your feeble view… and misses the point completely.

  33. Peter T
    April 8th, 2010 at 11:16 | #33

    Monkey’s Uncle

    You do not need growth (otherwise transfer payments could not have been made in previous times of no growth). Although the proportion of older people is growing, the proportion of younger is shrinking. And even if the overall dependency ratio rises, this can be dealt with by fairly minor reductions in consumption by the working age population.

    The old are not going to disappear. If there were no pension, they would be living with their children, and still be dependent.

    Growth just allows us to avoid distribution issues.

  34. Monkey’s Uncle
    April 8th, 2010 at 13:43 | #34

    Peter,

    Even if it is true that a declining ratio of working-age people can support more older people without economic collapse (I’m skeptical about this, but even if it were true), there is still the issue of intergenerational equity.

    Is it fair that younger people should have to support a higher proportion of older folks than previous generations ever had to when they were younger, simply because older generations either raised fewer children, or put more effort and resources into prolonging their own lives, or decided not to prepare for their own old age. It effectively amounts to punishing the young for the mistakes made by older generations.

    The problem is that expecting a declining ratio of working-age people to support more older people is not only economically inefficient, but it is also not terribly equitable. It fails on both efficiency and equity grounds. Any such policy is hard to justify.

  35. James
    April 8th, 2010 at 14:46 | #35

    Hi John,
    What’s your opinion of the Neo-Chartalist argument that (to oversimplify) deficits are not a problem in a fiat monetary system because the government can issue money up until the point where all effective demand is actualised, and has no need to balance its budget in the same way a household does?

  36. Monkey’s Uncle
    April 8th, 2010 at 14:47 | #36

    Alice, I recall on one thread you had a comment deleted for saying something like ‘the young are tired of old white men’. For you to insist you have never been cautioned for making hostile generalisations based on age, race, or gender and to accuse me of simply making it all up is extraordinary. I am sure there are other examples, and readers are welcome to search this blog. In any case, I will appeal to the fair-mindedness of the blog owner and regular readers here and ask ‘can anyone recall Alice being cautioned for such comments?’.

    I don’t wish to derail a thread over this. I only mentioned it because a serious breech of the guidelines was directed at me, and I have to respond again as I was falsely accused of making things up.

  37. April 8th, 2010 at 16:58 | #37

    James,
    That economic strategy has been used before and proved a roaring success – Weimar Germany, several times in Argentina, recently in Zimbabwe and in several other places for example. It is generally known as having recourse to the printing press.

  38. Peter T
    April 8th, 2010 at 17:54 | #38

    Monkey’s Uncle

    What do you think happened in previous periods where population was static or declining? Things did not collapse.

    Talk of fairness and efficiency is fine. But the old do not go away whatever the policy, and remain dependent. The issue is how and what level of suppport. We could, for instance, withdraw pensions (tried in Russia post 89). Then most would move in with family, some would starve, some would beg, and some would eke out an existence selling matches on the streets.

    We have mandated reliance on super, but some fall through the cracks, and market returns look very chancy for the next decade as economies rebalance. In any event, this policy favours the rich, and so breeds discontent.

    And we have to fgo through the demographic transition someday – the earth can carry only so many.

  39. Alice
    April 8th, 2010 at 18:26 | #39

    @Monkey’s Uncle
    Can anyone recall Alice being cautioned in this blog for the things you suggest MU (ageism and sexism??)

    The answer is no and you obviously cant find the caution. I await your apology for “making things up” MU.

  40. Alice
    April 8th, 2010 at 18:58 | #40

    @Monkey’s Uncle
    BTW MU – you proved my point with the following comment

    “Is it fair that younger people should have to support a higher proportion of older folks than previous generations ever had to when they were younger, simply because older generations either raised fewer children, or put more effort and resources into prolonging their own lives, or decided not to prepare for their own old age. It effectively amounts to punishing the young for the mistakes made by older generations. ”

    As I said (which wasnt ageist)

    “I was alluding to the fact that it is somewhat easier for the young to be resentful and to express that resentment vociferously about those who receive the old age pension and having to contribute with their taxes (which some resent even more especially in this blog)…of course until its their turn to be old or in need. ”

    I think you are a fair example of resentful youth objecting to pensions for older age people….until they belong to the same older demographic of course. You also forget the oladr age voting block in Australia, which is why we have old age pensions. I could say…and it would be true…historically there have been those in much greater need of assistance, like single mothers, and I might even prefer such assistance be directed to those in greatest need. You also ignore the political influences on welfare and who gets what. That is neither sexist or ageist and you need to ponder your membership of a lesser voting block when you make such comments. Liklihood of things going your way right now? Almost zero. Likelihood of welfare payments going where I think they should…about the same.

  41. TerjeP (say tay-a)
    April 8th, 2010 at 19:22 | #41

    I was alluding to the fact that it is somewhat easier for the young to be resentful and to express that resentment vociferously about those who receive the old age pension and having to contribute with their taxes (which some resent even more especially in this blog)…of course until its their turn to be old or in need.

    If this is targeted at me then it is wrong.

    Firstly your comment presumes a malicious motive. Unfortunately in this regard it is so damn typical of leftist claims to moral superiority. The leftis logic being “I think your policy is driven by evil motives therefore you’re wrong and I’m right”. I’m not resentful of those that receive the old age pension. I am starting to get a bit ticked off by somebodies repeated attempts to malign my character.

    Secondly I have advocated a graduated increasing of the aged pension over time. I happen to be of a generation that had madatory superannuation since very early in our working lives. On that basis the phase out of the aged pension that I artculated in the LDP policy on the aged pension means my generation would be the first to get no aged pension. The protects the entitlement for the current crop of oldies. So rather than taking from the older generation I’ve advocated preserving for the older generation and removing for my generation.

  42. Alice
    April 8th, 2010 at 20:16 | #42

    @TerjeP (say tay-a)
    Terje – you read into my comment what you like. If you take it personally Id suggest you are being little paranoid…however I have noted your repeated calls for lower income taxes of all descriptions…and Im much more inclined to agree with the thread title.
    I get a little ticked off with people who keep pushing what appear to me “beggar thy neighbour ideas” as long as it means lower income taxes for them.

    If you ever advocated a graduated increase in the age pension over time Terje…how do you intend to fund it? By an impost on private sector business (given that you want smaller government and lower income taxes – Im really not sure what you are suggesting here or anywhere else – or do you mean an increase in the age at which people can access the pension – it is not clear).

  43. Alice
    April 8th, 2010 at 20:20 | #43

    @TerjeP (say tay-a)
    Furthermore Terje
    “On that basis the phase out of the aged pension that I artculated in the LDP policy on the aged pension means my generation would be the first to get no aged pension.”

    People quite naturally change their views come pension entitlement age (and if you do not, the majority of your generation are likely to disgree with your plans). You cannot plan for that Terje. I mentioned before, the age pension is a political hot potato although you may get your way if you are a demographic minority. Just blame the baby boomers Terje. They usually got what they wanted!

  44. Alicia
    April 8th, 2010 at 20:29 | #44

    @TerjeP (say tay-a)

    I happen to be of a generation that had madatory superannuation since very early in our working lives.

    Well, boo-hoo. Which was a function of neo-liberal politics in action. That which you support, defend and advocate.

    Suck it up.

  45. Alice
    April 8th, 2010 at 20:39 | #45

    @Alicia
    Unfortunately Alicia…the GFC did suck up a lot of people’s superannuation which just served to show it is not a safe form of retirement savings…which may be why property continues to be so hot in this town?
    What point to mandatory retirement savings that can vanish into the ether with the speculative shenaningans and trailing commissions of packs of globally de-regulated fund managers and assorted middlemen? I dont know whether Terje isnt backing a losing horse advocating the removal of pensions for his age group, when there is no certainty their mandatory super will provide for them in their old age.

  46. TerjeP (say tay-a)
    April 8th, 2010 at 21:59 | #46

    There is a typo in my comment above.

    Secondly I have advocated a graduated increasing of the aged pension over time.

    Should have been:-

    Secondly I have advocated a graduated increasing of the eligibility age for the aged pension over time.

  47. Alice
    April 9th, 2010 at 06:13 | #47

    @TerjeP (say tay-a)
    I thought that was what you meant Terje. Are you sure it wasnt a Freudian typo slip?. You havent recently had a birthday have you?

  48. James
    April 9th, 2010 at 09:41 | #48

    @Andrew Reynolds
    Andrew,
    My understanding of the neo-chartalist perspective is that they acknowledge that the money supply should be constrained to match the total supply of goods and services in a situation where all effective demand has been actualised, as opposed to the current situation where the money supply is constrained by the amount the government can tax. We can tell that all effective demand has not been actualised by persistent high levels of unemployment and poverty compared to, say, the post-war “golden age”. This is rather different from Weimar (paying off punitive war reparations without an economic base) or Zimbabwe (a kleptocrat seizing control of the central bank).

  49. wilful
    April 9th, 2010 at 12:21 | #49

    Alice, I’m generally highly sympathetic to your views, however your debating skills are atrocious, you’re incredibly rude and personal and like making sweeping, outrageous generalisations. I recall you being warned along such lines by our host several times.

    So, even though I think you’re often right, I agree with Monkey’s Uncle, if anyone’s going to be coughing up an apology, it oughta be you.

    Of course, from now on you’ll think I’m a fascist capitalist old white male (without really knowing a damn thing about me), and will dismiss or attack everything I say. Oh well, my loss.

    Others (e.g. you Terje), please don’t generalise Alice’s comments to the ‘left’ (whatever that means these days), you know she’s not here representing anyone other than herself (nor are any of us).

    On the topic at hand, I think it’s a matter of risk management. A basic retirement sustenance wage is a fundamental need for a fair society. While most can provide for themselves, it would surely be cost effective across the economy for government to provide a basic safety net, absent the vagaries of the market? So yeah, the pension should stay, and should not have its eligibility expanded, however with compulsory super the proportion of elderly Australians calling on it should naturally decline.

  50. Ken
    April 9th, 2010 at 16:13 | #50

    @Monkey’s Uncle
    It would be far more useful if people talking about the age pension as it was introduced in 1909 being available to few people because life expectancy was less than 65 looked at the figures on life expectancy at age 65 in 1909 not life expectancy at birth. The high mortality rates in early life distort the figures, as you will see if you look at: http://www.aihw.gov.au/mortality/life_expectancy/trends.cfm

  51. wilful
    April 9th, 2010 at 16:59 | #51

    That’s equally misleading since it screens out all of those who’ve contributed to the pension through their taxes, but have died.

    Life expectancy in 1900-10 for 15 year olds was ~50 years. Which is 65.

  52. April 9th, 2010 at 18:37 | #52

    James,
    How do you measure a few of the things in your comment? Things like the money supply, the total supply of goods and services and when demand has been fully actualised.
    On another matter, the post war “golden age” was (IMHO) nothing of the sort – women were effectively banned from the bulk of the professions, those of non-Anglo backgrounds were virtually condemned to be in a persistent underclass and there were many, many other problems.
    The world then was not made up of just white men going about their lawful business.

  53. TerjeP (say tay-a)
    April 9th, 2010 at 18:44 | #53

    Others (e.g. you Terje), please don’t generalise Alice’s comments to the ‘left’ (whatever that means these days), you know she’s not here representing anyone other than herself (nor are any of us).

    I think this is a fair point and I have been asked this before so I will try harder. However even if Alice does not represent all of the left she is clearly of the left.

  54. wilful
    April 9th, 2010 at 19:24 | #54

    It’s a broad church…

    (though libertarianism, which you ascribe to, is pretty broad as well).

  55. Alice
    April 9th, 2010 at 19:31 | #55

    @TerjeP (say tay-a)
    Wrong Terje. I represent my own personal views. I dont like the die hard left but I certainly dislike the die hard right equally. In fact I think both are the cause of more ills than positive gains when it comes to economic policy. You can call me fond of common sense and equilibirum and you would be closer to the mark. You can call me centrist if you like because that is far closer to the mark. You can call me a fence sitter for all I care – I see certain benefits in taking the best from both extremes and ditching the worst and unworkable of their policies.

    I like to think I can distinguish between workable theories and pure ideology and dogma (always an ugly omnipresent danger in this game because economics, like accounting, affects peoples monetary interests and often they with the most money have the most power – not necessarily for the best economic welfare and economic health outcomes. That affects all of us. Slavery is still attractive this century if people could get away with it by convincing others it is necessary.).

    But I also recognise the proclivity for those sitting on extremist views of either direction to label those who dont agree with them as “left” or “right” or “nimbeys” or whatever. Its so convenient. Its an attempt to denigrate and box and disregard people’s individual views – also an attempt to get others to disregard particular individual’s views. I object to that.

  56. Alice
    April 9th, 2010 at 19:39 | #56

    @wilful
    Wilful – your recollection of my being warned by our host re “ageist or sexist” comments is as incorrect as MU’s. A recollection is not evidence and unless either of you can come up with the warning – your recollection is tantamount to “hearsay” Wilful. I have so such recollection as it never happened.
    I am still waiting for an apology from MU.

  57. Monkey’s Uncle
    April 9th, 2010 at 20:28 | #57

    So Alice, now there are two witnesses to testify to these specific warnings. If I made it up or it is merely a figment of my imagination, apparently Wilful has exactly the same overactive imagination. What are the chances!

    “I am still waiting for an apology from MU”. Ah yes of course. I apologise for telling the truth and refusing to be bullied into withdrawing an accurate statement.

    Alice, you previously demanded an apology because no-one else answered my challenge to come forward and verify my statement. Now that another reader has verified my version, well, you still want an apology anyway!

  58. Alice
    April 9th, 2010 at 20:35 | #58

    @Monkey’s Uncle
    Oh MU – give it up. Both of you are making things up and this isnt new around here.

  59. Alice
    April 9th, 2010 at 20:50 | #59

    @Monkey’s Uncle
    Hearsay from two (Wilful and yourself) who have a tendency to be like minded in their political / economic views?? Hardly evidence is it MU ?? Note I have not labelled either of you right. A common tactic – called in any other words an attempt to silence my views on the futility of tax rises or my reality of the impossibility of the abandonment of old age pensions (and inherently my unwilligness to subscribe to the “lower my income taxes” howlings of certain sectors of the vocal yet minority views amongst us …yet again????)

    Is it not really that which you object to (but would rather cast aspertions that I am being “ageist” or “sexist” and that “I have been warned by the host before for such transgressions?

    Utterly ridiculous and utterly false. It is both of you (Wilful and yourself) who should be warned here for telling blatant lies.

    Back to the topic MU. No I dont think pensions or welfare should be abandoned. No I dont think income taxes should be lowered (again). Yes I do think we will arrive at the point where income taxes need to be raised. I already think they should. There are too many public services in a mess and no I dont think the private sector “is more efficient” or “does it better” or “will provide.”

  60. Alice
    April 9th, 2010 at 20:59 | #60

    @wilful
    So Wilful – agrees with Terje that I belong to “their interpretation of the broad church of the left.”

    Idiots. I am a centrist. Neither you or Terje can get your head around that precisely because in your opinion “anyone not extremely right belongs to the broad church of the left” ipso facto is “left” ipso facto can be thrown into the “left group” ipso facto can be disposed with as “left”.

    You know – I dont suppose you realise how such idiot views get me mightily ticked off. No subtlety. No panache. No sophistication. No elegance and no style. But you have your have your labels and your name calling to fall back on.

    I dont suppose it ever crossed your minds to wonder why the green vote is growing – not with more lefties but with more middle liners like me getting heartily sick of the excess of hard right wing policies in both liberal and labour. Ask your politicial leaders to pay close attention to that. Its called a backlash. It happens when the movement pushes too far in a direction the majority dont like or want. Its why the liberals dont poll well these days and why they lost the election.

  61. April 9th, 2010 at 22:49 | #61

    Sorry, Alice, but anyone that thinks that the ALP is “hard right” (whatever that means) is, ipso facto, not a centrist. Deal with it.

  62. TerjeP (say tay-a)
    April 10th, 2010 at 06:34 | #62

    Alice – it is a bit rich you complaining about being labled. A bit like the pot calling the kettle black. And MU is right you have been warned off before for racist and sexist remarks. On several occassions you have sought to disparage the views of people on the basis that they are old white males, or sometimes young white males. If you are anti male or anti white you should keep your phobias in check and cease with the bigotry. The colour of somebodies skin or their gender shouldn’t be a factor in the worth of their ideas or opinions. And to attempt to drive somebody out of a debate by casting aspertions about their race or gender is quite appalling behaviour.

  63. Alice
    April 10th, 2010 at 08:07 | #63

    @TerjeP (say tay-a)
    Utter nonsense Terje.

  64. Alice
    April 10th, 2010 at 09:22 | #64

    @Andrew Reynolds
    Deal with this Andy

    Id rather have a rise in income tax and publicly provided essentials like electricity. If you dont think State Labor is hard right and inept because of it – tell me how the privatisation of electricity retailers and IPARTS lovely approval foe electricity price rises is a benefit of competition? These price rises in NSW will decimate all those lovely competitive small businesses you libertarian types want to encourage. Your low income tax pro privatisation views are a sham and they undo the very thing you want (flourishing small businesses).

    Thats quite apart from my centrist views that they also impose unnecessary hardship on hardworking families. They also undo the effects of Rudd stimulus program. They also place excessive power in the hands of private electricity companies. In short the neoliberal ideologies of State Labor are there for all to see and the stench is unmistakeable. Just wait for the election Andy if you dont think a whole lot of centrists and moderates like myself do not switch to get rid of the stench of right wing madness in NSW politics.

  65. April 10th, 2010 at 09:56 | #65

    @Andrew Reynolds

    anyone that thinks that the ALP is “hard right” (whatever that means) is, ipso facto, not a centrist

    Unless of course the ALP really is hard right … in which case they might be. Your whatever that means obscures the most important point, as it goes to the space for counter-defining oneself as a centrist in opposition to a “hard right” ALP.

    For the record, I don’t agree that the ALP can fairly be called “hard right”. Its dominant fraction is fairly bog-standard conservative on most economic and social questions. Certainly, it is not comparable politically to the US Republicans and it is somewhat less conservative on at least some economic and social questions that the regime it replaced. Its more liberal communitarian members are also somewhat more numerous and influential in policy than is the case with the Liberal-National coalition.

    As far as I can tell, Alice favours an even more communitarian and liberal approach than is by and large explicitly foreshadowed by those more liberal elements of the ALP. Whether this makes her a leftist is harder to say. She may well be entitled to call herself a centrist, as the term is not absolutely definable. It tends always to be defined relatively.

  66. Monkey’s Uncle
    April 10th, 2010 at 10:26 | #66

    Alice, as far as you being a centrist you have said on previous occasions that you are happy to have top marginal tax rates of 90%. If that is a “centrist” position I suppose those extreme right-wingers you complain of must be people who believe in having a top tax rate of 85% then.

    “Back to the topic MU. No I dont think pensions or welfare should be abandoned.”

    This is a complete straw man, as I never suggested that aged pensions should be abandoned. I merely suggested the age at which people qualify should be raised along with the aging population, and that we should ensure dependence on the age pension does not become too high. I never suggested for one moment that that there should be no safety net for those too old to work who lack sufficient retirement funds.

    You also accuse others of simply labelling your views ‘left’ as a form of cheap name-calling. The reality is that you employ these tactics more than anyone else. Anyone who disagrees with you is an extreme right-winger. In reality, I am not particularly right wing. I tend to be more fiscally conservative but more liberal on social and moral issues like abortion rights, euthanasia, drug law reform, civil liberties etc. In reality I am more of a pragmatist and a centrist, while you are a hard left reflexive ideologue.

  67. Monkey’s Uncle
    April 10th, 2010 at 11:05 | #67

    Oh and Alice there are now three witnesses to you being given these warnings. And to suggest Wilful is not a reliable witness as he is somehow more ideologically sympathetic to my views is to take silliness to new levels.

  68. Chris Warren
    April 10th, 2010 at 11:32 | #68

    Andrew Reynolds :
    Sorry, Alice, but anyone that thinks that the ALP is “hard right” (whatever that means) is, ipso facto, not a centrist. Deal with it.

    I don’t know what your knowledge of the ALP is.

    But the fact is the ALP became pretty much ‘hard right’ at the Terrigal conference and in its national executive interventions subsequently.

    The trickery of promising unions a “prices and incomes” accord but only delivering on wages, is evidence of a hard right agenda. Keating delivering for banks in the 1980′s was a hard right economic agenda.

    The corrupt antics of ALP right in the states (eg WA Inc), are clear monikers of a hard right agenda.

    The manipulations by Catholic groups within rightwing unions also points to hard right corruption.

    They ALP right may not be fascists but they stink just the same.

    Fortunately the hard right, anti-abortion, yankee flag waving fanatics, have been knocked out of ALP preselection in the ACT for the next federal election.

    But they can still have their soirees at the US embassy, can’t they.

  69. Alice
    April 10th, 2010 at 11:35 | #69

    @Monkey’s Uncle
    More made up stories MU….”you have said on previous occasions that you are happy to have top marginal tax rates of 90%”? You are having a field day with fantasy..but having said that I think the top should pay double the income taxes they pay now. It worked well in the post war years until the idiocy implicit in neo liberal ideologies (hich y0ou appear largely to pander to on most occasions MU – so as for calling yourself a centrist I would disagree) sold the developed world a crock called trickle down and cut the taxes on top income earners and basically contributed to a near collapse if global financial systems.
    As for three witnesses – I call you the three amigos. Terje apaprently made numerous posts before his memory kicked in. Yours was defective to start with and none of you can locate the so called “warning from the host about me being either “ageist” or “sexist”.”

    Id call that a nice little set attempt to cast doubt on me, label me “hard left” now is it MU??
    Im getting harder left by the day according to you and your three buddies.

    But MU – all three of you have history here as being disagreed with more often than you are ever agreed with on balance and history of being supporters of neo liberal conservative pro private sector ideologies. In particular Terje.

    Tell that to small business and average and above average Australians living in NSW who are now about to be robbed blind by private sector electricity retailers and the NSW Labor Govt. But gto my mind its people just like you three who have been championing the push for greed by governments along with lower taxes for some and much higher prices for the majority trying to work hard, build businesses and be productive.

    Yes it will become futile to resist tax increases to correct the mess the policies you (and your friends) have probably spent years pushing have now created. And no Im not “hard left” for saying so…. and neither am I “ageist” or “sexist” and nor am I any other kind of “nutter” or “pat label” you people want to come up with. Maybe you forgot “Greenie” or “militant feminist” or “nimbey” or one of “Quiggins Quols” or the numerous little name calling efforts developed by those affronted by the idea that they may have to pay a little income tax.

    Had you and your type not agitated and gained such generous tax concessions over the past three decades we would not be in the mess we are in now with their failed policies and failed ideas, which have cost us dearly and will continue to cost us all dearly.

  70. wilful
    April 10th, 2010 at 18:19 | #70

    Alice, you’ve got no effing idea of my ideology, and you’re the one busy throwing around labels. My strong criticism of you relates to your incredibly offensive and aggressive attacking style, which gets in the way of an reasonable debate around here. You’re so busy pigeonholing everyone and defending yourself from being pigeonholed that I basically ignore everything you have to say.

    To repeat what I said before, now that I’ve called you out on this, as have several others, and our host, who’s warned you plenty of times, you think I’m some capitalist running dog pig scum, which really is not the case.

    You are completely deaf to this, I realise. But maybe if enough people tell you you’ll get a tiny bit self-reflective about your behaviour around here.

  71. Alice
    April 10th, 2010 at 19:17 | #71

    @wilful
    Oh pardon me Wilful – the third musketeer is back for another go? Put up the evidence Wilful or pass. You were the first to recall “the hosts admonition for my “ageist” and “sexist” comments.

    Dont push me Wilful. I might get admonished for challenging the delusions of delusionsists.

  72. Alice
    April 10th, 2010 at 19:23 | #72

    Wilful – you were the second to recall such an admonition and Terje was the third and not one of you has much credibility here because so far, you cant find such an admonition (because it doesnt exist and never existed except in your own fertile imaginations and hopes) and I could call on the host to admonish you for faulty and entirely false accusations but I have not which says more about my grace than yours.

    I am owed the apology here. I dont like people who dont tell the truth Wilful and that includes you.

  73. Alice
    April 10th, 2010 at 19:48 | #73

    @wilful
    Wilful

    “Others (e.g. you Terje), please don’t generalise Alice’s comments to the ‘left’ (whatever that means these days), you know she’s not here representing anyone other than herself (nor are any of us).”

    Correct.

    Terje responded…

    “However even if Alice does not represent all of the left she is clearly of the left.”

    You Wilful responded

    “It’s a broad church…”

    Now who is labelling who around here? It really is about time people called you and Terje and MU on this sort of thing because it is not acceptable. I have my views and I have been called “ageist”, “sexist”, “left”, “aggressive”, for defending my views

    which btw dont include raising the pension age and which do include rasining income taxes and providing essential services through public funding (because it is costing all of us more to go down the privatisation road).

    Thats what you really dont like Wilful…not my style…not my “left” politics.not my eitiquette..just my views that you dont agree with.

    Well Wilful, too bad.

    I am still owed and apology and Im still owed some civility. This is an economics blog – not group therapy according to three neo liberals (and yes – seeing as you throw me to into to the basket labelled left – Ill throw you in with the basket labelled neo liberals – unthinking neo liberals I might add but thats not unusual – economics hasnt been about thinking for three decades).

  74. jquiggin
    April 10th, 2010 at 20:06 | #74

    Alice, please remember, one comment/thread/day

    Everyone, please discuss the substantive issue and avoid attacking each other

  75. Alice
    April 10th, 2010 at 20:20 | #75

    Alice, please take a couple of days off. I don’t have time to referee these disputes, so I’m closing this thread – JQ

  76. April 11th, 2010 at 12:16 | #76

    Peter T :
    BTW, pensions were invented when it was obvious that previous community systems (parish relief as a backstop, but the obligation on landowners and families to provide) had irretrievably broken down. Old age is not new.

    Actually, there’s a fair bit of evidence that the “previous community systems” were those provided by Church institutions, and that they didn’t break down but were forcibly removed by the Dissolution of the Monasteries etc. That is, replacement systems never quite grew enough to take up the slack, and ad hoc stuff like noblesse oblige, family support and poor relief only partly met the need (particularly since private resources were also being removed from the poorer groups all along, what with enclosures etc.). Certainly Disraeli traced the damage back to the Tudor period, in asides in his 19th century novel Sybil.

  77. April 11th, 2010 at 12:40 | #77

    jquiggin :
    Alice, please remember, one comment/thread/day
    Everyone, please discuss the substantive issue and avoid attacking each other

    I’d like to remind people that I suggested incremental and gradual increases in pension age a while back, here (see also this, for broader tax reform suggestions). However, I also proposed that there should be an actuarially matched, incremental and gradual lowering of an age-related income tax break, to allow people the chance to increase their private and personal provision for retirement (otherwise, people coming up to a receding entitlement age would face greater burdens than those of earlier and later generations).

    The object of the exercise was not to force increases in retirement age but to phase out state provision of retirement needs, turning the state element into a long stop and allowing constructive use of the funds instead (letting people invest them to generate real support for later needs). Neither I nor others contemplate just making life harder for at least some, but rearranging the load so it can be managed better – which includes making investments to support the needs. Yes, under present circumstances simply cutting benefits would be harmful, but that’s because of an “other things being equal” problem. The idea is to change those other things too, using an incremental approach that allows that to be done. Engineering out a need is both morally and practically different from just ceasing to cater to it, and in fact it is both morally and practically better than continuing to cater to it – even though just ceasing to cater to it is far worse than continuing to cater to it. But it is not that last false dilemma that is at issue here.

  78. Peter T
    April 11th, 2010 at 19:54 | #78

    PM Lawrence

    The monasteries went in England in the 1550s. The Poor Law/Parish Relief arrangements were under obvious strain from the early 1800s. There is a gap of 250 years. You also need to consider France, Holland and western Germany. It wasn’t just the church – there were also lots of informal but effective social arrangements.

    The issue with universal or near-universal private arrangements is the temptation – never for long resisted – for those managing the money to divert increasing proportions their way – in fees, investment in their own and their friends activities, and various sleights of hand. This in turn requires detailed and effective supervision, which breeds more elaborate gaming together with diversion of effort into undermining regulation and so on. Familiar story? Leaving private support to the well-off and concentrating public support on most people seems a more stable long-run policy. This does not preclude encouraged or enforced saving in publicly-managed funds (as with the public sector schemes or the industry funds).

  79. wilful
    April 12th, 2010 at 09:44 | #79

    It’s simply a matter of who is best placed to manage the risk. The government can and does allow most people to manage their own risk quite effectively and with all sorts of tax breaks. However, life is too uncertain and there are too many vagaries, so having a modest but not degrading income support system at the end of your life for those who’ve failed to manage the risk adequately is the least society can offer.

  80. April 12th, 2010 at 11:23 | #80

    Peter T :
    The monasteries went in England in the 1550s. The Poor Law/Parish Relief arrangements were under obvious strain from the early 1800s. There is a gap of 250 years. You also need to consider France, Holland and western Germany. It wasn’t just the church – there were also lots of informal but effective social arrangements.

    I haven’t got my point over. There wasn’t a gap of 250 years in shortfalls of informal and formal systems. Rather, adequacy of those arrangements ended with their main support, church systems, in the early Tudor period. They were replaced in part a generation or so later, by the Elizabethan Poor Law. That held up reasonably in practice until the Civil War, but with hindsight it wasn’t strong enough to carry loads it might face, loads which started to build up in the late 17th century and which left widespread poverty for small but increasing numbers from the early 18th century. It was just that it wasn’t until the 19th century that it was seen to have failed. Likewise, informal support didn’t take up the load, possibly because it was a period of change with yet further loads being added faster than adaptation could occur.

    So the point I was making was that the last time there had been an adequate system was the early Tudor period, and the gap wasn’t one in which other things did that job, it was a gap in which ad hoc arrangements were tried but failed progressively until they were completely overloaded and unworkable – even though failure was incipient and small rather than actual and large for most of the gap, there was still no adequate system.

  81. TerjeP (say tay-a)
    April 12th, 2010 at 14:59 | #81

    However, life is too uncertain and there are too many vagaries, so having a modest but not degrading income support system at the end of your life for those who’ve failed to manage the risk adequately is the least society can offer

    I think we ought to have a modest income support system for all people irrespective of age. And that is the package we (the LDP) took to the last election when we argued for a phased end to the aged pension. We proposed a negative income tax but you could achieve a similar thing with a universal social wage.

  82. wilful
    April 12th, 2010 at 17:43 | #82

    And, for elderly people, we’ll call it the pension…

  83. April 13th, 2010 at 02:39 | #83

    TerjeP, Wilful, space does not permit me to show the workings, but my own research has indicated that a negative income tax/universal social wage is only workable when it is set at a level far enough below survival levels that, over the whole of life, people still have to work to make ends meet but high enough that they can all price themselves into work and still survive. (In a Malthusian catastrophe the floor comes up to meet the ceiling and this cannot be done.) This means that a workable system along those lines cannot be a direct replacement for current benefits which are enough to survive on, and in particular it cannot be simply a pension by another name for the old. Under such a system, the old would have to have other resources built up when they were younger, which in turn means that it would need a slow transition to allow that to come about. A long stop arrangement would be needed too, to stop isolated anomalies letting some people fall through the cracks.

    That’s a large part of why my own suggestions (referred to above) were for a support system that would act more quickly than a negative income tax/universal social wage, i.e. a negative payroll tax, and a transitional method that would be age related to avoid confronting any age groups with insurmountable hurdles.

  84. Peter T
    April 13th, 2010 at 22:20 | #84

    PM Lawrence

    Think you need to look more closely at the history. Poverty and associated lawlessness were a major social concern in Elizabethan times, much less so by the early 18th century (effectively as a result of demographic and economic changes which raised labourer’s wages and reduced pressure on land), then started to rise again after c 1750.

    My point about 250 years is that policy lifetimes don’t change that much – this is too long a span to be considered an interim.

    Your point about the monasteries is valid, but the linchpin of arrangements in the 18th century was the squire, who coordinated and supported the arrangements of the village community- and was expected to put in both direct support and rent relief, and use his connections to arrange county or central government support. If you read the inquiries into the Irish famine, for instance, you find English governbments asking “where are the landlords and why are they not doing their job?” – not realising (or wanting to realise) that rack-renting Irish absentee landlords were not tied into the same social and political arrangements as English ones.

    My larger point is that complex social arrangements like support for the aged have to start from where you are socially and economically, and will have many different elements. Schemes that seem to assume a blank slate are not, to my mind, likely to do very well.

  85. paul walter
    April 13th, 2010 at 22:51 | #85

    Hadn’t checked this thread before: worth it just for more the malignant nonsenses from the likes of Terje and Reynolds; stock-standard Murdoch-ese.

  86. April 13th, 2010 at 23:21 | #86

    …and it is good to see the usual insightful comment from you, paul.

  87. paul walter
    April 14th, 2010 at 00:22 | #87

    Icing on the cake, m’boy.
    Icing on the cake.

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