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Tuesday, October 31, 2006

Intergenerational Conflict

Given our discussion on Social Security and the problems associated with the program, I thought it was interesting to discover Britan also has issues providing for the elderly. While the United States has the system of Social Security which has many problems, Britain has a public health system and fading away pension plans to contend with. Both of the ways the United States and Britain are trying to manage the looming problems resulting from the baby-boomer generation retiring are intergenerationally unjust- and in Britain it is already starting to spell out conflict.

There are stark defenses among the ability of the members of different generations to secure retirement in Britain. For example, many members of the baby-boomer generation in Britain are also in possession of "entitlements in defined-benefit schemes" which are linked to their final salaries. About 11 years ago there were five million private employees engaging in this plan and today there are a little less than two million. As a result it has been forecasted these schemes will disappear over time resulting from an inability to stay afloat. The companies offering these pensions have closed-up shop to new members or at least set up less generous contribution plans to new members in order to combat the deficit. "This adds up to a very dramatic shift in resources across generations."

There is also a concern about the younger generation in Britain because they will be forced to pay steeper pension contributions while being saddled with the responsibility to pay off student loans and because of policy changes many will also be impacted by the new "inheritance tax." Previously this tax was exclusively levied on wealthy estates but now it will impact the middle-class as well.

Another issue impacting the generational gap stems from political power. "Their children, on the other hand, face a far more uncertain and stressful future and risk being largely ignored by politicians." This is a result of the politically apathetic younger generation who is also outnumbered by the much more active older generation. As a result, the stark differences among the classes are also playing out in politics because in Britain there is an obvious grip on political power held by older generations. This is evident from the priority the health service by the enormous amounts of money spent on it by political parties including Labor and the Tories.

Britian and the United States both have problems with their respective plans to take care of an aging baby-boomer generation. The U.S. has a system that is generationally unjust because it will cause an increasingly difficult tax burden on members of the younger generation, while providing them little assurance the benefits will still be in place when they themselves are able to retire. Britain's problem is very similar but also looks a little worse because they seem to be heading towards intergenerational conflict as a result of not only unfair pension plans but also slowly loosing their ability to influence the government who controls the resources. "Whereas class conflict used to dominate politics and conflicts of culture and identity are today's worries, the looming danger is generational conflict." These issues not only threaten the economic livelihood of the country but also the health of their democracy.

Comments:
The U.S. has a system that is generationally unjust because it will cause an increasingly difficult tax burden on members of the younger generation, while providing them little assurance the benefits will still be in place when they themselves are able to retire.

I think there is another reason to think the system is intergenerationally unjust. Government's coercive power is being used to force those who cannot yet cast a vote to pay a tax that will be used to transfer income from them to others who can and do cast votes for the program. Doesn't that sound quite a bit like the revolutionary political slogan "taxation without representation?"
 
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