What’s the big idea?
A lower retirement age?
From Washington to Western Europe, politicians are slowly coming to terms with the need to cut — or at least slow the growth of — retirement benefits in order to deal with runaway deficits. In December, President Obama’s deficit commission recommended a series of tough measures to reduce spending, including raising the retirement age and thus delaying the moment when people start collecting Social Security.
According to economist James K. Galbraith, though, this is exactly backward. In an article in the latest Foreign Policy magazine titled “Actually, the retirement age is too high,” Galbraith, a professor at the University of Texas at Austin, contends that older workers should be encouraged to retire earlier, not later. With the economy creating few jobs, he writes, “common sense suggests we should make some decisions about who should have the first crack: older people, who have already worked three or four decades at hard jobs? Or younger people, many just out of school, with fresh skills and ambitions?”
The answer he says, is obvious — send the old folks home. He calls for a three-year window in which the age to begin receiving full Social Security benefits drops to 62. “With a secure pension and medical care, [the new retirees] will be happier,” he writes. “Young people who need work will be happier. And there will also be more jobs.”
Early last year, Rep. Dennis Kucinich (D-Ohio) also called for a lower retirement age as a job-creating initiative and got nowhere with it, save perhaps a few interviews with baffled financial journalists. The proposals echo a familiar, and questionable, notion on the left: that we should find ways to better parcel out existing jobs. It’s the same logic that leads some countries to consider cutting the number of hours or days someone can work each week, so that more people can share the work pool. In reality, the true challenge is to figure out how to create new jobs.
Galbraith writes ominously that the effort to increase the retirement age is “the most dangerous conventional wisdom in the world today.” But sometimes the conventional wisdom is not only conventional, but wise as well.