Wednesday, October 27, 2010

French Pension “Reform” and the Life Expectancy Canard

Angela Doland reports on a bill passed by the French parliament:

France's parliament granted final approval Wednesday to a bill raising the retirement age from 60 to 62, a reform that has infuriated the country's powerful unions and touched off weeks of protests and strikes. The 336-233 vote in the National Assembly was a victory for conservative President Nicolas Sarkozy, who has stood firm despite the protests - a stance that has resulted in his lowest approval ratings since he took office in 2007 … Unions see retirement at 60 as a cornerstone of France's generous social benefit system, but the conservative government says the entire pension system is in jeopardy without the reform because French people now have longer lifespans - an average of nearly 85 years for women and 78 for men, according to newly released figures from statistics agency Insee.

I am not an expert on the French retirement benefits debate but this claim sounds like a canard that proponents of Social Security benefit cuts in the US have often made. If life expectancy is longer because fewer children die prematurely, then it has little to do with the solvency of any retirement benefit program. The issue at hand should be the remaining life expectancy when people reach age 60.


Jimbo said...

Absolutely spot on. And how those people choose to spend their time post age 60, many of whom would choose to continue working.

Shag from Brookline said...

With the alleged benefits of red wine for aging, I can appreciate the whining in France. So perhaps by outlawing red wine, France could save its retirement at age 60 program, n'est pas?

TheTrucker said...

What seems perplexing to me is the problems of low wages and unemployment while morons want to keep old coots in the work force past their prime. The younger persons are more productive and can produce so much more stuff that the coots can be cared for even as the producers get more goodies.

The problems with social insurance are centered on a very poor distribution of net gains from improved productivity. Far too much is taken by rents leaving insufficient distributions to both wages and CLASSICAL interest. It seems to me, that even in the world of simple wages and interest (no rents), the distribution of gains to CLASSICAL "interest" (returns to investment) are too much and the distribution to wages too small.

It would seem that highly progressive income tax system could offset much of this problem.