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Should the retirement age be lower, not higher?
Old 01-15-2011, 09:02 AM   #1
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Should the retirement age be lower, not higher?

Interesting article in yesterday's Washington Post:

Should the retirement age be lower, not higher?

Here's the full text of the article cited by the Post. It's written by economist James K. Galbraith and appeared in the latest issue of Foreign Policy magazine:

James K. Galbraith
ACTUALLY, THE RETIREMENT AGE IS TOO HIGH

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.
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Old 01-15-2011, 10:16 AM   #2
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It's very persuasive, except -- where do we find the money for the pensions for all the new retirees?
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Old 01-15-2011, 10:17 AM   #3
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Pretty short-sighted. Free up jobs for those that need them and want them more. Don't think about the consequences. I don't think he is serious.

This will only lead to economic retraction. Economic prosperity happens when more people engage in productive work. More people working @ higher productivity = a bigger economy and everyone is better off.
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Old 01-15-2011, 10:25 AM   #4
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It sounds like the author wants to be controversial enough to wind up on talk shows and publish a book so HE can retire early.
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Old 01-15-2011, 11:03 AM   #5
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Don't think about the consequences.
He has, actually, but he has a very different take on that than the conventional views of most posters here. From a piece about the necessity of debt reduction:
Quote:
Apparently "going broke" means becoming unable to pay interest on the national debt. That being so, let's ask the question: under what circumstances might the United States Treasury Department become unable to pay interest on the federal debt?

Unlike Argentina or Ireland, the United States owes its debts in a currency it controls. When our Treasury wishes to make a payment, it sends a signal, by computer, to the payee's bank. The bank posts the payment by changing a number in the bank account of the payee. The payee, on checking his or her account, now realizes that she or he has a larger balance, and so larger spending power. That's all there is to it.

There is no way that this process can be disrupted by any economic force.
James K. Galbraith: Casting Light on "The Moment of Truth"

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Old 01-15-2011, 11:14 AM   #6
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This article mirrors my philosphy; most of which I have often mentioned here before. Not the least of which is the missing answer to the question: Where/how is the "conventional view of most posters" going to come up with the 11 million jobs needed now (not to mention the many more needed in the future)?
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Old 01-15-2011, 11:27 AM   #7
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he's a smart guy, just not super famous/smart like his dad so I think occasionally he says/writes some off the wall stuff.
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Old 01-15-2011, 11:30 AM   #8
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Here is an interesting interview with Mr. Galbraith. http://www.nytimes.com/2008/11/02/ma...wwln-Q4-t.html

Economists are rarely interested in being right; just like actors and mystery authors and consumer products they are brands, and it is a real career mistake to dilute or confuse you brand.

In James K.'s case, he inherited his ultraliberal brand from his father, and the acorn has not fallen far from the tree. I doubt anyone would have heard of him if he had a different name.

There are liberal economists who make a great deal of sense, very often if not quite always. In this category I place the late Hyman Minsky, a truly great thinker. But he waan't engaged in protecting his brand, so 10 or 15 years after his death he isn't much talked about.

Ha
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Old 01-15-2011, 11:39 AM   #9
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Originally Posted by haha View Post
Here is an interesting interview with Mr. Galbraith. http://www.nytimes.com/2008/11/02/ma...wwln-Q4-t.html
Yes, we are very much alike:

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what do you do with your own money? As little as possible. I am in the happy position of not having too much.
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Old 01-15-2011, 11:41 AM   #10
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he's a smart guy, just not super famous/smart like his dad so I think occasionally he says/writes some off the wall stuff.
<sigh> if only I could employ the famous/smart dad excuse.
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Old 01-15-2011, 11:42 AM   #11
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Typical liberal POV with no discussion as to how we'd pay for it... Why restrict it to 62? Make it 40 and there will be no shortage of jobs for those 39 or under I'm sure. Where do I submit my pointless article and how much does that kind of work pay?

Yes I realize there are liberals and conservatives alike who are economically clueless.
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Old 01-15-2011, 11:43 AM   #12
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The payee, on checking his or her account, now realizes that she or he has a larger balance, and so larger spending power. That's all there is to it.

There is no way that this process can be disrupted by any economic force.

I echo Michael B's thought that this guy isn't serious.

The economic forces that disrupt this process are hyperinflation and an unwillingness of creditors to continue to lend in U.S. dollars. Yes, we could retire all of the U.S. debt with a single key stroke. But it is not costless to do so.
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Old 01-15-2011, 12:19 PM   #13
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FWIW Galbraith is a professor at the University of Texas at Austin. Here's the college directory:

Directory
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Old 01-15-2011, 12:21 PM   #14
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The economic forces that disrupt this process are hyperinflation and an unwillingness of creditors to continue to lend in U.S. dollars.
The present administration is having difficulty producing any inflation at all, much less do we suffer hyper-. And rational creditors have a burning interest in the safety of their investments and dividends, but need have no fear of a default with US Treasuries, as Mr. Galbraith explains.
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Old 01-15-2011, 12:25 PM   #15
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Where do I submit my pointless article and how much does that kind of work pay?
So write one. You may find it is much more difficult than you suspect... particularly the having a point part.
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Old 01-15-2011, 12:36 PM   #16
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"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed---lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

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Old 01-15-2011, 01:04 PM   #17
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I agree with those of you that consider Galbraith an enfant terrible -in the worse sense-, provoking self-serving controversy.

We, in Spain, are trying -with very little hope- to find useful and meaningful jobs for almost a million middle to low qualified workers dismissed/fired/laid off due to the crash of house/residence building.
Im afraid that the new orientation of economics shared by many European politicians: increased productivity, competetiveness, longer working hours/life, sustainable/green economics, innovation.... will reduce the number of jobs avalilable in general, let alone the mentioned unemployed.
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Old 01-15-2011, 01:07 PM   #18
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As our population continues to crowd the earth and as easily harvestable natural resources dwindle, the burden of supporting a percentage of the population not engaged in any productive activity (retired) will become unmanagable. Yes, we could print money and pass it out to those not engaged in supporting themselves. But in the end, we survive by dividing among us all the resources available to share. Having fewer contributing to the aggregate pool while still requiring their slice of the pie isn't going to do it .
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Old 01-15-2011, 01:17 PM   #19
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The present administration is having difficulty producing any inflation at all, much less do we suffer hyper-. And rational creditors have a burning interest in the safety of their investments and dividends, but need have no fear of a default with US Treasuries, as Mr. Galbraith explains.
As long as the country is perpetually stuck in a liquidity trap it can plan on printing money to pay its debts. But considering that liquidity traps are rare and can't be produced on demand, assuming liquidity trap economics for long-run fiscal planning seems imprudent, if not reckless.

And with respect to rational investors only caring about P&I payments, they also care deeply about inflation (domestic creditors) and devaluation (foreign creditors) that effectively reduce the purchasing power of those P&I payments.
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Old 01-15-2011, 01:17 PM   #20
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As our population continues to crowd the earth and as easily harvestable natural resources dwindle, the burden of supporting a percentage of the population not engaged in any productive activity (retired) will become unmanagable. Yes, we could print money and pass it out to those not engaged in supporting themselves. But in the end, we survive by dividing among us all the resources available to share. Having fewer contributing to the aggregate pool while still requiring their slice of the pie isn't going to do it .
So, "Get out there and find a job" is your best shot?
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