Right-wing authoritarian, Philip Booth (of the IEA, not to be confused with devoutly libertarian Phil Booth of No2ID), displays a surprising naïvety in his comments on Iain Duncan Smith's proposals for a Citizen's Pension:
There are problems with the current system, but sustainable reform is possible. The contributory principle should (1) be strengthened and the two state pensions merged into one. Individuals should (2) earn an entitlement to a fixed amount of pension each year when they pay their NICs with that fixed amount being indexed until retirement. Once pension is accrued it should (3) neither be added to nor taken away by the government.
The pensions of all the elderly would then be determined by the entitlements they earned throughout their working lives. If a particular generation wanted higher pensions, then that generation would pay for it with higher NICs. (4)
The problem with the proposed “citizens’ pension” is that the pension will be decided by parliament and not be dependent on contributions (5). No fewer than 43 per cent of active voters are aged 55 or above. The government will thus not do anything to undermine the financial position of the elderly. (6) A citizens’ pension will be forever increased under pressure from a greying electorate...(7)
The Lib Dems say they do not like the contributory approach because carers and the disabled might be left out. Such people would not pay NICs and so they would not get a state pension. But if it is desired to fix this problem, the solution is easy: the government just gives credits to such people; it happens now and the system works. (8)
1) He who says 'should' has just lost the argument.
2) And again.
3) Three strikes and you're out.
4) The state pension has always been 'pay as you go'. It's the simplest and cheapest way of doing it. The fact that people believe it to be 'contributory' is a separate issue. And any discussion of state pensions that ignores the Pension Credit is pointless.
5) Who decides on the age at which you qualify for a state pension? Who decides the level thereof and how it will be indexed? Who decides on the level of the Pensions Credit (which makes a mockery of the whole 'contributory principle')? Who decides the level of the super-tax on employment National Insurance contributions?? That wouldn't happen to be, er, the self-same Parliament, would it?
6) Sort-of-true. This pandering to the over-55s primarily manifests itself as Home-Owner-Ism, which is a far greater drag on the economy than the 5% of GDP we spend on state pensions and Pensions Credit.
7) Also sort-of-true. But if things were as simple as he said, by now the state pension would kick in at age 55 and be £300 per week. It clearly isn't, so there must be equal and opposite counter pressures from somewhere that decide how mean or generous the state pension system is.
8) If he approves of this approach, has he not just driven a horse and cart through his own argument?
Tuesday, 26 October 2010
"Should"
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9 comments:
The argument being advanced is, I have thought, pretty good. The government supplies a minimum, non-means tested (great, no bureaucrats). The rest is up to the individual.
If a particular generation wanted higher pensions, then that generation would pay for it with higher NICs
Erm... how about if a particular individual wanted a higher pension? Why should my pension be determined by what my contemporaries want?
The only fair way is (as with everything else that the government gives out): make sure that nobody starves. Anything extra is your own problem.
OP, so do you agree with Mr B or with the general idea of a "Citizen's Pension" (it's a separate debate deciding how much it is, what age it kicks in etc)?
I can't disagree with it really. I'm very much in favour of citizen's income, and reckon it would be a positive thing even without LVT. Therefore "citizen's income lite" in the form of a fixed pension seems good to me as well.
I've just read my original post: it wasn't very clear was it?
"The argument being advanced" I'm talking about is by the government spokesdrones.
Means testing of state pensions is a perfect example of the tragedy of the commons. The best thing to do financially for the individual is to splurge all assets and wealth away before hitting retirement age so as to maximise the amount received from the government. The fix for the tragedy of the commons has been known for hundreds of years; and in this case Citizen's Income/Pension is it.
Yes, he does seem to have been taken in by the NIC Ponzi scheme, doesn't he? Quite surprising for someone from the IEA.
I think the criticism of "should" is a bit unfair in this case, though - you can use "should" if you are expressing an opinion, as he apparently was.
AC, to hell with the 'contributory principle', which he appears to support (as well as supporting a non-contributory principle in the last bit I quoted).
It's authoritarian clap trap, just like 'means testing', which is mathematically or logically the opposite (if you pause to think about it). As OP says, the welfare system is there to prevent people starving etc, end of.
If we want a 'contributory principle' then this is best handled by having individual private accounts, ideally in a scheme with fees comparable to the US TSP[1]. Want a bigger pension? Contribute more to your own pot and vote for sensible pro-growth policies.
[1] Look at https://www.tsp.gov/investmentfunds/fundsoverview/expenseRatio.shtml then check your UK pension/ISA fees and weep.
PS: I second adamcollyer's criticism of your criticism of "should". You should have said that he who says 'should' should lose the argument.
Ed, I have read and I have wept.
Mark there are two distinct meanings to the word should.
1) Indicating the correct or desired course of *action* - "We should go to the cinema (not the theater)."
2) An expected outcome - "If I put a pan of water on the stove, the water should eventually boil".
In neither case is there definitive support for your statement. The first certainly doesn't since making an argument that doesn't indicate a desired course of action...well...isn't much of an argument. While the case *can* be made against the second meaning, it merely admits lack of data and relative experience rather than an admission of error. A perfectly valid argument can include the word 'should'.
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