There has been a chorus of economists who blame everything from excessive borrowing to cheap loans to early retirement with generous pensions that triggered the greek debt crisis in the first place to the political system that allowed this to happen. Not many have looked into the causes of low saving rates in western countries i.e. US/EU. There are many Points that one must ponder over..
1. They are all liberal free enterprise systems
2. EU has some form of state ownership & spends considerably more on welfare/Doles & aging population is not earning enough to sustain the spends
3. Political pressure or oversight led to easing of norms to land to unscrupulous & low credit worthy consumers in US.
4. Banks converted this debt into securities and sold them to other banks on bond market
All these no doubt are important but obvious causes.
In case of countries like Greece/Portugal/Spain or later in UK & france, pensions have been a huge drag on state exchequer. So isn't time we look at other datapoint/factors that may have an impact on nations finances..
Its time we start looking at basic unit of economic activity - Family
There is another issue that has not gained the attention it deserved with respect to state finances. All these governments employ an army of bureaucrats to run the system & most of them retire with a lifelong, inflation indexed pension. Greece, citizens were retiring at age 45 with full pensions. Take a case of UK/France, where citizens (govt employees) retire with pension benefits & pass on the benefits to spouses post their death. UK pension shortfall for the month of August 2015 was 358 bn Pounds. Overall shortfall is around 5Tn pounds.
Now is the tricky part comes with spread of new age religion called 'Individualism' ..
The core tenets of 'religion of individualism' as i see it responsible for wrecking the family system (smallest economic unit) are..
1. Sex for pleasure not for procreation
2. State responsibility to take care of citizens (welfare/doles)
3. Removing ethical/moral restrictions from sex outside marriage
The religion of individualism aka individual rights & femi-nazi movements has brought a situation that..
1. More and more children are being born out of wedlocks
2. High divorce rates
3. late marriages or no marriages
With the looming economic crisis, younger generation is finding it hard to find jobs & they are not leaving parents houses as they can't sustain their lifestyles. when pushed out there is another disturbing trend as this generation has lost the capacity to work hard (like their forebears). You see lot of young women marrying older man in these countries, even a country like Brazil is going through this phenomenon.
older man riding on the temporary testosterone high of viagra aka the blue pill is enjoying his sex life till late and are dumping their older spouse/partners for younger ones. Why do the young women choose to do so? Well, ageing & retired have money (lot of them) & these young women get enrolled in the pension system as beneficiary post the man's death.
Do you see the implication? The government that was planning of an average 18-20 years of pension duration lands up paying for 40-50 years to the spouse/partner of deceased pensioner. It is wrecking the finances of brazil/UK/France.
Take the case of India, we have around 3.1Mln central govt employees & another 18 million in state & other PSUs. Its true that majority of them may be in Group C or D category thus low paid but they do get inflation indexed pensions. With increasing life expectancy, state lands up paying pensions for longer. Luckily we have a growing population but unfortunately most are either underemployed or unemployed.
Unless Prime minister Modi pulls a miracle of getting manufacturing (big time) in India, we are staring at abyss with huge pension bills (recurring) for military personnel or other govt employees. our 55% population (engaged in agriculture) contributes around 12-13% of GDP. It will further come down to 5% in 10 years. Its time we have to shift this large manpower to productive usage.
What do we do the disease called individualism creeping in our society with similar western issues creeping in urban landscapes. Rising divorces (generally at older ages too), Children abandoning parents in villages or small towns & not taking care of them in old age will raise more demand for pensions or state support.
Government has a tough choice, tackle Viagra fuelled youthfulness & children's apathy towards old parents. India has just taken on roller coster of pension issues. we need reform right now before Viagra finds our retirees.
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