.. the welfare state is a kind of ‘commons’ where we all graze at the expense of everybody else .. In particular, we all graze at the expense of future generations. Pension and healthcare costs – probably the biggest two items of the welfare state – involve huge inter-generational transfers. Today’s workers vote for pension benefits to be paid by people who are not yet born. The same applies to health as health spending is mainly incurred at the end of life. Instead of saving for health costs, we expect future voters to pay for it. Of course, as populations age, this leads to bigger obligations on proportionately smaller workforces.
Economists have worked out the rough order of magnitude of the debts that we are passing on to the next generation. In the UK, the explicit national debt is of the order of 80 per cent of national income. But, the implicit welfare debts are about 400-500 per cent of national income. We are facing huge increases in taxes to finance these costs. Some countries may not survive the demographic transition. So, the government is in debt – the debt we all know about – because it cannot finance current welfare commitments. But, this is nothing compared with the future commitments which it has made.
quarta-feira, junho 26, 2013
The welfare commons por Philip Booth: