Pensions, Population, and Prosperity
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About this ebook
In both developed and developing nations, old age security is a concern of the utmost importance. Wealthy nations face ailing government pension systems, while less developed nations struggle to construct viable mechanisms for assisting the needy elderly. In this unique and provocative monograph, Oskari Juurikkala, fully cognizant of these differences and drawing on the wisdom of the Christian social tradition, argues that the solution for both groups of nations lies in the same direction - away from reliance on the state and toward strong familial and other private networks.
The author's unusual blend of informed policy analysis and incisive cultural commentary makes this essay a vital contribution to the ongoing discussion over pension and social security reform.
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Pensions, Population, and Prosperity - Oskari Juurikkala
Pensions, Population, and Prosperity
A Christian View of Social Security Reform
Oskari Juurikkala
Edited by Kevin Schmiesing
Christian Social Thought Series
SMASHWORDS EDITION
Copyright © 2012 by Acton Institute
An imprint of the Acton Institute for the Study of Religion & Liberty
Edition License Notes
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CONTENTS
Foreword
I. Pensions, Old Age, and Christian Ethics
II. Work and Pensions
III. Children, Families, and Old-Age Security
IV. Hopes and Worries in Less-Developed Countries
V. Toward Better Old-Age Security
Notes
References
About the Author
FOREWORD
It is a universal fact of human experience that the interaction between generations is at once a source of material and spiritual support, social development, and tension (if not conflict). It follows that it is a perennial challenge to minimize the negative potential and maximize the positive potential of this interaction.
Concern over the relationship between young and old spikes from time to time according to the rise and fall of sundry political or cultural crises. That concern is sometimes based on real, significant problems, and sometimes it is based merely on the perception that one or the other side of a generational battle has lost touch or has failed to assimilate the knowledge or habits necessary for the maintenance of advanced civilization.
We are currently in the midst of one of those times of concern, as evidenced by numberless studies, conferences, and commentaries in one way or another relating to the subject of what some have called intergenerational solidarity.
It is hard to deny, moreover, that contemporary worries about generational strife are well-placed. The confluence of large and not-easily-modified historical forces—an unprecedented burgeoning of elderly populations coupled with shrinking proportions of young people; growing moral toleration for the practice of ending the lives of the disabled, terminally ill, and even the uncomfortably sick or weak; attenuation of the economic link between parents and children as a result of economic, cultural, and political developments—seems to ensure that the issue of generational relations will only increase in importance in coming decades.
In this tenth volume of the Christian Social Thought Series, Oskari Juurikkala focuses on one aspect of the problem outlined above: the urgency of pension reform, especially with respect to state-run pension schemes (in the United States, Social Security). What is extraordinarily valuable and unique about Mr. Juurikkala’s analysis is its keen appreciation of both the economic and the broader social and cultural dimensions of the issue of old-age security.
Mr. Juurikkala’s approach can be viewed on several levels. For those concerned about specific questions of public policy, he offers trenchant analysis of the situation in both developed and less-developed nations and points in the direction of helpful reforms. For those interested in the wider context of the issue, he furnishes a discussion of fertility rates and their connection to the problem of pension unsustainability. Finally, for those who wish to plumb the depths of the issue and who are willing to consider a more radical rethinking of old-age security, he argues provocatively for a return to a family-based social security arrangement.
As the author freely admits, the goal of providing well for all elderly everywhere is an elusive one and various tactics may be tried with various rates of success. Here is a compelling case, however, that, in most places, the methods currently prevalent will likely be less and less effective as the future unfolds. In the interest of fostering the positive side of generational interaction—intergenerational solidarity—the guidance proffered in this short book should be seriously considered.
Kevin Schmiesing
Acton Institute
* * * * *
I
Pensions, Old Age,
and Christian Ethics
Pension systems in the so-called developed world are not faring well. Longer life expectancies, lower labor force participation among older workers, and declining birthrates are all contributing to the unsustainability of many existing schemes, both public and private. Dependency ratios (number of retirees divided by number of workers) have been rising steadily for several decades. Governments have instituted various short-term fixes that help to keep their systems running. However, a long-term reform agenda is needed, as a major funding crisis looms on the horizon particularly for public pay-as-you-go (PAYGO) pension—or social security—systems.¹
Public pension systems are a major issue for national economies. The Organization for Economic Cooperation and Development (OECD) recently estimated that the German and Italian pension systems would yield budget deficits of around 10 percent by the year 2030. Due to unfunded pension liabilities, the debt-to-gross-domestic-product (GDP) ratio in these countries would go over 100 percent. This raises some serious questions, such as how long severely indebted pension schemes can keep running, or even whether they can continue to exist. If they must be closed down, how will that happen and who will bear the cost?
Opinions differ widely and wildly when it comes to the future of pensions, both public and private. Some even claim that there is no such a thing as a looming pensions crisis. The range of opinion is understandable, because it is difficult to know anything for certain, given the extraordinary length of the relevant time spans. This makes predictions highly sensitive to numerous assumptions—such as total employment rates, educational behavior, economic growth, longevity, and fertility rates—most of which are hard to predict in any case. This uncertainty invites plenty of political quarrels—sometimes fruitful, sometimes less so. From a moral point of view, the sad consequence is that, regardless of what in fact will happen, the elderly are increasingly seen not as a source of stability, wisdom, and experience but as a burden on the rest of the society.
This introductory chapter serves as a foundation for the rest of the book. It considers the relevant principles of Christian moral and social teaching, while the other chapters delve more deeply into the pension problems facing today’s societies. Although pensions are mostly about economics, they are not just about that because they involve, influence, and shape human persons and communities in complex ways. This should always be borne in mind when considering the nitty-gritty of the current pensions challenge.
Christian Principles Related
to Old-Age Security and Care
The Human Person
Before investigating the pension problems facing today’s societies, let us briefly consider the relevant principles of Christian moral and social teaching. The center of this teaching is the fact that a person is not merely a material body that lives for a while and then dies. He or she is created as a unity of body and soul, and together these make up the human person. The body is not merely an instrument or carrier of a supposed human person but an essential part of it, and, hence, there are no social or economic issues that do not affect the human person as such.
Questions of social security tend to be framed in purely economic terms. The human person, however, is neither a mere factor of production nor a pleasure or utility machine, as modern economic theory tends to have it. He is the summit of God’s work of creation, a rational and free being, by nature a social being and capable of and called to communion with other men and with God himself—he is made in God’s image and likeness (Gen. 1:26).
After his creation, man rejected God. This we call original sin. However, the mystery of Christ—the eternal Son of God, who took humanity upon himself, became perfect God and