[Patrickov]

OP's question is definitely misplaced.

I'd ask, instead, "why the other politicians cannot 'compromise' themselves so that few enough people hate them most".

[JohnRawls]

OP's question is definitely misplaced.

I'd ask, instead, "why the other politicians cannot 'compromise' themselves so that few enough people hate them most".

Macron was elected recently and this was part of his program. This "hype" about protests especially by commies is overblown. This is average Friday French protest regarding a big reform.

[Pants-of-dog]

The French are rightfully protesting their government and its refusal to honour their part of the social contract.

The deal was “pay into the system until 64, then live off said system”. The government broke their part of the deal.

Now, the government and its supporters can explain the hows and whys of this decision (i.e. pension systems are unsustainable because of current demographic trends), and they may even be correct.

Note that the explanation for why the government of France broke its deal with the French taxpayers does not contradict the fact that the government broke the deal. Instead, it simply provides clarity as to why capitalism was never going to work as a long term solution for this: it requires a worker base that is significantly larger than its retiree base, which assumes endless growth (an impossibility on a world of finite resources).

[MadMonk]

The French are rightfully protesting their government and its refusal to honour their part of the social contract.

The deal was “pay into the system until 64, then live off said system”. The government broke their part of the deal.

Now, the government and its supporters can explain the hows and whys of this decision (i.e. pension systems are unsustainable because of current demographic trends), and they may even be correct.

Note that the explanation for why the government of France broke its deal with the French taxpayers does not contradict the fact that the government broke the deal. Instead, it simply provides clarity as to why capitalism was never going to work as a long term solution for this: it requires a worker base that is significantly larger than its retiree base, which assumes endless growth (an impossibility on a world of finite resources).

No, the deal was 62. 64 is what they're trying to raise it too, with some pushback from the public. Minor detail but I thought it was worth correcting since that's literally what this is all about. Also worth mentioning is that every French government for close to three decades has wanted to make this change but failed because of its unpopularity. Everyone wants to be reelected next election, but Macron can't constitutionally stand in 2027, and his political party is a one-man show, so he has nothing left to lose.

Retirement was designed in a different era and small adjustments are necessary. Is the global financial economy nothing but a ponzi scheme? Probably, but we do what we can until it all goes down in flames.

[wat0n]

The French are rightfully protesting their government and its refusal to honour their part of the social contract.

The deal was “pay into the system until 64, then live off said system”. The government broke their part of the deal.

Now, the government and its supporters can explain the hows and whys of this decision (i.e. pension systems are unsustainable because of current demographic trends), and they may even be correct.

Note that the explanation for why the government of France broke its deal with the French taxpayers does not contradict the fact that the government broke the deal. Instead, it simply provides clarity as to why capitalism was never going to work as a long term solution for this: it requires a worker base that is significantly larger than its retiree base, which assumes endless growth (an impossibility on a world of finite resources).

Capitalism, socialism and any other system would fail to uphold this promise given the demographic trends.

Choosing between defaulting on the promise now or doing so later in a far more drastic fashion should be a no brainer.

One question, which cohorts are going to be affected by the reform? All of them or the retirement age will be raised for those born after some given year?

[Pants-of-dog]

The assumption that this problem would also exist in other economic systems seems doubtful, and is also a whataboutism. It does not contradict the claim that this problem is inherent to capitalism.

[wat0n]

It's not "doubtful" this is not inherent to capitalism, we can just see how socialist countries are faring to compare. It is also not a whataboutism to point out this isn't an issue inherent to capitalism.

Furthermore the old PAYGO systems aren't all that capitalist to begin with. They're probably one of the finest examples of a collectivistic social policy if anything.

[Pants-of-dog]

The issue is inherent to capitalism.

Whether or not another system also has this problem does not change the fact that this problem of depending on ever larger markets and labour forces is inherent to capitalism.

“Inherent” means that it is built into the very system and is an inescapable feature of said system. It does not mean “unique to”.

[wat0n]

It's not inherent to capitalism. There are other pension systems that don't suffer from the issues France is suffering from.

It's also not inherent to socialism, since there can be socialist alternatives that also don't suffer from the same problems.

[Pants-of-dog]

The French pension system does not seem to be suffering from any problems according to the Conseil d‘orientation des restraites, or Pensions Advisory Council.

Without any changes to the rules, the system could work until 2070. It made a surplus amount of money in 2020 and 2021, and while it is expected to go into deficit until about 2035, it is expected to rebound after that and be sustainable for the foreseeable future.

So the money Macron is supposedly saving for the long term sustainability of the pension fund is actually going somewhere else. Probably tax cuts for rich people who have dirt on him.

https://www.france24.com/en/france/2023 ... ble-system

[Rich]

The issue is inherent to capitalism.

What in God's name is capitalism when its at home?

To call our current system capitalist is absolutely cretinous. To call our current societies capitalist is a filthy Marxist lie.

[wat0n]

The French pension system does not seem to be suffering from any problems according to the Conseil d‘orientation des restraites, or Pensions Advisory Council.

Without any changes to the rules, the system could work until 2070. It made a surplus amount of money in 2020 and 2021, and while it is expected to go into deficit until about 2035, it is expected to rebound after that and be sustainable for the foreseeable future.

So the money Macron is supposedly saving for the long term sustainability of the pension fund is actually going somewhere else. Probably tax cuts for rich people who have dirt on him.

https://www.france24.com/en/france/2023 ... ble-system

Sure, the boomers will eventually die off. But what happens in the meantime?

[Pants-of-dog]

Since the explanation that the pension plan is unsustainable is incorrect, there seems to be no rational reason for the government to break its part of the social contract.

[wat0n]

Uh, it's pretty much the definition of "unsustainable pension system" for it to require extra governmental contributions beyond the statutory one.

[Pants-of-dog]

If someone wants to claim that the French pension system is unsustainable, they have to ignore the evidence already presented.

Any argument that ignores evidence already presented in this thread is almost certainly incorrect.

[wat0n]

Well, I took the trouble of reading the English summary of the 2021 report by France's Pension Advisory Council (COR). Two things to consider:

1) The report makes it clear French pensions are already not being funded just by social security contributions - the "contract" has already been broken for a while now:

How is this expenditure financed?

Levies to finance pensions currently represent almost 31% of working people's income. 75% of the financing of the pension system comes from social contributions. The rest of the resources are made up of earmarked taxes and other resources which come from State subsidies and transfers from third-party organisations, such as the unemployment insurance or the family branch of Social security.

Those "earmarked taxes" are tantamount to a hidden increase in the "agreed" contribution rate.

2) The projections already acknowledge that pensioners will see their relative living standards - compared to the average worker - decrease from the current high levels. That's why the system is "sustainable", essentially by not pampering retirees as much as they are now.

Why would the share of pension expenditure fall in GDP in the long run?

The share of pension expenditure would fall in the long run despite the ageing of the French population; the ratio between the number of people aged 20 to 59 and those aged 60 and over would drop from 1.9 in 2020 to 1.3 in 2070. The impact of this demographic ageing on the pension system would be slowed down by the increase in the retirement age, which would rise from 62.2 years in 2019 to just under 64 years around 2040 with unchanged legislation, under the effect of past reforms and the increase in the age of entry into working life. This increase since 2010 has been accompanied by an increase in the employment rate of older people. The ratio between the number of contributors and the number of pensioners would nevertheless decrease, from 1.7 in 2019 to 1.3 in 2070.

However, despite this unfavourable demographic trend, pension expenditure as a percentage of GDP would decrease due to the fall in the average pension relative to earned income: pension would continue to grow in constant euros, but less quickly than income. Thus, the gross pension relative to gross income would vary between 31.6% and 36.5% in 2070, compared to 50.1% today. The stronger the growth, the sharper the decline in this ratio.

It seems unlikely pensioners, who will represent a larger share of voters, will accept to see their living standards worsen (increase less) relative to that of younger voters.

The European Commission's 2021 Ageing Report paints a worse picture of the French pension system, expecting for social security contributions to be able to cover pension spending on their own only in 2070 and for public spending on pensions as a percentage of GDP to be higher than the COR's forecast until around 2060. This is because the 2021 Ageing Report assumes fertility, long term increases in productivity and life expectancy will be lower than the COR's 2021 Report.

[Pants-of-dog]

No one claimed that the pension plan was supposed to be solely funded by wage contributions. The fact that other sources were used to fund this program does not change the fact that people have paid into this program with the expectation that they would then receive a pension from the government at 62.

To argue that people should be punished (by having the government change the deal unilaterally) because the government decided to also fund the pension fund through other means is simply a poor attempt at blaming the victim.

The French government is breaking the social contract and the evidence does not seem to justify it.

[wat0n]

@Pants-of-dog people, specially young people, are being "punished" if their tax burden increases to fund pensions for retirees. If I suddenly need to contribute more to the pension fund or some other tax (e.g. VAT) needs to go up, I am most definitely paying for it. It also breaks the intergenerational contract to do that since both benefits (i.e. pension payments, retirement age) and contributions were defined.

If the demographics and productivity growth don't play along, someone will have to pay a price in one way or another. In that sense, a capitalization system (be it individual or collective - yes, there is a socialized version of that, where the capitalized balance is split evenly among all the cohort's retirees) is more honest because although contributions are defined, the future benefits are not and as a young person you know what that means. Or you can do it the other way around, set up a system where contributions are not defined and can go up or down but guaranteeing pensions, which probably does not sound too appealing to young people but is certainly possible in theory.

[Pants-of-dog]

There seems to be no evidence that taxes will increase to make the pension plan sustainable.

Yes, the government needs to either raise the age, or import large numbers of labourers, or raise taxes, or somehow address the inherent problem of having an always expanding labour force creating the necessary wealth to pay for the pension plan. Which is why they supposedly broke the social contract.

But the evidence shows that it is sustainable anyway.

[wat0n]

There seems to be no evidence that taxes will increase to make the pension plan sustainable.

Yes, the government needs to either raise the age, or import large numbers of labourers, or raise taxes, or somehow address the inherent problem of having an always expanding labour force creating the necessary wealth to pay for the pension plan. Which is why they supposedly broke the social contract.

But the evidence shows that it is sustainable anyway.

It doesn't, I cited from two reports now. The French pension system, like that of other countries, is already unable to perform as promised (i.e. fund benefits just from social security contributions).

The social contract you are referring to has already been violated.