> Where would the money come from to give someone a retirement at 50?
Well, it looks completely different if we take out the money from this situation.
Consider this: we have big unemployment, a lot of part-time workers, a lot of people not working because of disabilities, there are also millions of college and university students who are obviously not working full time. But the economy keeps going, it has no shortage of workforce, number of workplaces is limited and less than total number of people.
Then you propose to increase retirement age.
The number of workers will increase, but the number of workplaces is the same. Wages are decreasing, tax revenue is decreasing and we again have no money to pay welfare, pensions etc.
So we don't need more workforce.
Redundant workers rely on disability pensions, unemployment payments, food stamps etc. All these welfare programs have obvious deficiencies, but we need to feed the people anyway. If these people were working it would be much better. But there is simple way to increase number of working people without extra resources.
We just need to limit working hours. And it is possible, because it was possible to introduce 40 hour work week. Now cut it to 35, and you get 12% increase of number of working people and unemployment completely disappears.
That train of thought is known as the lump of labour fallacy.
What you propose would reduce output; if it was optimal for firms to hire the unemployed, in place of those already employed, then they would do so - unless they are prevented from doing so by labour legislation, which doesn't seem to be the case the U.S.
That the unemployed are not hired might make sense when there are costs to hiring and training a new worker, which don't exist for a worker already in place. On an aggregate level, this policy would increase the cost of labour, and consequently reduce its demand, so less overall would be employed (though the rate of employment would probably stay about constant because you reduced the denominator by reducing the labour force).
"In theory, theory and practice are identical. In practice, they're not."
A fair portion of the Western world's underemployment and unemployment problem derives directly from the overemployment of those who have the jobs. As people keep putting it, "Whatever happened to the 40-hour workweek?"
For example, among those sedentary professionals who can keep working for decades upon decades, most in the United States are classified as Fair Labor Standards Act exempt, and are therefore often made to work overtime. Health insurance is a fixed cost that needs to be driven down both through socializing medicine and, preferably, through requiring per-hour National Insurance taxes, but only the latter action would actually change the fact that firms find it cheaper to hire two professionals working 60 hours/week each than to hire three professionals for normal 40-hour workweeks.
And, here's the trick, neither of those two professionals actually receives overtime pay. The company is literally getting a 1/3 boost to their productivity-per-employee solely by using a legal loophole to not pay for all hours worked. This is not the lump-of-labor fallacy, it's straightforward exploitation.
To paraphrase many Hacker News-targeted blogposts, "Fuck companies, pay workers."
That's a great point, but it's only a definition. Being a definition in an economics text (in this case, just a website) doesn't make it automatically correct. It needs to be proven by research.
> What you propose would reduce output; if it was optimal for firms to hire the unemployed, in place of those already employed, then they would do so - unless they are prevented from doing so by labour legislation, which doesn't seem to be the case the U.S.
Payroll taxes definitely do work in that way (not as an outright barrier, but by acting as a market distortion which encourages investing in expanding production through expanding capital rather than doing so by expanding employment rolls when, before considering payroll tax costs, it would be equally or more efficient to expand production by expanding employment.)
Doesn't the Obama care insurance penalty basically do this? Companies are forced to either spend $10000 per employee like they do do now to give them coverage or pay a $2000 fine to the government. The beauty of this is that part time workers are exempt from the fine so most companies will just hire 25% more people and make everyone only work 30 hours.
Unemployment is basically solved in 2014. Under employment on the other hand...
Exactly. They tried that in France at a moment where everybody was euphoric: the two germanies had recently been re-unified and GDPs of nearly everybody were growing like crazy.
Instead of France trying to reimburse its own public state debt they decided to move to 35 hours / week.
We can see the results now: Germany's economy is one of the best in the eurozone, they managed to stay at "only" 80% of public debt and are enjoying a modest GDP growth. Meanwhile France reached 100% public debt and is dangerously close to a disaster (youth unemployment is rising, the private sector isn't motivated anymore, austerity will need to kick in or France won't be able to re-finance itself on the markets).
The loss of competitivity of France is directly attributed to moving to 35 hours / week and is going to be the main reason why France is going to lose its status as the world's fifth biggest power. By 2017 Brazil's going to be in front of France. Heck, if Holland and the socialist gets re-elected there's a far from zero probability that France won't be part of the G8 anymore by 2022!
That is very concerning but, sadly, there's nothing else to hope from socialists who are spreading hatred of the entrepreneurial spirit and hatred of those who succeeded, in the name of the nanny state spraying loyal socialist voters with money inflating their sense of entitlement.
And yet, having a 35 hour work week for 30 years is a huge achievement in itself. That's a billion hours not worked.
International economics is too complex to pin France's woes on one single factor, especially when they have a lower debt to GDP than the US which is famous for it's long working hours.
There is a lot wrong in the French economy. There is a lot uniquely wrong with every economy. I'd argue that as the huge populations of BRIC countries use modern productivity tools like automation to increase per capita GDP, it would be bizarre for France to hope to stay in the G8. And that's a win for everyone.
Well, it looks completely different if we take out the money from this situation.
Consider this: we have big unemployment, a lot of part-time workers, a lot of people not working because of disabilities, there are also millions of college and university students who are obviously not working full time. But the economy keeps going, it has no shortage of workforce, number of workplaces is limited and less than total number of people.
Then you propose to increase retirement age.
The number of workers will increase, but the number of workplaces is the same. Wages are decreasing, tax revenue is decreasing and we again have no money to pay welfare, pensions etc. So we don't need more workforce.
Redundant workers rely on disability pensions, unemployment payments, food stamps etc. All these welfare programs have obvious deficiencies, but we need to feed the people anyway. If these people were working it would be much better. But there is simple way to increase number of working people without extra resources.
We just need to limit working hours. And it is possible, because it was possible to introduce 40 hour work week. Now cut it to 35, and you get 12% increase of number of working people and unemployment completely disappears.