The ongoing French protests over the raising of the retirement age have started to pewter out, the Wall Street Journal reports. French President Macron went ahead and forced through his legislation to raise the minimum age of retirement in France from 60 to 64. This proved particularly shocking as he circumvented the Parliament using a little known constitutional provision. In turn, millions of French people went to the street, declaring a general strike in the hope that the government would relent. So far, the government has refused to budge.
France is particularly hard hit within the global crisis of retirement. With smaller families and longer life expectancies, the Macron government has decided that raising the age of retirement was the best way to sustain the pension program. More than half of France’s GDP is captured by taxes and redistributed, making further tax raises difficult without impacting the economy. Many other nations will soon face population crises, such as China.
In America, Social Security continues to be the third rail of politics. Created at a time when life expectancy was low and fertility rates were high, contributions by current workers to fund retired folks at 65 was sustainable. Now, the opposite is true, with the large Baby Boomer cohort retiring while fewer young people starting their careers. Even within the Republican primary, Trump is advancing himself as the protector of Social Security against DeSanctis.
Wages in America have not been keeping up with the return from capital, such as dividends and interest. Currently, Social Security pension funds are only allowed to invest excess contributions in low paying Federal Reserve bonds and not in better paying equities, such as tech firm stocks like Apple. Social Security contributions also exclusively come from workers rather than including capital gains and returns. Will American legislators begin to search for unconventional solutions to a huge debt and entitlement solvency problem?
What SHOULD happen is the announcement of a COMPLETE phase out of government controlled retirement plans. Something along the lines of the retirement age goes up 6 months every year until it reaches 300 years. That will allow some benefit for those that have spent decades relying on the promises that should never have been made, but tell people new to the workforce they are ENTIRELY responsible to provide for their own retirement.