The Americans learnt to hate Saddam Hussein so that they could have a reason to take over Iraq. But all industrial countries have a problem for which there is no domestic solution, namely the burden of caducity. This column was published in Business Standard of 15 April 2003.
GERONTOCRACY AND THE INVASION OF IRAQ
Most auto-rickshaw drivers in
Delhi are young – in their teens or twenties. Apparently, many passengers do
not pay, and the drivers have to be tough enough not to be intimidated. So I
was surprised that the driver of a rickshaw I took recently was gray-haired.
Not only old but sick: he had dark shadows around his eyes, and seemed to be
about to drop off to sleep. I asked him whether he was drinking or sick. He
said he had a gallstone. I told him that he was obviously in pain, and should
have an operation soon. He said that he could only afford to go to a government
hospital, and that it was very difficult to have an operation in one. I thought
that his life may be short and painful.
It was not very different in the
Roman empire 2000 years ago. The average longevity then was 35. It was most
unusual for someone to live beyond 50. There were some occupations where age
did not matter; that of Caesar was one. But in most, it was unusual for anyone
to be working over 50. Those that had accumulated wealth and reputation by then
could become wise men, and join the senate or write history. The rest lived on
someone’s mercy.
Things are different in advanced
countries today. The British Queen writes a letter to every centenarian on his
birthday congratulating him or her and wishing her or him an even longer life.
But she no longer signs it personally; instead, the signature “Elizabeth R” is
electronically reproduced. The day is not far when the number of letters the
Queen has to dispatch will exceed a thousand on an average day.
Today, the average age to which
people live in advanced countries is more than twice what it was in imperial
Rome; but the retirement age has advanced only from 50 to 60 or 65. So the number of idle people has risen enormously. An idle mind is a devil’s workshop; but so
is an idle body. It is amazing in how many ways a geriatric body can
malfunction. The result is a huge rise in resources required by the old and the
sick. Provision for the old commonly takes 10-20 per cent of the income of
advanced countries; medical care takes another 8-15 per cent – and a good deal
of it is care of the old.
The Romans did not believe in
looking after the old. Those that were rich enough hired servants or bought
slaves to look after themselves; the rest died of improvidence if they were
foolish enough to live into old age. But advanced countries no longer allow
that. All of them provide for state pensions that support old people reasonably
well. It is another matter if the old fall sick; in that case, the quality of
care a state gives them varies considerably from country to country. But in no
state are they likely to die because they are not able to look after
themselves; they will be looked after to the end.
As the number of old people rises in all countries, the state-financed retirement-to-grave
welfare systems are beginning to fail. Old people are worried. In Holland, the
Old People’s Party brought down the government when it tried to limit their
benefits. Elsewhere they have not gathered the strength and the numbers to
influence politics. But they will; it is only a matter of time.
State pensions and medical care
are one alternative; the other two are that private employers fund their
employees’ pensions and that old people live on their savings. Employers, like
governments, are feeling the pinch, and are cutting the cost. They do it in two
ways: they are changing over from pensions that depend on the employee’s last
salary to those that are determined by his accumulated contribution; and they
are cutting down their own contribution to pensions and encouraging employees
to contribute more. So the net effect of penny pinching, whether it is by
governments or employers, is the same: that people have to save more for old
age.
When people retire, they stop
doing anything productive, but continue to consume; in whatever way old people
are cared for or care for themselves, their consumption must come out of other
people’s production. Savings are not accumulated consumption; they are only
accumulated claims to consumption. The extent to which consumption goods can be
stored and used later is limited; most of old people’s consumption must come
out of surplus production by the young. The very survival of the old implies transfer
of goods and services to them from the young. And the burden of that transfer
is increasing as the proportion of the old increases at the expense of the
young.
The young could bear that burden
without reducing their own consumption if their production were going up. Rise
in productivity, brought about by innovation, has been the hallmark of
industrial countries for over two centuries: so much so, that economists take persistent
technological change as what distinguishes advanced countries from “developing”
countries.
But productivity in Japan has not
increased for over a decade now. It has been crawling at snail’s pace in
Germany. Its growth has slowed down in the entire industrial world. The only
exception was the United States, which saw a tremendous burst of productivity
increase in the 1980s and 1990s. But the bubble burst in 2000. Now productivity
is crawling in the US as well – and there is muted fear that the Japanese
disease may hit the US.
If productivity ceases to
increase, inter-generational transfers will become a zero-sum game: the growing
number of old people can be fed only by reducing the consumption of the young.
It will not matter even if state pensions and medical care decline and are
replaced by private savings; that will only change the distribution of benefits
amongst the old. However the old are supported, their growing numbers will mean
a declining standard of living for the young.
Is there no way both the young
and the old can live better? There is: they should acquire slaves. Arabs in
their years of prosperity brought invariably younger brides from India, Germans
from Thailand, Americans from Russia. Soon after the “liberation” of Russia,
there used to be organized tours to introduce single Americans to attractive
Russian women. But sooner or later, the imported slaves exploit the laws of
their host countries and become free. Even sooner they cease to be willing
slaves.
A better way would be for a
country to acquire colonies. Colonies are no more willing servitors than
concubines. But their exploitation can be efficiently organized; and they can
be subjected to different laws from their conquering countries. Maybe
realization of this is behind the subjugation of Iraq. Oil will soon get
cheaper for its conquerors.
