Today I went for lunch with two smart, good-looking young women. So – naturally – I wished to be suave, scintillating, sophisticated.
So – naturally – I talked about pensions.
Actually that didn’t happen, though I thought about introducing the subject. Pensions have been an issue I’ve been wanting to blog about for a while, in connection with some other things. First off, the USA. Social Security has been getting attention for a number of years now but no-one really wants to think about it. The problem is that it’s an unfunded scheme: current payments are covered by current receipts. One of the evil fundamentalist neocon fascist policies favoured by the Republicans is the part-privatisation of the scheme. They point out that since the Social Security fund is a collective rather than individual scheme, a lot of people – millions – are paying payroll taxes which they think are buying them a future entitlement. They’re wrong: they’re paying today’s pensions. The Republicans suggest allowing workers to use part of their money to buy private-sector pensions, the fortunes of which are tied to the stock market, which should ensure that the fund grows at a rate higher than inflation. It’s a plausible idea, though it’s also the case that the current system will stay solvent for the foreseeable future so long as the economy continues to grow at historic rates.
One has to be an expert to adjudicate on these things. It’s worth saying, though, that the Bush plan is a serious attempt to address a real problem, though it’s far from proven that it would be the best approach. If I have any left-wing readers I haven’t alienated yet, may I suggest that when you hear the inevitable scare stories about this, say to yourself: ‘it’s not necessarily bad because Bush wants it’ and repeat as necessary. I promise to do the same, mutatis mutandis, next time I hear Charles Kennedy speaking about education, or something.
But the Yanks are sitting relatively pretty where it comes to pensions. The English-speaking countries as a whole are, in fact: Britain could do better and the government is trying to address the problem (with state second pensions and the like). But the real problems arise when you look at continental European countries, which have higher pensions, lower retirement ages and less favourable demographics. France and Germany are going to hit real trouble in a couple of decades. Italy is worst off of all, which is no surprise, since from my experience of that in many respects marvellous country, it is effectively a gerontocracy. In a couple of decades there are going to be a lot of very disgruntled pensioners in the EU, unless the pension structures there get serious reform. But it might already be too late for that as the grey vote is already a reality, quite besides the strength of the trades unions, especially in Germany. The alternative to ratting on state pension entitlements would be to elevate taxes to cover the funds shortfall, except if the continental EU countries retain their current tax rates, that will scarcely be possible.
Given all this, it’s hardly surprising that the EU countries are even more in denial about the pensions problem than the USA.
So what? Well, nothing happens for a single cause. That’s one of my articles of historical faith: no event ever has a single cause. The witlessness of statements such as ‘the Iraq
war was all about oil’ was always one of the chief motivators of my dislike of the anti-war movment. By itself, the pensions problem facing the big continental countries is not insurmountable. The trouble is that it will hit at a time when other problems are likely to come to a head.
First, oil. Big disclaimer: no-one knows what’s going to happen to oil prices in the long term. There are thousands of people who do nothing all day but think about oil prices and they can’t agree, so what chance do I have of predicting well? But let’s assume oil prices fall from their current high, thus removing one of the key incentives for greater efficiency, then trend upwards again over the next couple of decades, as easily-accessible reserves run down. The result of that will be to make it difficult for European industry to create enough jobs to knock a hole in the European unemployment rate, which everyone agrees is chronically high.
Second, race hate. This is not going to go away. Recent events – the mosque attacks that followed the murder of Van Gogh, the racist chants in the Bernabeu Stadium - have proved yet again that the most apparently advanced societies have demons lurking in their shadows. As Clive James once pointed out, Germany before 1933 was arguably the most cultured, educated society in the world. ‘It didn’t help a bit.’ The so-called visible minorities are going to constitute a larger percentage of the EU’s population in, say, 2020 than now. And the Muslim element within that percentage will contain a lot of people for whom the military/political defeat of Islamism is merely another reason to feel alienated and hostile. (Of course, it could go the other way: serious Middle Eastern reform and the growth of democracy there could defuse a lot of Islamic alienation. Take all this with a spoonful of salt.)
Now throw into this witches’ brew of angry pensioners, chronic high unemployment and race hate an oil price spike, which would throw another few million people out of work, and the conditions would be right for a real neo-fascist threat to European democracy.
In part ‘I wants to make your flesh creep’, but then also thinking about worst-case scenarios is just part of a responsible debate. The essential thing is not to blame anybody but think of how to tackle the issue.
In the first place, I doubt any such threat would succeed in overthrowing the democratic order in any European state. An open fascist threat to democracy would instantly unite all other parties against it. National coalition governments would be formed to impose austerity and repress street violence firmly: any truly dangerous fascist parties would be outlawed. History doesn’t repeat itself mechanistically like that. The continental Europeans have learnt that much from the 1930s, namely, don’t pussyfoot about with direct fascist threats to democracy (Islamism isn’t such a threat: it can kill people, but cannot seize power, not in Europe anyway.) People do learn some lessons – the really big, obvious ones – from history. (The main reason why Iraq is not Vietnam is, simply, Vietnam.) But the threat might not be completely open and obvious, which might tempt some unscrupulous right-wingers to adopt at least some fascist themes. We can surely agree that it would be best to prevent the threat from arising in the first place.
The best single way to draw the sting would be a dynamic economy. This is why it’s so important to get rid of EU agricultural subsidies (the main benefits of opening the EU more to Third World food exports would accrue to Europe, not to the Third World), reform the EU countries’ labour markets to enable the growth of the information economy – the so-called Lisbon agenda. Neither of these seems to be happening yet, though as the full consequences of the eastwards expansion of the EU arrive, the Common Agricultural Policy will have to put down. (The key indicator of that happening will be when the Agriculture Commissioner insists that the latest round of CAP reforms will make no significant difference – meaning the opposite.) Both are measures that Margaret Thatcher would strongly approve of.
It may be that a strong dose of Thatcherism is the best prophylactic against fascism. At any rate, I can’t think of any obviously left-wing policies that might actually work. Simply herding schoolchildren en masse into diversity awareness seminars isn’t going to cut it.
(PS I seem to remember Steven Den Beste of blessed memory pursuing a similar line of argument – about European vulnerability to fascism - at one time. The above is probably just a warmed-over watered-down version of his ideas, extruded through the warped mesh of my own mind. )
