Sunday, October 24, 2010

Rejoinders to My Previous Post

Bernard Girard takes issue with my critique of Thierry Desjardins' comments on retirement reform. In Bernard's view, I exemplify the way in which the reform is misunderstood by people outside France. He rejoins that the reform is profoundly unjust, that it makes short shrift of consultation with the unions and continues Sarkozy's practice of presidential intervention in domains where the president has no business, that it ignores the central question of slow, jobless growth that is at the heart of the pension deficit, and that it represents "social regression," a giveback of un droit acquis. His pushback is joined by Brent (see comments on yesterday's post) but implicitly challenged on point 2 by TexExile (also in comments), who notes that employer-labor consultation on this type of issue generally fails without strong state leadership. On the other hand, FrédéricLN, another commenter, notes that words like "consultation" and "concertation" often mean, in French government parlance, "We listened politely to your complaints and then did what we intended to do anyway."

I would not deny that the reform represents une régression sociale, to borrow the words of Benoist Apparu, the secretary of state for housing, who then had to accuse himself of a gaffe for stating the obvious. The question is whether such regression was unavoidable or could have been done in a less unjust manner. I believe that it is unavoidable, and I don't think that either Bernard or Brent fundamentally disagrees. Bernard does say that a more effective pro-growth policy would have improved matters. No doubt. I wish I knew what such a policy looked like. Brent argues that reform would not be necessary if the flow of wealth from the poor to the rich, characteristic of the neoliberal global regime of the past 30 years, were reversed. I agree that growing inequality threatens to destroy liberal democracy, but in the meantime the deficit of the retirement system needs to be attended to. Tackling inequality is a goal for the longer term.

In the end, the criticism to which I am most sensitive is the contention that the reform is profoundly unjust. Bernard singles out injustices to those who start their working lives early, women, people with interrupted careers, those who lose their jobs late in their careers, and those who work in small firms or declining sectors. He details his case here. These injustices are real--real enough to have been addresssed, in part, both by existing legislation and by the reform. There are special provisions for those who begin work before the age of 18, for interruptions due to pregnancy and parental leave, and periods of unemployment. They do not go far enough. But sometimes a major reform can be achieved only by overlooking certain flaws and leaving them to be attended to later. This was the case with health care reform in the US.

Once again, I think that the fundamental objection to the Sarkozy reform is not that it is flawed but that critics do not trust Sarkozy to attend to fixing those flaws later on.* Perhaps the critics are right. But I think they ought to concentrate their fire on the flaws rather than on denying in toto the need for change, even if that change can be characterized as une régression sociale. For while a longer working life may be regression, a longer life expectancy is not. To be sure, the government has exaggerated the actual increase in life expectancy as its fundamental justification for reform. But the fact remains that generous social insurance, which is an undoubted public good, requires that not only the benefits but also the burdens be shared by all. About the equality of burden-sharing there will always be arguments, but are the burdens that young workers, women, small-business employees, and victims of globalization are being asked to bear under the reform worse than they are already bearing under the pre-reform system? Of that I'm not so sure. I'd like to hear Bernard's reply, since he is more familiar with the details of both regimes than I am.

* And why assume that Sarkozy will be the one doing the fixing? If the Left comes to power, it will be able to thank the ex-president for having taken the heat of moving the retirement system closer to solvency and still move to repair remaining injustices or to overhaul the system entirely, but starting with a smaller deficit than would otherwise be the case.


FrédéricLN said...

Yes, the pensions systems needs to be financially balanced, and it is not (since years). And the reform would likely put it in a rather better situation.

TexExile said...

Two quick comments.

First, while France definitely needs policies to stimulate growth and higher employment rates, no serious analysis for over a decade has suggested that faster growth could solve the problem without significant reform to the pension system itself. On the contrary, the present reform is already predicated on a substantial improvement in economic performance over the coming decade. A more pessimistic (realistic?) assessment might have necessitated even more drastic change.

Secondly, the 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.

Finally, a question for you, Art: on what basis do you conclude that the provisions made for people who start to work early, interrupted careers, etc etc, are insufficient?