It is always today's production capacity that pays for today's pensions via taxes.
Vote for good pensions and work for an economically, ecologically and socially sustainable future.
Pensions require sustainable production
A system with sufficient progressive taxes and government deficits/that the government creates money instead of the banks doing it via lending (read about deficits here) can also streamline production by creating enough jobs and money at all levels for everyone. Such a system also does not need to stress or injure workers so that they become ill and production suffers.
We cannot essentially save money for retirement as we cannot eat the food we produced when we earned the money fifty years before we retired.
It is always today's generation of wage earners who pay for today's elderly in the hope that the children of the future when they grow up will pay and work for themselves when they become pensioners.
An active state
The government must use its tax revenue and deficits to keep production rolling in a way that:
- does not harm the workers because then they cannot work
- ensures that low- and middle-income earners have sufficient purchasing power to keep production and consumption going
- ensures that agriculture and industry have the resources and research grants they need
- not kill Mother Earth because then we have nowhere to live and nothing to eat. This requires, among other things, a green transformation of production and consumption.
- keeps crime and social unrest down by offering everyone in the country sensible livelihood and educational opportunities
- build the railways, roads, houses, housing and offices we need
- secures the supply of energy, telecommunications, medicines, housing and food
- offers everyone in the country first-class school, care, welfare, culture and defense under good conditions for the employees
There are many more like it that keep production going.
But pension savings such as the purchase of shares or funds do not add to production the resources it needs to provide for us or the pensioners. Shares and mutual fund holdings are only yield requirements.
Too low pensions and a high retirement age only benefit the fund companies. Low and middle income earners and society's productivity are the victims of low pensions. How does the pension system work? How do low pensions benefit fund companies? How can progressive taxes and government deficits promote a sustainable and fair economy?
The pension system and the profits of mutual funds
In today's society, we save via private pensions, public pensions and occupational pensions in mutual funds and shares. It is mostly these fund companies and business owners who benefit from low pensions and a higher retirement age. The worse our pensions are, the more we are stimulated to save for pensions. According to the book Greedy Sweden by Andreas Cervenka many of today's new or richest billionaires are precisely this after owning or working in fund companies. When individuals save in mutual funds or stocks in order to have an adequate pension, these investments mostly drain the companies in which the savers put them of money. Except when the company is incorporated and new issues. Shares and fund shares, most of the time, only a right to claim the investment object for money, but which does not add anything to the production. This creates a situation where the fund savers become dependent on "draining" the investment objects of money in order to generate profit.
In fact, it is today's and future's productivity that provides for today's pensioners, regardless of when it is now. Therefore, today's pension savings pose a risk that the yield requirements on production become unrealistically large, while the economic, human and ecological conditions for production suffer.
Today's global fund and share savings, largely with pension money, means that the market is overflowing with investment capital. At the same time, it is already overinvested in many interesting companies and it is difficult to find investment objects that can give a good return.
Private savings good complement
Savings can be of some use in spreading the cost of short- and long-term purchases and investments over time. But saving does not add much to production. Savings that are converted into loans, where the loans have to be repaid. And when too much of the production takes place with the help of private loans, there are regular financial crises when people cannot pay off, take new or pay off their loans. Because when that happens, the money supply decreases.
Shares and fund shares are more of a requirement for a return than an investment.
Conclusion
To achieve good pensions and build a sustainable economy, we need progressive taxes and sufficient government deficits. Low pensions and a higher retirement age benefit fund companies and stocks in the short term, while low and middle income earners and society's productivity lose out. By understanding how money is created and lost, and by using tax revenues and government deficits wisely, we can create an economy that promotes welfare, the survival of nature and justice for all.
Vote for good pensions and work towards an economically, ecologically and socially sustainable future.
More to read
Financial capitalism and feudalism in the West versus industrial capitalism in the East
Resistance to deficits and investments leads to recession in Sweden
I don't agree with your reasoning. The pension is a transfer of money from the working to the non-working, which is based on an "agreement" that those currently working will be supported by those working in the future when they are no longer able to work.
The money is thus taken out of production, completely indifferent to where it comes from. You can, in and of itself, do as you do now, via a kind of fake pension fund that pays out as much from as into. Personally, I think it's a detour. Or you can do as in France, pay the pensions directly from the taxes the state receives. In both cases, it is only a matter of redistribution.
The reasoning about the rentier society is of course correct, but does not really belong there. If, of course, you don't see the pension funds as gigantic rentierism. In the US, where they are private, they work very much like that. In Sweden, where the fourth AP fund has politically written rules for where the money should be put pending payment, it works like any government investment policy.
I may be wrong about the AP funds, but otherwise I consider the pension reform to be just a way of favoring share and mutual fund savings which, by and large, do not add anything to production. The reasonable thing would be that the pensions were paid out of the year's taxation.
But if the AP funds only buy ownership in companies and funds without taking responsibility for supplying the companies, they add nothing to production.
I've read that all retirement saving makes it hard to find good investments.
It is a much better investment policy when the state supplies the public sector or spends money for production, public utility needs or research.
I agree with most of your argument, but I can't get the title together.
However, there is actually a way to make it work, albeit with a different argument: The pensions can only be good if the production capacity is good when the pension expires. And it can only be if there is investment in production capacity. Investments in shares and other symbols and fetishes do not help.
And then you have reason to be a little worried. The entire North Atlantic economy is "rentierized", says Brett Christophers, for example, not least the Swedish one where the financial industry now accounts for more than 50% of company profits. How much production capacity remains, and how much has been "outsourced"?
But I don't think you're saying this outright, at least not so clearly that the sentence is clear.
Did the text get better now?
Your summary captured my message. I think I make it clear. Then it's all the burnout, work injuries, environmental destruction, lack of housing, railways, lack of resources for school, care, care, culture that also destroy production capacity.
It's probably only me who finds it difficult to follow a text with too many threads in it.