Friday, September 21, 2012

Austerity In Britian Not Working, So Blame It On The Welfare State

The political economy in Britain is much like that in the US.  The US economy is not growing fast enough to reach full-employment, but the British economy has negative growth.  Conservatives in both countries are preaching the virtues of austerity, and screaming about the welfare state which redistributes income in the wrong direction.  One of their tactics is to create a wedge between the younger generation and the elderly who are the primary beneficiaries of of the social welfare system.  This article, for example, leans heavily on data and analyses provided by a foundation in Britain called the Intergenerational Foundation.  The article focuses primarily on the retirement benefits of a doctor who retired from the NHS.  Doctors in Britain receive an above average income, which is small relative to the income of doctors in the US, but they get a good pension when they retire. The pension system compensates them for the opportunity cost of choosing a medical career instead of a higher paying job, for example, as an investment banker.  The Intergenerational Foundation points out that working doctors will have to pay higher taxes to support retired doctors, and that they many not get as good of a deal when they retire.  This has the effect of weakening support for the retirement system among younger workers. The foundation focused on the generous pension system for doctors, however to create a more general concern for the entire social welfare system in Britain.

Conservatives in the US use the same strategy to build a wedge between younger workers and the elderly.  Many younger workers have been led to believe that Social Security will be bankrupt by time they retire.  They ought to be concerned more about the rising cost of the healthcare system in the US, which does affect the Medicare and Medicaid programs, but efforts to deal with healthcare price inflation usually run into political opposition in the US.  Conservative reform proposals in the US focus primarily on passing the cost of healthcare price inflation onto retirees.

Its good that some seem to be worried about intergenerational justice in Britain and in the US.  It would be better, however, if the focus were on the health of the planet that we will leave to our descendents.  Many do what they can to accumulate wealth to leave to their children and grandchildren.  They seem less concerned about the habitability of the environmental legacy that they pass on to future generations.

No comments:

Post a Comment