Abolishing the state pension would be a great policy
Unfortunately it’s an impossible one to implement.
While life expectancy has romped ahead in recent decades, the age at which citizens are entitled to live off the state for the rest of their lives has barely budged. With families in developed countries getting ever smaller, a demographic nightmare is forming, with a shrinking pool of the productive funding an expanding pool of the unproductive.
If only we could start again
As a dyed-in-the-wool libertarian I believe in as much personal freedom as possible along with total personal responsibility. Both of which are on the wane in modern society, the latter lamentably much more so than the former.
As a libertarian I find the notion of a “retirement age” and a “state pension” almost morally offensive. Surely everyone should be free to choose when they aim to stop working and be free to profit in the here and now by stretching that day out. Surely it should be everyone’s inalienable right to trade an expectation of a comfortable and long retirement for more disposable income and more pleasure in the here and now?
Taxing people in the here-and-now for a retirement they may neither want, nor in spite of all the advances in medical science get, robs people of freedom of choice in their lives. Give people the money now and grant them the freedom to choose. If you want an early and long retirement, make sacrifices now and you can have it if you live long enough. If you want to enjoy your healthiest and youngest years to the maximum and consign yourself to working until you drop, then that should be your right too.
Two arguments against this spring immediately to mind. The first is that it presumes people can be trusted to make the right choices for themselves and many won’t. As a libertarian that is just fine with me – it is for each of us to suffer the consequences of our mistakes and not for a nanny state to wet-nurse us from the day we’re born to the day we drop. But I appreciate in today’s world that’s an unfashionable point of view. So we must constrain freedom of choice for everyone to protect those patronisingly considered incapable of taking care of themselves.
The second argument would be that it’s unfair to expect those genuinely too old and too infirm to work to have to do so. But to my mind that’s what disability benefits are for. If you’re genuinely incapable of earning a living (as opposed to being unwilling to) then surely in any caring society it is right that the state provides for a comfortable level of care and quality of life for you. I’m not proposing here that an arthritic nonagenarian should be forced to stack shelves at the local convenience store. I just think that a healthy and capable nonagenarian should have been given the choice of a richer and wealthier eight decades before it if they chose to keep earning a living as long as they could.
But we can’t
Unfortunately there’s a third and inarguable reason for not ridding ourselves of the retirement age and the state pension. It’s an almost impossible policy to implement fairly.
Perhaps for a country with a sizeable financial surplus or a well-endowed sovereign wealth fund capable of funding all existing pension liabilities without future taxation, such a policy could be implemented. But except for those lucky few countries, there’s an unavoidable double-whammy on the young, from whom you take away a future pension, yet deny them the tax cuts to go with it because they have to go on paying for the pensions already promised to the old.
You can’t tell a 20 year old that he has to spend the rest of his working life with no pension to look forward to unless he funds it from his own pocket, yet hand him nothing back with which to do so. Nor can you tell a 50 year old that you’re taking his promised pension away and that if he wants to retire at 65 he needs to fund it from his remaining working life.
Even if you freeze existing pension benefits accrued to all members of society, so that the 50 year old gets say 80% of what he’s expecting and the 20 year old gets nothing, the amount of tax reduction you could bestow would in no way make up for what you’re taking away.
It would take generations to gently phase in the abolition of state funded pension rights. And as a citizen of country where pension legislation seems to be turned on its head every few years, who would trust the government to stick to their promises anyway?
All libertarians hope for a smaller state and greater personal freedom., and some will fight for it. Sadly this seems a fight that just can’t be won.