Wednesday, 30 September 2015

Contracting Birth Rates Mean The Gradual Fading Out Of The State

Numerous people in history have uttered the maxim that the measure of a civilised society is how it treats its weakest and most vulnerable members. The elderly are perhaps the best case in point, because children with all their life ahead of them are seen to have plenty of future value, whereas a society that maltreats elderly people may do so on the basis that they have little perceived societal worth.

We used to treat the elderly in ways that would make your blood boil. When we were in hunter-gatherer groups the elderly soon became a burden on the party, taking up resources, slowing them down, and being unable to contribute much by way of hunting or gathering. Consequently, it wasn't uncommon for older folk in the tribe to be starved to death, killed with a sharp or heavy object, left behind to die, or even eaten by some of the tribes with cannibalistic proclivities.

Nowadays we're doing better - we have a social services system that ensures there is adequate treatment for the elderly, and in places like Spain and Italy you'll often find the elderly living with the rest of the family, being cared for until they die. One day we might even allow people the dignity of assisted suicide - a present solecism for which future generations will surely look upon us with horror.

Yet in spite of best intentions, and all the progress we make ethically, there is still something that will cause us big problems in the future, and is starting to already. The problem in question is a financial discontinuity between the tax that can be gathered and the money needed to be gathered to sustain State-funded institutions like the NHS and pensions. When state pensions were first introduced there was an 8 to 1 worker to pensioner ratio. Currently there is a 3 to 1 ratio, but at some point that will be reduced, perhaps even to the point where there is just 1 worker for every pensioner. For this reason alone the NHS is only going to survive if it is fully privatised, which it pretty much will be in a few decades.

But the problem deepens because most developed countries have systems of welfare that depend on a growing population to sustain their workforce. Apparently, though, we're told that after a steady growth since 2001, the past three years have seen birth rates fall quite sharply (that's not to say this trend will continue). If birth rates continue to fall and life expectation continues to rise (both of which seem quite likely) then there will be relatively fewer workers paying taxes towards the NHS and pensions.

Because of this, taxes have been way too high, which negatively affects total revenue from earnings. Also the tax threshold for low earners is far too low, which means people in the lowest quintile are often not keeping enough of their wages, and some finding it is not worth their while being in work at all. There is no question about it: things cannot go on as they are - the State is going to have gradually unload its most costly institutions - institutions that were once affordable, but due to a very different ratio of workers to pensioners, no longer is.