French Socialists scrupulously avoiding long-term fix for their pension problem

posted at 6:31 pm on September 1, 2013 by Erika Johnsen

It was practically just the other day that even France’s Socialist government were reeling at the record-high tax bill they realized they had imposed on French citizens (à la a top marginal tax rate of 100 percent and etcetera) and agreeing that further tax hikes to pay for their still bloated state expenditures would be a decidedly poor idea, while European economists and financiers were warning that their economy will continue to meander without major cuts to public spending.

…Which doesn’t quite adequately explain what’s going on with the latest proposal for “pension reform.” France’s pensions are drastically underfunded, so the bureaucrats have come up with the typically weaksauce plan to extend working lives from 41 to 43 years — by 2035 — and to shore up the system’s finances in the meantime mainly by raising payroll taxes.

The modest scale of France’s pension overhaul should ensure a smooth passage through parliament and with the public, explaining the Socialist government’s tiptoe approach.

But the victory could be pyrrhic. The proposals, containing only modest increases to the size and duration of pension contributions and leaving retirement benefits untouched, may disappoint the European Commission and others who wanted more aggressive structural changes.

Analysts say the tweaks in a draft reform unveiled this week mean the system will need revisiting in the next few years to keep a lid on a gaping pension deficit, unless growth or labour productivity rebound faster than expected.

Even if President Francois Hollande is rewarded with a growth spurt that eases the deficit, he is missing a chance to properly reform a system whose complexity creates an unnecessary burden on public finances, critics say.

The fact French pensions are almost entirely borne by the state means public spending on pensions is 14.4 percent of economic output compared to an EU average of 12.9 percent.

Increasing contributions is one thing, but businesses are not at all pleased about France’s already ridiculously high labor costs, especially with the French government’s prime goal of spurring economic growth in mind. As the WSJ editors point out, this is just another mealy-mouthed and temporary fix for a pay-as-you-go system that is wrongly promising generous and lifelong benefits to workers while the workers-to-retirees ratio continues to decline. The math just doesn’t work, and pretending otherwise won’t help matters in the long run.

Paying for a growing number of retirees with a pay-as-you-go system that invests little for the future is a losing game. It will ultimately require much smaller pensions or much higher taxes, a fact that French businesses understand well even if the political class won’t admit it.

France’s somewhat higher birth rate might spare it from the worst of the pension crisis that threatens Germany and other European countries a few decades hence. But given France’s consistent lack of economic growth, relatively favorable demographics can postpone the pension bomb’s detonation. It won’t defuse the bomb.


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France’s somewhat higher birth rate might spare it from the worst of the pension crisis that threatens Germany and other European countries a few decades hence.

That “higher birth rate” is a problem. Not a feature.

HotAirian on September 1, 2013 at 6:39 PM

(à la a top marginal tax rate of 100 percent and etcetera)

“What a great idea: let’s impose a federal income tax rate of 100 percent and a state income tax rate of 10%!”

/libfleeandlie and Emperor I Won

ShainS on September 1, 2013 at 6:42 PM

France’s somewhat higher birth rate might spare it from the worst of the pension crisis that threatens Germany and other European countries a few decades hence.

Those are Muslim births, are they not? How do more Muslim births help anything but Jihad?

oldleprechaun on September 1, 2013 at 6:43 PM

Socialists are lazy as Barky the Vacationer and Moochie the Lobster Slayer demonstrate daily.

viking01 on September 1, 2013 at 6:44 PM

Maybe the Frogs can entice Mexican citizens to invade their country. Just think of the jump in GDP and added payroll tax collections to fund their retirement system.

GarandFan on September 1, 2013 at 6:44 PM

Kick the Can is a favorite game of children and socialists.

Flange on September 1, 2013 at 6:48 PM

Let it burn.

vityas on September 1, 2013 at 6:57 PM

Ask Britain how that higher birthrate is working out for them in collecting tax revenue.

The Daily Telegraph reported in 2012 that 75% of all Muslim women are unemployed while 50% of all Muslim men are unemployed (67.5% total) – a staggering 350% rise from 13% for men and 18% for women in 2004. Muslims are also on sick leave more than anyone else, with 2001 figures revealing that 24% of females and 21% of males claim disability. Muslims are the most likely among all religious groups to be living in accommodation rented from the council or housing association (28%); 4% live rent-free (2004 figures). As if this is not enough, the total prison population in the UK amongst category A and B criminals (the worse crimes) is now 35-39% Muslim.

HotAirian on September 1, 2013 at 6:57 PM

In a way the improvidence on pensions is OK. If they saved more money they’d have more money, and they’d just spend it on importing Muslims, which would involve greater costs down the road. Mass immigration plus forced integration is white genocide.

One way or another the crash is coming.

David Blue on September 1, 2013 at 7:45 PM

libs uptopia right here…

cmsinaz on September 1, 2013 at 7:49 PM

Kick the can down the road and let someone else deal with it later.

myiq2xu on September 1, 2013 at 8:15 PM

Just send their pensioners down to Syria to take out their chemical weapons. Solve two problems at one time.

Corsair on September 1, 2013 at 9:28 PM

Kick the can down the road and let someone else deal with it later.

myiq2xu on September 1, 2013 at 8:15 PM

…at least in this country…they are looking at the floodgates at the border…and are trying to blow up the dam!/

KOOLAID2 on September 1, 2013 at 10:26 PM

So the French think they will collect their pensions from taxes collected from future taxpayers, who will be from the muslim immigrant underclass of today?

That’s cute.

Adjoran on September 1, 2013 at 10:28 PM

So the French think they will collect their pensions from taxes collected from future taxpayers, who will be from the muslim immigrant underclass of today?

That’s cute.

Adjoran on September 1, 2013 at 10:28 PM

As in all historically white countries, there’s a lot of people that don’t buy this and don’t want it. But as in all historically white countries, there’s an anti-white ruling class that regards white people (other than their privileged selves) as stupid horrible bigots, and not worth listening to, and so on with the mass immigration, and if anyone objects, see that they are shamed and their career is ruined.

It’s working so far, not just in France but everywhere. If it keeps working in France till there’s a Muslim majority, say goodbye to the French nation forever. If it keeps working in all historically white countries till we’re all outnumbered, say goodbye to white people forever.

I think it’s got to come down to elite prejudice against non-elite, non-diverse, non-vibrant, working class white people. Because you’d have to be stupid to think that the Muslim or Mexican masses are really going to pay everybody’s pensions in years to come.

David Blue on September 2, 2013 at 12:19 AM

Socialism works so… consistently.

It’s amazing there are any socialists at all. They must be some of the dumbest people on earth.

trigon on September 2, 2013 at 12:27 AM

Socialism works so… consistently.

trigon on September 2, 2013 at 12:27 AM

A century of empty promises and mass graves.

David Blue on September 2, 2013 at 12:39 AM

bwahahahahahahahahaha

A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks “What do two plus two equal?” The mathematician replies “Four.” The interviewer asks “Four, exactly?” The mathematician looks at the interviewer incredulously and says “Yes, four, exactly.”

Then the interviewer calls in the accountant and asks the same question “What do two plus two equal?” The accountant says “On average, four – give or take ten percent, but on average, four.”

Then the interviewer calls in the economist and poses the same question “What do two plus two equal?” The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, “What do you want it to equal”?

roflmmfao

donabernathy on September 2, 2013 at 1:05 AM

Socialism works so… consistently.

It’s amazing there are any socialists at all. They must be some of the dumbest people on earth.

trigon on September 2, 2013 at 12:27 AM

Socialism is an easy sell to the half-formed, adolescent mind. Today, children live the ideal socialist lifestyle. Mommy and Daddy take care of almost everything. College liberalism just reinforces that by altering or completely ignoring certain aspects of reality and with no prior experience to fall back on, they swallow it.

Reality is the only way to educate the drones.

The problem is the schools. They must be taken back over.

98ZJUSMC on September 2, 2013 at 3:09 AM

The problem is the schools. They must be taken back over.

98ZJUSMC on September 2, 2013 at 3:09 AM

In the meantime, home-school.

David Blue on September 2, 2013 at 6:16 AM

Detroit on the Seine.

RadClown on September 2, 2013 at 7:13 AM

Farting in their own general direction?

Sherman1864 on September 2, 2013 at 11:08 AM

Here’s a great idea, not.
The admins should tighten the ‘delay’ for the server push down to mere moments.
If any of you have more extensive thoughts, do it outside of this little box, then paste it.

All the html you could ever need, vis-a-vis the tabs, above, you can find right here.
Scratch that. I’ll provide simple notes herein, shortly.

There is so much information out there that none of it leads you to what you were looking for in the first place. Fiddling.

mickytx on September 2, 2013 at 9:07 PM