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we single out population ageing as causing a special crisis when
economic dependency among the unemployed and other sections
of the population such as children, students and mothers is
viewed as part of the normal functioning of the economy?9 In the
contemporary world, economic growth is as likely to be labour
displacing as it is to be employment creating. Old age is not
a special case, it is not the only or even the predominant cause of
people becoming dependent financially on others. The balance
between those working and those on benefits has strong social
and institutional aspects and is not the same as the balance
between productive and unproductive members of society. As
Jackson says, Both unemployment and retirement are socially
created, and they are not reducible to the behaviour or physical
characteristics of unemployed and retired individuals .10
The ageing of populations is not new. It has been the character-
istic of the British population for most of the twentieth century,
old age and intergenerational conflict 85
which saw the establishment and maturation of the British
pension system. Mullan points out that British society had coped
with a tripling in the proportion of over-64s between 1911 and
1991 and that in comparison a further 50 per cent rise over the
next 50 years does not seem that onerous .11 Although crises
of increased dependency ratios have been regularly predicted
during this period they have never materialised. The prime
reason for this is that growth in economic efficiency has been
more than enough to ensure that the productivity of those in
work has increased and produced the resources to fund ever-
increasing standards of living in retirement.
Historically modern societies double their wealth about every 25
years. This pace of expansion projected into the next half-century
dwarfs the extra cost for society from more elderly dependants.12
The proposed solution for the demographic time bomb crisis,
that of funded pension schemes, leaves the original problem of
the demographic balance between generations unaltered. There
will still be the same ratio of workers to pensioners (as defined
by simplistic dependency ratio measures). If the projected
labour shortage materialises, wage inflation will push down the
relative value of pension assets compared to the price of labour.
Demand from affluent pensioners for the labour of diminishing
numbers of workers will push up their price. In other words
it will become relatively more expensive to employ a nurse, a
doctor or a hang-glider instructor than previously. It remains
highly uncertain whether funded pension schemes will create
a larger volume of future goods and services for retired people
or merely re-allocate who gets them. What they clearly cannot
do is change the demography. To make the case that privately
managed pension schemes offer a better long-term option for
older people in general rather than a limited number of affluent
individuals, it has to be shown that greater gains to societal
productivity can be made through the route of private pension
fund investment than alternatives. This case is far from made.13
86 old age and intergenerational conflict
The view of population ageing as a demographic time bomb
has been constructed by those with a particular agenda and
a specific way of seeing the world. The function of such argu-
ments is to create a sense of inevitability and scientific certainty
that public pension provision will fail. In so far as this strategy
succeeds it creates a self-fulfilling prophesy. If people believe
the experts who say publicly sponsored PAYG systems cannot
be sustained, they are more likely to act in ways that mean they
are unsustainable in practice. Certainly in Britain and elsewhere
in Europe the state pension is an extremely popular institution.
To have it removed or curtailed creates massive opposition. Only
by demoralising the population with the belief that it is demo-
graphically unsustainable has room for the private financiers been
created and a mass pensions market formed.
GLOBALISATION AND THE NATION STATE,
IMPLICATIONS FOR WELFARE
The idea of the welfare state
To what extent can and should nation states provide the means
for securing a good old age? Should people be able to claim an
old age pension merely because they are citizens? Alternatively
does the market, given that shares can go up or down in value ,
offer a secure way to finance retirement? In practice low income
groups in most countries are never going to be able to fund their
own retirement. There needs to be some element of redistribution
if all older people are to receive an adequate income. Even the
World Bank in setting out its policy for pensions recognises the
need for mandatory tax-financed public [pensions] designed to
alleviate poverty .14 The original state pension systems founded
in Germany in the 1880s were constructed to bolster the estab-
lished political order and counter the political appeal of socialist
programmes to the poor.15 The welfare state in Britain was
founded and developed in the period immediately following the
Second World War.
old age and intergenerational conflict 87
The welfare state was conceived in the darkest moments of the
Great Depression, and forged as an institution in the aftermath
of the Second World War. At its peak, its many functions and
responsibilities literally institutionalized the social relations of
Western societies. For many, the state was both the proper
provider of public infrastructure, and, given the vagaries of the
market, the only institution capable of providing a comprehensive
system of public goods. . . . Recent moves to radically reform
(UK) and even dismantle (US) welfare programmes suggest, in
fact, that the post-war consensus that legitimized state inter-
vention in market capitalism is in tatters.16
Pensions in Britain became part of the idea of a welfare
state that cared for people from the cradle to the grave . The idea
was (and still is) extremely popular with British people. Social
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