Pollard hasn't a clue on pensions
Stephen Pollard, who I vaguely recall is meant to be an expert on this sort of thing, declares:What makes the sterility of the argument over public services all the more ridiculous is that none of this need be a problem. If, instead of using taxes to fund services on a “pay as you go” basis, we (to use the jargon) used funded financing, where money is invested throughout people’s working life, the demographic equation would be irrelevant.
Back in 2002 I was raving on about how this is obviously untrue, but I was hardly stating something new. The general principles have been well known for years - probably thousands of years given most pensions have been PAYG throughout history, normally in the guise of your children. This paper by Nicholas Barr sets out most of the arguments, but put simply any wish to consume in retirement what you cannot store now is going to require other people, and the number of them will matter.
It is shocking (ah, it's not really is it?) that someone of Pollard's standing should be so unaware of the basic financial issues. It's highly amusing that the article is about other people living on a fantasy island [1].
[1] Which is apt, as the simplified explanation in Barr's piece for why demographic issues are always key is Crusoe on his island.
[2] Like Barr, I am in favour of funded private pension provision (and a state pension), much less in favour of Pollard's idea of funded NHS provision. It seems to me that perhaps medical costs are too hard to forecast to make individual pre-funding a sensible idea.
Labels: Pollard pensions
posted by Matthew @ 7/03/2007 12:14:00 PM
Comments: 2
