In the United States and other rich countries, pension reform is known as the ‘third rail’ of politics; if you touch it, you will in all likelihood die or, should you somehow survive the nasty shock, you get turned into a barely sentient vegetable. That is why even allegedly tough-minded politicians who go on about austerity and the need to keep public spending down prefer to leave things much as they find them and let the next lot tackle the problems that are being caused by a rapidly growing number of oldsters, many of whom need expensive medical care, and a workforce that almost everywhere, even in China, is starting to shrink.
In Spain, each pensioner is now supported by just over two people who are gainfully employed; within a couple of decades, it will be less than one. You don’t need to be a mathematician to appreciate that the Spanish system is hurtling towards a brick wall, but whenever a nerdy politician who looks at the numbers suggests that something really ought to be done about it, he or she is immediately mugged by mobs of leftists, humanitarian do-gooders, labour union heavies and churchmen who say that only a sadist would dream of depriving old folk of what is theirs by right. As a result, nothing much is done.
Elsewhere the situation may be marginally less dire than it is in Spain, but virtually all the pension schemes that were put together when, on average, men and women had far shorter lives and many more children, have ceased to be viable. Sooner rather than later they will fall apart, impoverishing millions, as happened here when the economy suddenly nosedived 15 years ago and right now in Venezuela.
The welfare institutions we take for granted were designed for societies that no longer exist, but most people cling to the belief that nothing much in this area has changed since 1881, when the conservative “Iron Chancellor” Otto von Bismarck agreed that the few individuals who made it past 70 should get a state pension. In the following years, enlightened rulers not just in Germany but in the rest of Europe and the Western hemisphere reduced the standard retirement age to 65, which for a time seemed fair enough, but for actuarial reasons it became obsolete as the 20th century neared its end.
For the problems facing the welfare state to become more manageable, at least one of three things would have to happen.
The first and most obvious has to do with average life expectancy; for it to fall back to where it was half a century or more ago, the Western world would have to be ravaged by a series of big genocidal wars or plagues like the Black Death that in the Middle Ages reduced the population of Europe by more than half. A less drastic solution would entail raising the retirement age to 80 or so, but proposals to edge it upwards from 65 by just a year or two are invariably greeted with howls of rage accompanied by general strikes.
That leaves a third alternative: persuading people to have many more kids. For a variety of reasons, efforts to do so have failed almost everywhere. Until quite recently, influential Europeans, among them the holder of the post once occupied by Bismarck, Angela Merkel, thought they had the answer to the conundrum; they would import large numbers of prolific breeders from the underdeveloped world whose offspring, they imagined, would be only too happy to support the natives in their old age. Unfortunately for everyone concerned, the experiment in social engineering they undertook has simply made an already bad situation even worse. Mauricio Macri is an engineer who – to the bemusement of traditional politicians – takes numbers seriously, but even if he personally assumed that most of his compatriots would understand the need to tinker with Argentina’s notoriously ramshackle pension arrangements, his advisors must have warned him that touching ‘the third rail’ would put him in danger.
To get away with it unscathed, he would have had to hide the minor changes he had in mind under thick layers of bureaucratic gobbledygook and then administer them in relatively painless doses. Instead, the government treated a modest reform, which may not be enough to keep the system afloat, as though it were a drastic overhaul. Not surprisingly, the many who loathe Macri took full advantage of the chance to stir things up that he handed them.
Cristina Fernández de Kirchner, Sergio Massa – who by gleefully allying himself with the former president shot himself in the foot – and the rest of them are not the kind of individuals who are likely to lose much sleep over the plight of the millions of pensioners who find it desperately hard to keep body and soul together. As for the louts that the Kirchnerites, Trotskyites and others of a similar disposition encouraged to lay siege to Congress and, while about it, attack anyone who stood in their way – including police personnel who, unlike their counterparts in other countries who would have responded with more vigour had been ordered to grin and bear it – all they were interested in was a spot of mayhem. It is safe to assume that among the rioters were plenty of young thugs who in their spare time enjoy beating up older folk and stealing whatever they have on them because they are unable to fight back.
Whether or not last week’s disturbances put Argentina’s still rickety democracy at risk is an open question, but there can be little doubt that Cristina and her friends would dearly like to see Macri toppled by an angry mob. They have good reason to want what for the country as a whole and most of its inhabitants would be an appalling disaster; for them, democracy plus the modicum of judicial independence that goes with it could well mean long years in jail. The government’s willingness to ram through changes that, in the short term at least, could harm pensioners gave its mortal enemies the opportunity they were looking for to wage war on the streets, but the ensuing violence probably hurt them far more than it did Macri, who quickly made the most of a chance to play the part of a staunch defender of democracy who is more than willing to confront a horde of barbarians.
(*) Former editor of the Buenos Aires Herald (1979-1986).