Intergenerational Conflict
The Evil Legacy of the Welfare State
The topic of intergenerational conflict has been coming up quite a bit lately. Finally, of course, the truth is beginning to dawn upon people. The welfare state was built on the basis of making promises now but putting off payment into the future. Otherwise known as "pay as you go", that was OK as long as there were more people paying taxes than were drawing benefits. Now, however, the demographics of the western world mean that the number of people expecting benefits is increasing (as the baby-boom generation nears retirement) while the number of people active in the workforce is decreasing.
To fund the promised benefits, the tax burden on those in the workforce will have to increase significantly in most western countries (and that begs the question as to who will pay for benefits further in the future!). This will be happening as governments are forced to cut back on the benefits promised to those taxpayers! Doesn't take too much imagination to see that there are going to be a lot of very upset taxpayers!
In all likelihood, governments are simply not going to be able to deliver on the promises they made. When that happens, a lot of pensioners are going to be very upset and will complain that they paid taxes all their lives and expect what was promised. The dirty truth, of course, is that their taxes didn't go towards funding those promised benefits but were wasted on needless government spending.
So, we can expect a lot of squabbling between different groups as they all struggle to get their share of the spoils. This is another evil aspect of the welfare state - it sets up conflict between different groups. This intergenerational conflict wouldn't happen, of course, if individuals took responsibility for themselves and there wasn't forced redistribution via the government.
This particular post was prompted by an article in this week's "Economist" ("A Future Meltdown? - The ageing of the baby-boomers casts doubt over asset prices too) which contains an interesting discussion over the impact of demographic change on the stock and property markets.
The topic of intergenerational conflict has been coming up quite a bit lately. Finally, of course, the truth is beginning to dawn upon people. The welfare state was built on the basis of making promises now but putting off payment into the future. Otherwise known as "pay as you go", that was OK as long as there were more people paying taxes than were drawing benefits. Now, however, the demographics of the western world mean that the number of people expecting benefits is increasing (as the baby-boom generation nears retirement) while the number of people active in the workforce is decreasing.
To fund the promised benefits, the tax burden on those in the workforce will have to increase significantly in most western countries (and that begs the question as to who will pay for benefits further in the future!). This will be happening as governments are forced to cut back on the benefits promised to those taxpayers! Doesn't take too much imagination to see that there are going to be a lot of very upset taxpayers!
In all likelihood, governments are simply not going to be able to deliver on the promises they made. When that happens, a lot of pensioners are going to be very upset and will complain that they paid taxes all their lives and expect what was promised. The dirty truth, of course, is that their taxes didn't go towards funding those promised benefits but were wasted on needless government spending.
So, we can expect a lot of squabbling between different groups as they all struggle to get their share of the spoils. This is another evil aspect of the welfare state - it sets up conflict between different groups. This intergenerational conflict wouldn't happen, of course, if individuals took responsibility for themselves and there wasn't forced redistribution via the government.
This particular post was prompted by an article in this week's "Economist" ("A Future Meltdown? - The ageing of the baby-boomers casts doubt over asset prices too) which contains an interesting discussion over the impact of demographic change on the stock and property markets.
posted by Kevin Francis at
8:14 pm
