Taking Apart the Fable
Lie One: Not Enough Workers. We are told that there will not be enough active young workers to support this ever-growing population of over-consuming geezers. But if that were true, what would happen? What happens when demand exceeds supply? Prices go up, which, in this case means the price of labor. Wages would rise; unemployment would go way down.
Guess what? That is not happening. Will it happen sometime soon? It is not likely, but if it did, it would not be a problem for the economy as a whole. It would, in fact, be the solution to the problem that we actually face. The rich would not like it, of course, because wages would be going up relative to profits. Business would be booming (good for the economy), but workers would be getting more and investors less (bad for the rich.) So the rich are going to do what they can to keep it from happening and blame their dirty work on the pensioners, who will themselves be victims.
Lie Two: Not Enough Stuff. There is another implied and utterly fallacious assumption behind this “codgers robbing the young” scenario. That is that there is just not enough to go around. There are not enough goods and services for everyone and the greedy geezers are hogging them all. This is ridiculous on the face of it; in fact, the source of our real problem is exactly the reverse.
Wait a minute! How is that even possible?
To understand that, we will have to back up a little.
The Paradise of Increased Productivity. Back to 1930, in fact, when John Maynard Keynes published a short essay called “Economic Possibilities for Our Grandchildren,” in which he considered the consequences of steadily rising worker productivity. He imagined that by 2030 the standard of living would be remarkably higher, and that people would work no more than fifteen hours a week, devoting the rest of their time to leisure and culture. We would be essentially liberated from want.
Keynes was not alone. His was a perfectly logical projection. Industrialization and automation were making it possible for increasingly fewer workers to produce vastly more. And it has continued. Since the end of the Second World War productivity has increased more than four-fold. One part of his prediction has certainly come true: the standard of living in the rich countries has greatly increased, but we are far from fifteen-hour work weeks and retirement at age forty-five. Instead, Americans at least are working longer hours than ever and the pundits are talking about delaying retirement to age seventy—or more. Clearly, if his prediction had come true, we could easily provide for seniors who retire at sixty-five even if they do live much longer than they did in Keynes' day. What happened?