Holiday time is coming, and tomorrow I'm off to the mountains, to sit in the shade and read. Frans is already somewhere down in Italy, but before he drove off into the sunset he found the time to send me this:
In a little more then 5 hours I will start a journey to Italy by car so I must type fast (a little less-considered) not to lose too much sleep.
First I owe you an answer to our question about Bull. The fact I once worked for them does not make a special impression. What struck me once again is the fact that a (huge) loan seem to have been accepted assuming that the (long) existing rules about state-support would not be applied strictly. A phenomenon I see all too often; in companies as well as in governments. (taking the risk that things go unnoticed).
The 8 o'clock tv-news today had an issue you surely would like to hear about: villages form the Norwegian countryside who lose their young to the cities succesfully try to get Dutch immigrants to fill in the gaps. In the Dutch media there are now numerous articles and letters referring to the (economic) meaning of the babyboom, the pension-funds and that kind of stuff. Also in this respect the Netherlands is an interesting country. Before the eurozone was effectuated there were discussions about how the economies and policies of other european countries (especially italy) would threaten "our pensions". Unlike other countries in the Netherlands the bigger part of the income of the aged people does not come from the younger generation but from their own savings.
The largest "owner" of the world was (and probably still is) the pension-fund I pay too: the "ABP". Unfortunately this "institutional fund" had its share of the popping internet-bubble and are cutting now in the pension. The way "my" ABP is doing this is to change to a so-called "middle-wage-system". Until now the payment of the pensions was based on the wage the old man or woman earned in his or her LAST year. Now they change that base to the average of the total career! The older system always has seemed very unfair to me vis-a-vis the people for whom the wages didn't grow very much during their careers. But: what about credits and expectations !!
In the meantime a professor has launched the idea of an active population-policy aiming at 2,1 child for the average woman. He is getting interesting comments. The one I liked most is the notion of reexamining the term "aged". 100 years ago a person of 65 years old was an aged person surely; now he or she is not! When you account for a more realistic view on the concept of aged the western societies are not ageing at all; on the contrary. With regard to the labor-related immigration I read about studies that show that the need for workers can easily be met with by raising the age people stop working with just 2 years.
Frans is right about the studies, this is what most are claiming, and he is right that on some measures we are not ageing at all, but on the first point I doubt the people who write these studies undestand the difference between maintaining the absolute labour force size, and maintaining the dependency ratio. And on the second point, well my views are already pretty well known, we have to examine how our capacities change as we age, and how the more rapid dynamic of techological changes relates to all this. Equally, again as I keep insisting, it is one thing declaring that people should work longer, and another getting the labour market (ie those who seek to employ) to agree to this. At the end of the day, it would be really interesting to see some serious research into all this, so we could discuss things on a more informed basis. Joerg, as ever is contrarian:
You severely underestimate old people. I already pointed out recently that there seems to be a tendency emerging among U.S. seniors to price younger workers out of the market. Let´s look at a historical example first: "Colbert created the first public pension system. In 1673, he put into place a system that would pay sailors to do nothing after they reached a certain age. The plan was intended to combat piracy, because the old sailors often took to that devilry after they could no longer get honest work; it was the only way they could feed their families." (Bill Bonner) I remember that you proposed using a creativity index in a comment on Brad´s website. Actually, entrepreneurial activity is increasingly in evidence among really old people. My father took a job directing work on a stretch of Autobahn when he was close on seventy - his first job with entrepreneurial responsibilities ever. He was not the only West German engineer returning to work in East Germany in his old age. The expected "jobs miracle" for young engineers never materialized. There is a even an organization of "senior experts" - pensioner-managers - who go to developing countries and help jumpstarting new projects there, not to mention their support for fledgling companies at home. Last month I even met a 96-year-old doctor on the tennis court. He wasn´t watching - he was playing.
My riposte, I suppose, would be, the envigourated old-age model should be indentifiable in the productivity numbers, Japan doesn't seem to be too encouraging in that regard, and Germany still remains an unknown entity.