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Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when: - Inadequate savings for the median retir
by slv77 9y ago
Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when:
- Inadequate savings for the median retiree
- High levels of wealth inequality
- High levels of foreign debt
In that case the wealth transfer mechanism is broken. Those that are old are reducing consumption while those that are young can't generate income to replace it while those holding all the wealth (savings) scramble to avoid defaults (and risk) in a rapidly slowing economy.
- RobertoG 9y ago"[..] a structured transfer of wealth from the old to the young" Do you mean from the young to the old? How "inadequate savings for the median retiree" create unemployment? I can't think of the mechanism. Do you mean a deficit of investment in the economy from the savings?
- slv77 9y ago"Do you mean from the young to the old?" I'm thinking of wealth as the claim on productive assets such as stocks, bonds and property. Pensions are a structured transfer of wealth from the old to the young and of labor from the young to the old. "I can't think of the mechanism..." Inadequate savings can create structural problems that result in temporary mismatches between the desire to work and the desire to consume. For example if retirees are worried that savings or pensions are inadequate they may delay consumption which can create temporary high unemployment.