Monday, October 25, 2010

Bernard Girard Responds

Bernard Girard continues our debate over retirement reform here. I don't have time today, unfortunately, to do justice to Bernard's thoughtful reply, so I'll content myself with two quick points. Bernard contends that the reform will increase inequalities, because some employers are in a better position than others to compensate workers for losses to their state retirement income, and some unions will obtain such compensation while others won't. Indeed, but the retirement system itself remains redistributive. Neither the existing system nor the reformed system was ever intended to redress all inequalities in the economy, and it's not the best instrument for doing so. On this point I agree with the comment of TexExile to one of my previous posts:

[T]he pension system is in many respects the wrong instrument to address the inequities generated by other economic conditions. These can and should be tackled directly.

To take but one example, early retirement as a solution to the problems of people whose conditions of work are damaging to their health and/or serve to reduce their life expectancies is perverse. It amounts to using public pensions to relieve employers of the true costs of employing people for long periods in such conditions. If working conditions cannot be improved and the jobs in question are deemed essential, then either the employers should pay the costs of shorter careers or else career structures should be altered to protect workers' well being. Otherwise, employers have no incentive to address these problems -- the costs are shifted onto the taxpayer.
The one other point I would make addresses Bernard's lengthy remarks on the subject of growth policies. Nowhere in his discussion does he consider the disincentive to private investment imposed by high taxes and labor market frictions. To say this is not to declare myself a neoliberal or neoconservative. There are public goods that should be state-financed, and there are market failures that need correction. But money that the spend spends to cover shortfalls in the retirement fund, which was intended to be self-financing, or to employ unemployed youths (to take another of Bernard's examples, l'Emploi jeunes program) is money not available to finance education or research and development, investments on which the return in the form of economic growth is much greater.

I apologize for not being able to carry on this discussion at greater length.

I see that Thierry Desjardins also replies to my earlier post, but there is less to respond to in his message, because he mistakes the point of mine. I understand perfectly well that he dislikes Sarkozy because promises have not been kept and outcomes have not matched rhetoric--in short because his policies are bad. But my point is that the particular policy at issue--retirement reform--is not bad, as other policies (reform of the bouclier fiscal, detaxation of overtime, expulsion of Roma, banning of burqa, etc.) are. I think that discussion of retirement reform should focus on the text, not on its putative author.

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