If you look at political manifestos across the spectrum, none of them suggest lowering the state pension age as a goal - even those backing citizen's income ideas. I really can't understand that. It seems like a sure fire vote winner particularly if you sell it as a way of freeing up space so the young can get a job.3spoken
Why not lower the retirement age?
Neil Wilson
4 comments:
What if people don't retire? A recent trend has been the return of older workers to the labour market. The need to make ends meet trumps retirement.
Early retirement is just one of a category of useless cures for unemployment which have been around for centuries. That category is sometimes referred to as the “labour supply reduction” collection of alleged cures for unemployment. The collection includes reduced working hours, longer holidays, emigration, and extended education and thus delayed entry into the labour market for youths.
The basic and flawed theory is: 1, cut aggregate labour supply, 2, leave demand for labour untouched. And if you can do that, then of course unemployment declines. Trouble is that there’s a maximum feasible level of demand for labor before inflation kicks in for a given level of aggregate labor supply. Thus if supply is reduced, then demand has to be reduced as well. So unemployment stays the same.
It’s the same with apples: cut the supply of apples and you’ll have to cut demand as well if you want prices to remain constant.
King James I of England (1566 –1625) thought that unemployment could be reduced by shipping the unemployed off to Newfoundland and Virginia. Twit. Even better is the fact that if emigration cuts unemployment, then presumably IMMIGRATION increases it. But strange to relate, the US has taken immigrants at the rate of about 1 million a year for 200 years, yet unemployment in the US always remains much the same relative to unemployment levels in the countries that send the immigrants.
"Trouble is that there’s a maximum feasible level of demand for labor before inflation kicks in for a given level of aggregate labor supply."
There is, and we're nowhere near it.
It really is time to get away from this persistent assumption of yours that we're somehow near capacity.
Everything you say assumes a capacity situation, and no economy on the planet is anywhere near those conditions - however much business likes to moan.
The flawed theory is that we're at capacity and dynamically unable to grow output. Neither of those are true.
Let the older unemployed retire. Let those who hate their jobs and are old enough retire. Add some more liquidity to the job market and let people more around to a more efficient configuration - which then frees up space for younger people to get a start in life.
There is rarely bidding wars for staff. The demand isn't there to justify that. What happens instead is that stuff gets shelved.
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