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(photo credit: Ariel Jerozolimski [file])
Rarely do you find as cruel an example of falling victim to your own success as in the Western world's deepening pensions crisis. Although the details of this rapidly growing problem are complex, having to do with the specific labor laws and accounting structures in each country, the basic outline is much the same everywhere: a) people are living longer; b) the terms on which people retire have been steadily improving over a period of several decades; c) people in rich countries have been conditioned to expect that these trends are immutable - lifespans can only increase, health provision can only improve, and retirement packages can only get more attractive.
This mindset is found only in the Western world, and derives from the introduction of welfare-state apparatuses following World War 2. Elsewhere, these dangerous delusions are not rife, because the brutal realities of life outside the molly-coddled West have prevented them from taking root. Thus in Africa, for example, where Aids is still getting worse and other preventable or treatable diseases (such as malaria) kill millions annually, lifespans have actually shortened. More remarkably, in Russia too, lifespans are shorter than they were in the Communist era, but that is also because the Russians have proven that health services can deteriorate alarmingly, to the point where previously conquered diseases such as TB re-emerge.
WESTERN COUNTRIES - and others that have succeeded in achieving First World socio-economic conditions, such as Singapore, Taiwan and Israel - have increased both the quantity and quality of their citizens' physical existence. However, implicit in that achievement is the need to provide resources with which said citizens can enjoy their longer lives. That's where pensions come in - but where do the pensions themselves come from?
There are only two options: either John Q and Jane Citizen save during their working lives and live off those savings when they retire, or someone else - their employers or the government - pays them a pension. This second option is the norm in Western European countries, where the inherent problems in this structure - it's an open-ended commitment which swells as life expectancies rise - have been exacerbated by a growing tendency to retire early and/or enhance the terms of the pension. (Note, however, that the first option is also problematic, given John and Jane's tendency to live longer after they stop saving).
When people are programmed to receive pensions from another entity, it becomes like manna to them - although it falls out of the sky on a weekly or monthly basis rather than daily. A more substantive difference, unfortunately, is that the employers and governments who are supposed to keep the goodies coming are less reliable than the Almighty. After several decades, the system is crumbling - mainly because retirees are living much longer while the number of young workers is diminishing. On the other hand, the recipients of the manna are like their Israelite prototypes: any hitch in delivery, or even the threat of one, triggers loud grumbling.
The result is that the pensions crisis, driven by seemingly inexorable demographic trends and fuelled by ongoing medical advances, is getting worse. Anyone who can crunch numbers is able to demonstrate the dynamics of the impending disaster, so that governments are under increasing pressure to "do something." Indeed, what needs to be done is blindingly obvious: people need to work longer (i.e. the retirement age needs to be raised) and they need to work more (i.e. no paid early retirement or 35-hour weeks).
However - despite the strong likelihood that this would be good for the individual, never mind the firms and countries concerned - most people are totally opposed to these suggestions.
That's why governments are so loath to address the issue: it's political suicide. Not addressing it, however, is more literally suicidal for the nations and corporations involved.
But since inaction ensures short-term quiet but a long and painful decline, whereas proposing reform is likely to bring immediate political destruction, the big Western countries are doing their best to avoid it, stumbling on in their financial deserts, providing pensions for which they have no real cover and praying that the manna keeps dropping from the sky.
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