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Add one more difference to the lifestyles of morally good capitalist Americans versus demonic socialistic Europeans, brought to you courtesy of our ownership society.  In Europe people retire at 65 thanks to decent pensions.  In the United States of America of the 21st Century, where we long ago privatized retirement savings, old folks just keep on working, because when the market crashed, all their retirement nest eggs got broken:

In other parts of the developed world, people are retiring as planned, because of relatively flush state and corporate pensions that await them. But here in the United States, financial security in old age rests increasingly on private savings, which have taken a beating in the last year. Prospective retirees are clinging to their jobs despite some cherished life plans.

As a result, companies are not only reluctant to create new jobs, but have fewer job openings to fill from attrition. For the 14 million Americans looking for work — a number expected to rise in Friday’s jobs report for August — this lack of turnover has made a tough job market even tougher. [...]

The diverted life plans [people in their 60's] are an unintended economic consequence of the nation’s sprawling 401(k) plans. These private retirement savings vehicles, designed 30 years ago as a supplement to traditional corporate pensions, have somewhat haphazardly replaced the old system, like an innocuous weed that somehow overgrew the garden.

As is apparent in this downturn, the economic effects of such an ad hoc system can be perverse. In boom times, when companies need more workers, the most experienced employees may decide to retire, taking comfort in their bloated 401(k)s, whose values typically fluctuate with the financial markets.

Today, the reverse is happening in the first deep recession since the new accounts became so pervasive. A Pew Research survey scheduled for Thursday release found that nearly four in 10 workers over age 62 say they have delayed their retirement because of the recession.

So, to sum up, our society makes you work harder, longer and pay more for health care, and then when it comes time to retire, if the market is down so are the savings you need to live on in your golden years.  Which means you keep working at your old job, or you are forced to look for a new one.  But hey, greatest country on earth right?  Unless your a young person looking for a job, or an old one trying to hang on to one well into your 70's.  As the Times' report makes clear, our system of privatized retirement savings creates perverse incentives, and actually acts as an economic destabilizer.  In good times your best employees leave early, and in bad times they crowd out younger workers desperate for a new job to begin paying off their crushing debt load from financing their education:

New numbers from the U.S. Education Department show that federal student-loan disbursements—the total amount borrowed by students and received by schools—in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion. The amount of money students borrow has long been on the rise. But last year far surpassed past increases, which ranged from as low as 1.7% in the 1998-99 school year to almost 17% in 1994-95, according to figures used in President Barack Obama's proposed 2010 budget. [...]

The new numbers highlight how debt has become commonplace in paying for higher education. Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate, according to an analysis of the government's National Postsecondary Student Aid Study, conducted by financial-aid expert Mark Kantrowitz. Only a dozen years earlier, according to the study, 58% of students borrowed to pay for college, and the average amount borrowed was $13,172.

Great news if you are in the business of lending money to parents and their students to finance college costs.  Bad news if you want graduates to use the money they make from their first real jobs to help the economy grow.  Needless to say, those socialistic Euros typically treat their college student debtors far more leniently than we do ours.  We start gouging our kids from day one with higher tuition costs and demands for loan repayment ASAP regardless of whether someone actually has a job that can service the debt.But that's our system right now.  Dog eat dog, and may the best (and worst) senior executives and Wall Street Bankers retire early in luxury thanks to their golden parachutes and super-sized bonuses, while the rest of us work ever harder, die earlier and suffer more so that they can live the good life.  Does that sound like a fair system to you?  (Rhetorical question, people).

In France only 4% of people ages 65-69 are still working.  In the land of freedom, its one third of all people in that age group.  And a recent PEW study found that nearly 4 in 10 American workers age 62 or older have delayed their decision to retire (all per the NY Times article I initially linked).  That's an amazing statistic.  It tells me that we have something seriously wrong with the way our economy is structured.  And I'm not the only one:

The recent retirement losses have prompted policy makers to discuss whether Americans need a stronger social safety net, not just in health care and unemployment benefits, but in retirement as well.

Economists say there are advantages to reducing the financial risk for individuals. Pooling investments, in some cases, allows workers to switch jobs more easily and helps lower fees associated with investment decisions, for example.

Hey, maybe we need more socialism, not less, people.  Look at this:

... Europe isn’t just the land of "socialized" medicine. It is also the land of "socialized" retirement plans, and like other automatic stabilizers, pensions help cushion the blow of an economic crisis.

Retirement income typically comes from a combination of three buckets: state pensions, corporate pensions and individual arrangements. In many other industrialized countries, that first bucket — state pensions — supports a large amount of retirees’ income.

The typical American receives just 45 percent of his preretirement wage through Social Security, according to the Organization of Economic Cooperation and Development. By contrast, a worker in Denmark, which has one of the most comprehensive and generous retirement arrangements in the world, can retire with a state pension that is 91 percent of his salary.

Old people with money retire, making way for new workers.  They also have more to spend in retirement, helping to keep their economies more stable, more resilient.  More able to weather a downturn in the economic climate brought on by (ahem) greedy and stupid American Wall Street Investment Bankers and the bubbles they created in tech stocks, real estate and the derivatives market.  

I know, it all makes too much sense.  Cheaper health care costs.  More money for retirees.  A chamce for young people to better afford college and get on their feet.  A more stable economy.  Well, it makes sense for anyone who isn't in the top 1% of the income brackets her in the US of A.  Which is why we so much opposition to the evils of "socialism."  You know, right now, I would trade some of that evil for our current "righteous ultra individualistic unfettered capitalism " where the next serious illness or family crisis or job loss could wipe out what little savings you and I have and send us directly to bankruptcy, do not pass go, do not collect a single red dime.  Those evil socialists in "Old Europe" keep looking better and better.

Originally posted to Steven D on Thu Sep 03, 2009 at 12:09 PM PDT.

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Comment Preferences

  •  Tip Jar (18+ / 0-)

    "I just had the basic view of the American public -- it can't be that bad out there." Marine Travis Williams after 11 members of his squad were killed.

    by Steven D on Thu Sep 03, 2009 at 12:09:44 PM PDT

  •  Wouldn't you rather live (5+ / 0-)

    in a "socialist" America?

    "I just had the basic view of the American public -- it can't be that bad out there." Marine Travis Williams after 11 members of his squad were killed.

    by Steven D on Thu Sep 03, 2009 at 12:11:40 PM PDT

  •  Seems like a pretty weak argument (2+ / 0-)
    Recommended by:
    blueoasis, satrap

    at least when you actually diss private retirement savings.  The beautiful thing about private savings is that you can do whatever you want with them.  Yeah, if you are trying to retire right now, the fall in the market hurt you.  But if it was your savings, it didn't have to be in the market.  (And indeed, financial advisors usually recommend that as you get closer to retirement, you have less and less of your savings in stocks.)

    You want a pension or something like Social Security?  Well, OK, but there is no free lunch here.  You're going to pay for it in the form of a lower salary or higher taxes when you do work.  Personally, I'd rather just get the money and decide myself where to put it.

    •  I diss "retirement savings" on principle. (2+ / 0-)
      Recommended by:
      SherwoodB, millwood

      Don't get me wrong; I save.  A lot.  But I don't want to have to tie my money up in a variety of enterprises, several of which will no doubt lose money and/or prove themselves to be criminal.

      •  I should have also added, (2+ / 0-)
        Recommended by:
        blueoasis, millwood

        although it more or less stands to reason from context, that the way I save now, I can always withdraw funds on fairly short order.  With retirement funds, I have to wait until I'm in my sixties, or quit my job AND take a big tax penalty.

        •  Depends on how you save for retirement. (0+ / 0-)

          But yeah, the government certainly provides incentives for us to do it in certain ways.

          •  You keep ignoring the point, which is (1+ / 0-)
            Recommended by:

            that we're forced to throw money into pots we can't access until retirement age.

            If it's my money, I want immediate access to all of it.

            If it's a tax -- which is, after all, what Social Security is -- then of course I'll pay it.

            •  I don't have any special retirement account mysel (0+ / 0-)

              All of my savings really are instantly accessible to me right now, so I'm not too familiar with things like the IRA rules, if that's what you're referring to.  But I agree that we should not be forced to throw money into pots we can't access until retirement age.  Ideally, I don't think we should be forced to participate in Social Security either.

              •  That's only if you think of Social Security (1+ / 0-)
                Recommended by:

                as your own retirement money.  It isn't.  Never was.  It's a social welfare tax like many others.

                •  Well, we're getting pretty far afield now. (0+ / 0-)

                  Certainly most people see it as a retirement program, but I see your point.  Too bad we can't make it one or the other.  Taxing people to help the needy is a different thing than forcing people to save for retirement in a certain way, which was what I was originally arguing against.

      •  Buy US Treasuries then (0+ / 0-)

        They are 100% an investment in the Federal Government

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Thu Sep 03, 2009 at 12:25:04 PM PDT

        [ Parent ]

      •  So put it in a bank. (1+ / 0-)
        Recommended by:

        There are even some nonprofits nowadays offering investments in interest-bearing nearly-guaranteed microfinance loans.  (OK, there is a chance those will turn out to be criminal, but most people think they are a good deed.)

        In any case, to argue for "socialism" generally means that you want the government to FORCE everyone into a certain behavior, and that I don't like at all.  If you want a pension, find a job with a pension, or negotiate with your employer for a pension.  Don't make me do the same.

  •  Unfortunately, the most socialized institution in (1+ / 0-)
    Recommended by:

    the US is the military.

    It does such a good job of getting its fair (I would say unfair) share of US tax revenues that it sucks the wind out of non-military related safety nets.

    The participants in the military social state benefit from free health care, housing and other perks not extended to the greater population.

    For this, the members receive less than the going rate of pay for equivalent skills - yet they benefit also from a decent pension at the end of a 20 - 30 year career.

    •  On the other hand (0+ / 0-)

      Our socialist military is remarkably effective at what it does, and I'd say most of the expense problem comes from the private industry part of the military industrial complex.  Perhaps the military needs more socialism too, not less.  

      •  Except I'm thinking that the US (0+ / 0-)

        military, effective as it's supposed to be, is not exactly setting the world on fire in it's current battles.

        From Neocon to sane- thanks to Obama- and Kos.

        by satrap on Thu Sep 03, 2009 at 12:44:06 PM PDT

        [ Parent ]

        •  It's all "Bushed up." (1+ / 0-)
          Recommended by:
          High Tide

          IMO, the problems come from the Bush/Neocon plans for world dominance, not the ability of the U.S. Military to achieve a military objective.  We didn't have to do Iraq at all.  The military did great at the initial conquest, despite not having their best equipment because the inept Rumsfeld thought he could open up a 2nd front on the Turkish border.  

          I'm sure the military did as good a job as possible occupying a country that was being raped by Halliburton and Blackwater, instead of being rebuilt as promised.  You can only ask so much.  

          If we hadn't gone to Iraq, we could have left the Special Forces in Afghanistan and things wouldn't have gotten as bad there as they have.  We probably would have caught Bin Laden at Tora Bora if our guys had been used instead of local warlords.  But if we'd caught Bin Laden it would have been politically impossible to invade Iraq.  Hmmm . . .

          I don't know if it's possible to save Afghanistan or not, but IMO it wasn't lost by the military.  It was ignored for too long by Bush.  

  •  You got it. (1+ / 0-)
    Recommended by:
    Jack the R

    The problem is that those in the top 1% never have to experience what happens to the middle class, so they continue on without a thought for the middle class.

    "I don't want socialized medicine. And don't touch my Medicare."

    by bluedonkey08 on Thu Sep 03, 2009 at 12:27:02 PM PDT

  •  Right with you, Steve! (1+ / 0-)
    Recommended by:

    There's a high cost to militarily policing the world as we seem to do. There's an even higher cost to the "dumbing down" of people as we've seen at these town halls.

    And of course there is sheer stupidity involved when the electorate keeps re-electing "Granny" Mitch McConnell, Charles Grassley, John Enzi and those paragons of virtue from NV and LA.

    It is truly breathtaking how fast we are squandering a once proud country, acceding to the wishes of the christian Taliban, corporate demands and influence and the legions of mouth breathers doing their bidding.

    Are there enough reasonable people left to stem the tide?

    I think passage of the public option is going to be a larger bellweather than we realize.

    Yes, a change is certainly needed, not merely a change of party but a change of system -Eugene V. Debs

    by nativist on Thu Sep 03, 2009 at 12:32:26 PM PDT

  •  I wonder (0+ / 0-)

    It's all about messaging and the values we ascribe to words. "Socialism" has such a dirty, evil (to some) connotation in the country due to the Cold War era (and ignorance of what socialism really is and is not).

    If we the concepts of socialism and called it "Americanism", I bet we'd get every blue collar conservative on our side.

    Of course, that's much, much easier said than done.

    If there has been one disappointment so far from the Obama team it is their inability to frame the issues and their goals in a progressive (or hell, even a slightly left-of-center) manner.

    GOPaint: Painting the conservative hypocrisy at

    by abarrenfuture on Thu Sep 03, 2009 at 12:32:56 PM PDT

  •  Rec'd, Rec'd, a thousand times Rec'd (0+ / 0-)

    Say on, brother!

    The object of persecution is persecution. The object of torture is torture. The object of power is power. Now do you begin to understand me?' - 1984

    by MinistryOfTruth on Thu Sep 03, 2009 at 12:51:44 PM PDT

  •  Private Socialism for Democrats only (1+ / 0-)
    Recommended by:
    High Tide

    I basically agree with what you're saying, but the problem we're going to have, and are having is, "You can't help people who don't want to be helped."  Can't we focus on saving Democrats, and let the Right Wing go its own way?  There's got to be enough Dems in the U.S. to equal the population of a small European country.  Let's just create a "public option" within the Democratic Party and make it available to registered Democrats only.  Then do the same for other socialist ideas.  If our ideas are right, soon all Democrats will be running around sleek and healthy and well off.  For those who still don't want to come on board, well, the GOP is more like a death cult these days than a legitimate political party.  If they want to do themselves in, I'm sad to see it but they are free to choose their own doom.

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