The Solution: Smaller Government 
(Part 2)

by Doug Payton

An article in The Guardian reports that France and Germany are demonstrating why state-run programs, in this case pensions, don't work. There have been massive demonstrations there recently over a change requiring that folks who will receive state pensions must work 40 years instead of the previously legislated 37.5 years, and this applies to everyone retroactively. The problem include:

• One size does not fit all. A 49-year-old woman named Martine is quoted in the article. "My husband's a teacher, he feels exactly the same. All our working lives we've been planning around that [retirement] date, and now suddenly we're not going to be able to stop. What do they expect us to do? Die on the job?" The government has decreed that everybody will be treated the same way, but for Martine and her husband, this won't work. But since there's only one choice for everyone on the state dole, she has to live with it. Is that a better option than choice?
  
• Government programs make people dependent on government. See above. If Martine were more independent from government, she'd have more choices and have more control over her future. When this argument was made in reference to welfare, it's been labeled "racist", while welfare was considered "compassionate". Is the government of France being compassionate by forcing people to work more and contribute more for fewer benefits? How can this be fixed? "Experts point to Sweden as the country most successful in reforming pensions, introducing a mandatory 'third pillar' of private savings and combining pay-as-you-go with an investments-based model, but it took years of public debate to agree it." Sweden fixes it by trying to get folks to take more responsibility for their financial future. Public dole is the problem, individualism is the solution. Europe would do well to do away with as much of the former as possible, to be replaced by the latter.
  
• Social Security has always been a pyramid scheme doomed to financial failure. The article states, "At issue is the sustainability of pay-as-you-go state pension systems in which those in work pay the pensions of the retired rather than, as many fondly imagine, putting a nest-egg away for their own retirement." How compassionate is it to sell a program as a "nest egg", which is essentially a lie? If you get a statement from US Social Security of your contributions, it talks about how much of your money is in the system for you, but the truth is, it's already being paid out and you're gambling that future payees will cover your retirement. However, if I could take the money I pay into Social Security and invest it myself, I would pay for my own retirement, not force the next generation to do it for me. It would be my money and my responsibility. Instead, we (and Europe) have a risky tax scheme (sound familiar, Al Gore?) that is demonstrating its failure.
  
• The more taxes levied, the less tolerance government has for emergencies. Martine Durand, deputy director for labor and social affairs of the Organization for Economic Cooperations and Development had this to say with regards to the options faced by these governments: "Increasing contributions is counter-productive in high-tax countries, reducing pensions is also politically unpopular. That just leaves raising retirement ages." High taxes, applied to pyramid schemes, only mean that at some point this situation must arise. Taxes can realistically go no higher, and so more must be asked of the populace to prop up a program that doesn't work. Smaller government, taking less from its citizenry, can afford to ask more in times of emergency, but European governments are stuck. Of course, if they'd never started this pie-in-the-sky program and let people run their own lives, they'd have avoided this emergency altogether.
  
• Arrogance in government takes decisions away from citizens "for their own good". What kind of arrogance? "With exquisite mistiming, meanwhile, MEPs voted last week voted for themselves the option to retire retire at 60 on a pension of 70% of gross earnings." That kind. Is that a compassionate government, or just one that thinks they know better than the average guy?
  

Basically, what the government (and liberals who advocate it) call "compassion" is merely legalized thievery. Social Security and its like in Europe are not compassionate because they force one group of people to pay for another. And they don't work because they gamble on demographics and behavior patterns that the government cannot control (even though they may try via legislation).

In Paris yesterday an electricity board engineer called Jean-Marc summed it up. "Over the past few years every single redundancy plan has targeted the over-55s, and now they're asking us to work for longer. Who do they think they're kidding? It's completely incoherent, utterly unrealistic."