The Dangers of Gray Power

With rare bipartisan agreement, the Bush administration is proposing a substantial increase in benefits for the elderly. The proposed reforms may cost US taxpayers more than President Bush's massive tax cut of 2001, and one that implies a very significant redistribution from America's young to its old. But while many observers have pointed out the risks associated with Bush's tax cuts, and the gaping deficits that have followed, few seem worried about the added deficits that will arise from this gift to the old.

What is happening in America is but more evidence of the vast power exercised by the elderly in our societies. Similar moves are afoot throughout Europe, where the generosity of state-sponsored pension plans has become unsustainable, but reforming the system is almost impossible politically.

The rise of pensioners' political power results from a multiplicity of factors. The first is simply that in every industrial society, people are living longer lives and having fewer children. Combine this with the generous retirement rules that were designed in the 1970's, when the post-war baby-boomers were just about to join the labor market and the welfare state seemed to be free of budget constraints, and you create an entitlement that no one wants to tinker with.

The second factor empowering the pensioners' lobby is that the old are, on average, richer than the young, simply because they have been around longer and so have had more time to accumulate wealth. Being richer, they can provide more financial support to parties and politicians who will defend their interests than the young, who might want to push for pension reform.