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Collective Bargaining is Needed to Voice Opinion Collective bargaining is needed by people in any job. Within any firm there exist feedback structures that enable workers to communicate with managers and executive decision makers. However, there are some issues which affect workers significantly, but run against the principles of profit, or in this case the overall public good that the state seeks to serve. In this situation, a collection of workers are required. This is primarily because if suggested changes go against public interest then a single worker requesting such a change is likely to be rejected. However, it is the indirect benefit to public interest through a workforce that is treated better that must also be considered. But indirect benefit can only truly occur if there are a large number of workers where said indirect benefit can accrue. Specifically, indirect benefit includes the happiness of the workforce and thus the creation of a harder working workforce, as well as the prevention of brain drain of the workforce to other professions. When a single person is unhappy for example, the effect is minimal, however if this effect can be proved for a large number of people then an adjustment must be made. In order for these ideas to be expressed, workers can either engage in a collective bargaining process with their employer, or take more drastic action such as strikes or protests to raise awareness of the problem. Given that the alternate option is vastly more disruptive, it seems prudent to allow people to do collectively bargain. [1] [1] “Importance of Collective Bargaining.” Industrial relations. | |
As discussed in the first proposition side argument, we can curtail the rights of individuals if we see that those rights lead to a large negative consequence for the state. In this situation proposition is happy to let some public sector workers feel slightly disenfranchised if it leads to fewer strikes and a situation where public sector workers are not paid too much, then the net benefit to society is such that the slight loss in terms of consistency of rights is worth taking instead. [1] [1] Davey, Monica, “Wisconsin Senate Limits Bargaining by Public Workers”, The New York Times, 9 March 2011, | |
If school is so expensive, than shouldn't the government be subsidizing school costs instead of forcing parents to send kids to school when they can't afford the books and clothes? It is also unfair to assume that parents on welfare on neglectful and do not value education. Supporting meal programs in schools and subsidizing other costs are much more likely to draw children than forcing parents to send children to school when the kids are hungry and embarrassed1. 1 United States Department of Agriculture, "The School Breakfast Program",[Accessed July 21, 2011]. | |
Parents on welfare are more likely to need the incentives to take on the costs of sending children to school. Parents on welfare benefits are the most likely to need the extra inducements. They generally tend to be less educated and oftentimes be less appreciative of the long-term value of education. In the late 90's, 42% of people on welfare had less than a high school education, and another 42% had finished high school, but had not attended college in the US. Therefore they need the additional and more tangible, financial reasons to send their children to school. Children living in poverty in the US are 6.8 times more likely to have experienced child abuse and neglect1. While attendance might not be a sufficient condition for academic success, it is certainly a necessary one, and the very first step toward it. Some parents might be tempted to look at the short-term costs and benefits. Sending a child to school might be an opportunity cost for the parents as lost labor inside or outside the homes (especially in the third world) the household, or as an actual cost, as paying for things like supplies, uniforms or transportation can be expensive. Around the world there are an estimated 158 million working children, who often need to work to contribute to their family's livelihood2. In the UK it is estimated that sending a child to public school costs up to 1,200 pounds a year. If they lose money by not sending children to school, this would tilt the cost-benefits balance in favor of school attendance. 1 Duncan, Greg and Brooks-Gunn, Jeanne (2000), "Family Poverty, Welfare Reform, and Child Development", Child Development, [Accessed July 21, 2011] 2 [Accessed July 13, 2011]. | |
The purpose of welfare is not to better society per se; it is to support those who have fallen into bad times and need extra help. Expecting people to render a service in exchange for help is demeaning and it undermines the purpose of welfare which is to help people get back on their feet versus tell them what they have to do to be considered beneficial to society. | |
The policy has been effective in the past The main goal of this program is increasing school enrollment overall. If it was too much to expect from families, then the program would have failed in the cases that it was instituted. However, the opposite has been the case. 12.4 million families in Brazil are enrolled in a program called Bolsa Familia where children’s attendance in school is rewarded with $12 a month per child. The number of Brazilians with incomes below $440 a month has decreased by 8% year since 2003, and 1/6 of the poverty reduction in the country is attributed to this program [1] . Additionally it is much less expensive than other programs, costing only about .5% of the country’s GDP [2] . Considering that this program has been affordable and successful in both reducing poverty and increasing school enrollment it is worth using as an incentive in more programs around the world. [1] 'How to get children out of jobs and into school', The Economist, 29 July 2010, [2] 'How to get children out of jobs and into school', The Economist, 29 July 2010, | |
But the program in Brazil is biased towards rural communities versus cities. In the two largest cities in only 10% of families are enrolled versus 41% in the rural areas of Brazil [1] . To consider the program effective it needs to work equally with all members of the poor, which it does not. [1] 'How to get children out of jobs and into school', The Economist, 29 July 2010, | |
Just because students attend school does not mean that they are going to receive a quality education. The best educated children are those whose parents are involved heavily in their school, helping them with their homework, and pushing them to excel1. Without involved parents, students can become just as easily discouraged. There really need to be programs to involve parents more in school, and provide good mentors and role models for students who don't have them. Schools also need to be improved. Just sending kids to school doesn't mean that they are going to learn and be determined to better themselves. Additionally particularly in the third world if children don't have good schools and qualified teachers, then what is the point of going to school? 1 Chavkin, Nancy, and Williams, David (1989), "Low-Income Parents' Attitudes toward Parent Involvemet in Education", Social Welfare, [Accessed July 21, 2011]. | |
It is morally acceptable to make welfare conditional. When society has to step in and provide for those who've proved themselves unable to provide for themselves that should reasonably create certain expectations on the part of those being helped. In almost every aspect of life, money is given in return for a product, service or behavior. It is the same with welfare payments; money in exchange for children being put in school. We expect parents to do a good job in their role as parents. Ensuring that their children attend school is a crucial part of parental responsibility. Children on welfare in the US are 2 times more likely to drop out of school, however studies have shown that children who are part of early childhood education are more likely to finish school and remain independent of welfare1. Thus, when a parent is a welfare recipient, it is entirely reasonable to make it conditional on sending their kids to school. If tax payers' dollars are being spent on those who cannot provide for themselves, there needs to be a societal return. One of the greatest complaints about welfare is that people work hard for the money that they earn, which is then handed to others with no direct benefit to society. If children of people on welfare are in school it increases the likelihood that they will finish high school, maybe get a scholarship and go to college, and have the necessary tools to contribute to the work force and better society. 1 Heckman, James (2000), "Invest in the Very Young", Ounce of Prevention and the University of Chicago, [Accessed July 25, 2011]. and Duncan, Greg and Brooks-Gunn, Jeanne (2000), "Family Poverty, Welfare Reform, and Child Development", Child Development, [Accessed July 21, 2011] | |
Requiring school attendance allows welfare to be the hand-up that it is meant to be, and keep children out of crime. In the US, girls who grow up in families receiving welfare handouts are 3 times more likely to receive welfare themselves within three years of having their first child than girls who's families were never on welfare1. Children living in poverty were 2 times more likely to have grade repetition and drop out of high school and 3.1 times more likely to have children out of wedlock as teenagers2. They are 2.2 times more likely to experience violent crimes. Children of welfare recipients are more likely to end up on welfare themselves. Welfare should be a hand up, not a handout that leads to dependency on the state. It is the latter if we are only leading people to fall into the same trap as their parents. Education is the way to break the vicious cycle. Through education, children will acquire the skills and qualifications they need in order to obtain gainful employment once they reach adulthood, and overcome their condition. In the developing world, primary education has proven to reduce AIDS incidences, improve health, increase productivity and contribute to economic growth3. School can empower children, and give them guidance and hope that they may not receive at home. Getting kids in school is the first step to equipping them with the skills to better their situations, and if encouraged by their parents they might consider scholarships to college or vocational school. The program does not guarantee this for all, but it is likely more effective than the leaving parents with no incentive to push their children. Benefits are supposed to promote the welfare of both parents and children. One of the best ways to ensure that welfare payments are actually benefiting children is to make sure they're going to school. This is simply providing parents with an extra incentive to do the right thing for their children and become more vested in their kids' education. 1 Family Facts, "A Closer Look at Welfare", [Accessed July 21, 2011]. 2 Duncan , Greg and Brooks-Gunn, Jeanne (2000), "Family Poverty, Welfare Reform, and Child Development", Child Development, [Accessed July 21, 2011] 3http World Bank, "Facts about Primary Education",[Accessed July 21, 2011]. | |
Yet if kids aren't going to school anyway it doesn't matter if the schools are inadequate. Getting kids in schools is the first step to improving the education situation and the dropout rate. As long as we look at the education system in the US and around the world as dismal and overwhelming, nothing will change. | |
There is nothing that says the two are mutually exclusive. Linking welfare to school attendance could be instituted next to other reforms that overall would create greater incentives for children to do well in school. | |
Connecting welfare to failure of parents is unfair. This policy requires that parents be held accountable and punished for the actions of their children. It suggests that their failure in instilling good values is because they care less than middle-class, educated parents. That is a broad and stereotypical assumption. Such parents, many of whom are single mothers, find it harder to instill good values in their children because they live in corrupt environments, surrounded by negative influences[1]. They should be aided and supported, not punished for an alleged failure. Just encouraging putting children in schools does not recognize the larger problems. Some families cannot control their children, who would rather make money than go to school. And caps on the number of children these programs can apply to, as is the case in Brazil, creates problems as well for the families[2]. People are doing their best, but the environment is difficult. Providing safer and more low income housing could be a solution versus punishing people for what is sometimes out of their control. 1 Cawthorne, Alexandra (2008), "The Straight Facts on Women in Poverty", Center for American Progress, [Accessed July 21, 2011]. 2 | |
It is unjust to make welfare conditional Welfare should not be used as a tool of social engineering. These are people who cannot provide even basic necessities for their families. Asking them to take on obligations by threatening to take away their food is not requiring them to be responsible, it's extortion. It is not treating them as stakeholders and equal partners in a discussion about benefits and responsibilities, but trying to condition them into doing what the rest of society thinks is good for them and their families. There is a difference between an incentive and coercion. An incentive functions on the premise that the person targeted is able to refuse it. These people have no meaningful choice between 'the incentive' or going hungry. This policy does not respect people's basic dignity. There is no condition attached to healthcare and Medicaid that says people have to eat healthily or stop smoking, so why should welfare be conditional? Allowing them and their children to go without food if they refuse is callous. Making welfare conditional is taking advantage of people's situation and telling them what they need to do to be considered valuable to society; it is inherently wrong. It impedes on people's rights to free choice and demeans them as worthless. | |
School does not an education make School attendance is not a positive outcome in and of itself. It should be encouraged only if it is conducive to learning and acquiring the meaningful education needed to break out of the poverty trap. Blaming the poverty cycle on kids failing to attend school ignores the fact that schools are failing children. Public schools are often overcrowded, with poor facilities and lacking the resources necessary to teach children with challenging backgrounds. In 2011, 80% of America's schools could be considered failing according to Arne Duncan who is the secretary of education1. Schools in developing countries often lack qualified teachers, and can suffer from very high staff absenteeism rates2. A more effective school system would result in fewer kids dropping out, not the other way around. Additionally, involved parents are integral to effective education3. Simply blackmailing them with money to do the right thing will not work. In fact, you might actually experience backlash from parents and kids, who'll see school as a burdensome requirement that is met just so you can keep the electricity on. Throwing kids into school where they do not have confidence, support, and the necessary facilities is not productive. 1 Dillon , Sam (2011), "Most Public Schools May Miss Targets, Education Secretary Says", New York Times, [Accessed July 21, 2011]. 2 World Bank, "Facts about Primary Education",[Accessed July 21, 2011]. 3 Chavkin , Nancy, and Williams, David (1989), "Low-Income Parents' Attitudes toward Parent Involvemet in Education", Social Welfare, [Accessed July 21, 2011]. | |
There should be rewards for success in school, versus punishment for failure to attend. This problem could be addressed by subsidizing school supplies or rewarding good attendance records with additional cash. Cutting benefits will only hurt the children we are trying to help, with their families deprived of the resources to feed them or care for them. Free breakfast programs in the US feed 10.1 million children every day1. Providing meals, mentors, programs that support and help students are ways to help them get along better in schools. There are already 14 million children in the US that go hungry, and 600 million children worldwide that are living on less than a dollar a day2. Why punish those families that have trouble putting their kids in school, which only hurts those children more? There should be rewards for good grades, and reduction to the cost of school and above all programs so that children don't have to sit in school hungry and confused. 1 United States Department of Agriculture, "The School Breakfast Program",[Accessed July 21, 2011]. 2 Feeding America (2010), "Hunger in America: Key Facts", [Accessed July 21, 2011]. and UNICEF, "Goal: Eradicate extreme poverty and hunger", [Accessed July 21, 2011]. | |
It is perfectly just to ask people to adjust behavior in exchange for funds. In fact, if the tax payers' dollars were being poured into an unchanging situation that would be unfair and unproductive. For a long time the US, and countries around the world, have struggled with making welfare a program that can lift people up. Connecting it to schools can help children. | |
If families have incentives to send their children to school, and raise their children with a value of education, stressing the need for them to go to school they are more likely to finish high school and lift themselves out of these environments. The reason why some children would rather work then go to school is because they have been raised in an atmosphere that does not stress education and the necessity to finish high school. This type of program would push parents to change their children's values as they grow up. Additionally, a child's sense of duty to their family because of welfare payments being connected to their school attendance would give them further reason not to drop out, even if they do not like or value school. | |
One needs to differentiate between mature, developed, but indebted economies like the US, the UK, and developing, cash-rich economies like the BRICs. Their share of the world economy might be increasing, but they would be better served investing their money in infrastructure and development, not in the IMF. Only then they might be on par with the developed nations and comparing quotas might become appropriate. | |
Under representation of emerging economies Claims that power within the IMF is distributed according to the reality of the members’ weight in the global financial system are inaccurate. The IMF reflects the financial system as it was 50 years ago and has done little to acknowledge the growth of countries like Brazil, Russia, India, and China (BRICs), which have far fewer votes than their economic heft merits, while Western countries like Belgium are actually overrepresented [1] . Significant reforms to the voting quotas need to be implemented in order to create an IMF that is true to the reality of the world financial system. [1] -- “Wanted: a French Revolution”. The Economist. June 30, 2011. | |
That is an argument for reforming the economic foundations and philosophy of the IMF, not necessarily its governance. One cannot simply conflate the leadership of Western nations with neoliberal policies. Keynesianism is also a western economic doctrine. Maybe the IMF should be encouraged to adopt it in some cases. | |
Unbalanced decision making The decisions taken by the IMF have a deep impact on the entire global financial system and on developing countries in particular, whose economies are especially sensitive to global changes. Yet, the Western, developed countries have the greatest sway in the decision-making process, with developing countries having little influence over the process. It creates an unjust financial world order, where rich and powerful countries call the shots and smaller, poorer ones bear the consequences [1] . [1] Foot, Rosemary; Mcfarlane Neil; Mastadundo Michael. US Hegemony in International Organizations. Oxford Publishing Online, November 2003. | |
The primary function of the IMF has now become that of a lender of last resort [1] . It keeps governments that are on the cusps of a default, solvent. Membership in the IMF is optional, as is borrowing from the fund. Countries only have to do what the IMF tells them when they take its money. Western countries get to have more sway because they bring in the greatest financial contributions to the Fund. It’s not unfair, therefore, for them to be allowed to place conditions on how their money will be used by those who choose to borrow it. [1] Bihide Amar; Phelps Edmund. “More Harm than Good”. The Daily Beast. July 11, 2011. | |
You don’t need to experience food shortages to understand the importance of food. The IMF position, however, is that financial stability is a precursor for long-term growth and prosperity. Therefore, in the short term, balancing budgets might take precedence over any other legitimate concerns countries might have, like subsidising farming to maintain low food prices. | |
Neoliberal foreign policy Western dominance leads to economic policies and loan conditions rooted in neoliberal economic principles, like austerity measures, which overemphasize cutting public spending. These often actually end up badly hurting developing economies, increasing inequalities and poverty (Malawi is a prominent example) [1] . Argentina’s economic collapse attests to that [2] . [1] Hari, Johann. “It’s not just Dominique Strauss-Kahn. The IMF itself should be on trial”. The Independent. June 3, 2011. [2] -- “Economic debacle in Argentina: The IMF strikes again”. | |
IMF-led policies' Impact on access to food and healthcare Since Western countries do not suffer from food shortages, they do not understand how vital food and access to healthcare is for survival in the developing world. The IMF treats food and healthcare in its policies just like any other commodity on the market, sometimes with disastrous humanitarian consequences [1] . [1] Oxfam. “Death on the Doorstep of the Summit”. Oxfam Briefing Paper. 2002 | |
Member countries can not unilaterally increase their quotas8. So even if a country, like the BRICs became rich enough to afford buying a bigger share, it would be in the interest of Western nations to block such a move to retain the power under the status quo. Western countries are still, rightfully, dominant players. But they hold disproportionate sway over the Fund. Important decisions within the IMF require an 85% supermajority of the total voting quota. The US alone holds 17%, while EU members hold 32% [1] . Effectively, the US is the only country in the world with veto rights at the IMF. Even if all the other countries were in agreement over a certain proposal, the US could unilaterally block it. That is a clear example of just how dominated the IMF is by the West. [1] Wikipedia. “IMF Article. Memers’ quotas and voting powers”. | |
As vocal as developing countries have been about the need for a change in leadership at the IMF, they have often failed to come up with viable alternatives to European candidates and recently, when given the opportunity, they failed to rally around Christine Lagarde’s (the new MD) only serious competitor: Mexico’s Agustín Carstens3. | |
Capitalism and a guiding principle of IMF policy making Capitalism as guiding principle: At its core, the IMF is a capitalist, financial institution, not an exercise in proportional representation and democracy, and it has to function on that premise. Drastic changes in the quota systems that would see the West ceding control of the institution, would not be based on the reality of the financial system, but on a political desire to make the institution more representative. Such a move would hurt its efficiency. | |
Gradual and abrupt change To paint the IMF as western dominated and unresponsive to shifts in the global financial order is inaccurate. The IMF is gradually accommodating the growing stance of emerging economies like China through reforms to its quota system [1] . Also, among the countries with the 10 biggest quotas are Japan (no 2), China, Saudi Arabia and Russia8. The reality is that Western economies still represent the biggest players in the world financial system and any change in their leadership of the IMF should come gradually, with the potential change in status within the world economy. There is no reason why they should abruptly relinquish leadership of the Fund. [1] Arnott, Sarah. “Emerging Economies Battle for More Voting Rights at the IMF”. The Independent. September 28, 2009. | |
Western states as large scale shareholders Western countries are the biggest contributors to the IMF. They bring in the most money and, until recently, have rarely required loans from the institution themselves. In any business, the biggest shareholders get to have the most say in the decision-making process. The IMF should not be different. | |
The role of managing director For its entire existence, the managing director of the IMF has always been European. This has created considerable discontent within the developing world, with developing countries feeling disenfranchised and, therefore, less likely to trust and cooperate with the Fund [1] . [1] Musoko, Chipo. “Why IMF boss will not come from the Continent”. All Africa. May 23, 2011. | |
Precisely because Europe is now the IMF’s biggest client, its MD should not come from Europe. Questions about the independence a European in such a position are already being raised, with some pointing to the fact that the fund has been much more generous with the European PIGS than with any of its previous clients. A non-European MD would maintain the Fund’s credibility and integrity [1] . [1] -- “Time For a Change: While a euro-zone finance minister, even a talented one, should not lead the IMF”. The Economist. May 26, 2011. | |
Unbridled capitalism is not a viable response. A balance has to be struck between economic interests and political imperatives. The IMF is also a political institution, not a private bank. Its money comes from countries, and therefore the IMF should be accountable to its member states that pay for its very existence. That means a more representative balance of power within the governance of the institution. | |
There remains a danger of not learning from past mistakes. Forced evictions are unlawful, and have minimal benefits in terms of human development [1] . Evictions only show the natural path of the lawless nature of capitalism. Within capitalism, public space becomes privatised over time in order to enable the creation, and circulation, of profits. Cities are social spaces, and therefore need to be designed for, and around, people not profits. Evictions dispossess of their land, livelihoods, and homes; while the city is redesigned for investors, the elite, and footloose companies. Social development and security needs to be seen as the natural path of development. Further, comparatively, the context of African cities differs to that of Europe and the US. [1] For more information see further readings: United Nations Human Development Reports. | |
Forced evictions are a natural path of development. Forced evictions have occurred globally across time, they show the natural progression of development. Cases across Europe and the USA show evictions were a feature of cities and urbanisation in the past. London experienced numerous ‘slum clearances’ from the 18th to the 20th Century, one such clearance was the building of the Metropolitan railway to the City which destroyed the slums around Farringdon and forced relocation of 5-50,000 people from 1860-4. [1] Firstly, as modernisation theory shows transition occurs as society progresses from ‘traditional’ to an ‘age of mass consumption’. Evictions often occur where inhabitants may not have the legal titles to occupy land. Evictions enable the transition from communities who occupy land based on traditional laws and beliefs to the emergence of a refined legal system. Secondly, development can only progress once new land becomes available - investment requires space. Therefore space has to be cleared for the city to be re-planned and new investments made. New investments can ensure African cities become sites of prosperity and continue to attract investors. [1] Temple, 2008 | |
Forced evictions are not solutions as those displaced will simply build new shanty towns so it will not stop rapid growth. They fail to tackle underlying issues across African cities - such as the lack of access to adequate housing, services, and bad governance. | |
Forced evictions pave the road for African cities to set a trend towards Eco-Cities. A key character of global cities are the global connections made. Whether financial, economic, political, or cultural - global cities become a fundamental hub providing key resources. Forced evictions provide space in overcrowded, unorganised, cities whereby new architecture and districts can be built, and new trends set. Forced evictions provide spaces for new financial districts and beautiful cities to emerge across Africa. Recently plans have been set to implement 'Eco' projects across African cities. Proposed projects include the Konza Techno City, Nairobi; Eko Atlantic, Lagos; HOPE, Ghana; and Kampala Tower, Kampala, as part of the Venus Project. | |
Forced evictions are necessary to change perceptions. Western media and institutions often present an image of 'Africa' which fails to understand the reality, and continues to position 'Africa' as the 'other', 'unknown', and in need of assistance. Cities across Africa are an opportunity to change this idea of Africa. Forced evictions enable local, and national, governments to redesign African cities. Taking the case of South Africa forced evictions, in cities, have been central in promoting its new image. In 2010, South Africa hosted the FIFA World Cup. Stadiums were built in Johannesburg, Cape Town, and Durban and provided the international community an opportunity to see the beauty of South Africa and confirm its ability to deliver as a BRIC country. Evictions occurred to create an aesthetic city, for the greater good. The evictions were only a small cost in the broader scale, whereby a better city would be built for all to enjoy, employment created, and tourists attracted [1] . [1] Although accurate figures of the number of evictions carried out, and/or number of residents displaced, are unavailable, cases have been reported where around 20,000 people could have been evicted in one settlement. See further readings: Werth, 2010. | |
It remains questionable whether the FIFA World Cup has been a success for South Africa, and for the majority of South Africa's citizens. The costs of forced evictions have outweighed the benefits in the international arena. The publicised nature of evictions across South Africa, in the build up to FIFA 2010, highlighted a negative image of urban planning in Africa and the unresolved issues of equality and rights. Forced evictions have resulted in the loss of architectural heritage for new builds, homelessness, and the publication of communities living without freedom to rights. The Western Cape Anti-Eviction Campaign is a clear example. The social movement gained momentum to expose the undemocratic world poor communities live in and fight evictions. The communities were relocated into 'Tin Can Towns' and 'Transit Camps'. [1] The negativity raised will have future repercussions. [1] For more information see further readings: Smith (2010) and War on Want (2013). | |
Since 2000, over 2mn experienced forced evictions in Nigeria [1] . Recent plans to implement the Eko Atlantic project along Lagos’ coastline has been designed with an intention for reducing emissions, protecting the vulnerability of Victoria Island to climate change, and promoting sustainable development. However, an exclusive landscape has been planned - targeting commuters, financial industries, and tourists. The need to include quotas for providing adequate housing or public services has been neglected. Furthermore, the designs present the construction of exclusive open spaces. Informal workers, such as street traders, will become unwelcome, destroying livelihoods. [1] COHRE, 2008. | |
The idea of promoting a ‘slum-free’ environment is often used to justify evictions. However, for just urban planning, alternative methods need to be used. On the one hand, cases show how slum upgrading can be achieved through community organisations and the provision of tenure security. Organisations such as Abahlali BaseMjondolo and Muungano wa Wanavijiji are positive examples. On another hand, the Master Plan’s [1] , justifying evictions, are wrong. Exclusive spaces are created as the new developments cater to elites and the right to health becomes accessible by a minority. Additionally, slums persist as forced evictions have a different agenda. Slum-dwellers are merely relocated to new settlements, with poor sanitation, inaccessible, and insecure. Furthermore, in the case of Kenya’s 2030 Vision, a number of cases indicate tensions are emerging. Rights over land, and therefore who receives compensation, are contested. Slum dwellers are given little warning on when the eviction will occur. Displacement resulted as residents were unable to afford new builds and not granted a new build. [1] See further readings. | |
Forced evictions are a means to control rapid urbanisation and gain global city status. Africa is undergoing rapid urbanisation of 3.5% per year (by comparison China’s is only2.3%). [1] With the rising number of ‘Megacities’ [2] across Africa, the government need to introduce methods to control the sprawling nature of cities and create a sense of order. Mega, and Million, cities have become a representation of Africa’s urban future. Urbanisation in Africa is occurring much faster than the governments are able to cope with. As Mike Davis (2007) suggests African nations showcase a new type of city - a city of slums, decay, and prevailing revolution. The government need to take more control to effectively build future cities and define the path of urbanisation. [1] Worldstat info, 2013 [2] ‘Megacities’ are defined as cities with over 10 million inhabitants (Wikipedia, 2013). | |
Forced evictions will create cities without slums in the long-run. Slums and informal settlements need upgrading; and the percentage of slums remains highest in Sub-Saharan Africa [1] where slums can be up to 72% of the urban population. [2] Slums are unhealthy spaces - spaces where disease festers, there is limited access to sanitation and services, and overcrowding presents a squalid environment. Forced evictions are an effective urban planning tool to build healthier cities. Residents need to be evicted to enable infrastructure to be built (i.e. roads, lighting, sewage), and services constructed (i.e. hospitals and schools). Evictions enable a healthier environment and homes to be built in the process of redevelopment, beneficial for inhabitants in the long-run. This has been the motive of Kenya Vision 2030 [3] which aims to provide access to adequate housing and a secure environment for urban dwellers. In upgrading slums, such as Kibera, the first stage required relocating residents in Kibera to multiple sites (i.e. Soweto East). [1] Fox, 2013. [2] Tibaijuka, 2004 [3] Kenya Vision 2030, 2013. | |
Forced evictions are following, and imposing, the law. A heavy hand is need for rights to be granted to all in the future. A majority of informal settlements are also illegal, future cities in Africa need to be built on a sense of legality and law. | |
Slums and informal settlements are constraining African cities from becoming global players. Space needs to be cleared and new investors attracted, which will bring positive development. As a result of Johannesburg’s global status, Johannesburg’s Stock Exchange has continued to grow and improve [1] . Exchange Square, in Johannesburg, shows what African cities need to become. To become integrated into the global-economy city space, and priorities, need to be redesigned. [1] See Johannesburg Stock Exchange (2011), whereby classified as first for regulation of security exchanges. | |
Forced evictions are political land grabbing. Politics justifies, and legitimises, forced evictions. Previous cases across African cities [1] show how ethnicity, race, and political party preferences, are heavily embedded in the process. Inhabitants may have legal rights to occupy land - however, as in the case of the 1990 Muoroto demolition in Kenya [2] , ‘legal rights’ were trumped by ethnic tribalism and inter-party competition. Further, a majority of African cities are built informally, therefore what can be defined as illegal? Forced evictions will fail where entire cities are built on a state of informality. [1] Examples include: Zimbabwe (Operation Murambatsvina), Kenya, South Africa, Tanzania, Nigeria, Ghana. [2] See further readings: Klopp, 2008; and Ocheje, 2007. | |
The housing crisis is unresolved by forced evictions. Across African cities there is a housing crisis - whereby there is a mismatch between housing demand and supply. Kigali, capital of Rwanda, for example needs to build half a million new homes. [1] As evictions continue the crisis is being exacerbated. Evictions displace individuals by destroying homes; are forcing lives’ to be rebuilt; and cause a rise in homelessness. In addition, in cases whereby resettlement housing is provided issues emerge. The new locations of resettlement show the crisis is unresolved. Residents are rehoused into unsanitary areas, areas far from employment opportunities, and on undesired land. Slums, and informal settlements, will continue to re-emerge in new locations as solutions are not being provided. Residents are forced out of central locations without being provided with an effective, affordable, alternative replacement. Alternatives need to be introduced and considered. [1] Agutamba, 2013 | |
Denying individuals rights to the city commons. Forced evictions create an exclusive city. The process of evictions means individuals are targeted, and criminalised, particularly the poor. The right to the city - to use the city, live in the city, and build the city - is denied to the poor and criminalised. Such denials have implications for the livelihood strategies of the poor. For example, in the case of Johannesburg, South Africa, informal street traders have been evicted from using open, public space within the city centre. Such spaces are their means of employment, and as Abahlali Base Mjondolo show, the evictions represent a denial of legal and human rights [1] . [1] Abahlali Base Mjondolo are a movement of shack-dwellers based in Durban and operating across South Africa. Updated articles are provided. | |
Forced evictions are inhumane, and make state violence an increasing reality in African cities. Forced evictions are unjust and reflect a threat to human rights. By carrying out such events, the state has become a key actor enforcing violence, fear and insecurity to those whom remain in need of protection [1] . In Luanda, Angola, where 18 mass evictions have been noted between 2002-2006 by the Human Rights Watch [2] , individuals have been killed and imprisoned in the process. Intimidation by the state and government officials becomes a dangerous norm; and inhabitants are not treated as humans. [1] Amnesty International Campaign. [2] Human Rights Watch, 2007. | |
Forced evictions are needed to resolve the crisis. The crisis is emerging not out of a mismatch between supply and demand, but rather a lack of space and the inefficient use of space available. Plans need to be followed for housing to meet need, and evictions ensure such ambitions can be achieved. Evictions provide space to build housing effectively. Take the newly proposed Kigali City Plan 2040 [1] . 34,000 affordable homes will be built, in estates, for different socioeconomic groups. Space and organised planning - based on evictions - are essential to achieve this. [1] See further readings: Nuwagira, 2013; and Kigali City Plan 2040. | |
African cities should not aim for ‘global city’ status. There is debate as to the extent to which Africa is experiencing rapid urbanisation. Data shows that across several countries in Sub-Saharan Africa, in reality, urbanisation is slowing or static [1] . A process of counter-urbanisation is occurring as a result of return migration and fictitious data. The political discourse of Africa’s rapid urbanisation and Megacities promotes unjustified dangerous intervention, such as forced evictions. African cities are unique, and need to promote an alternative image to define their status. A different brand and image of global city status is required, rather than following the current definition. The current definition fails to recognise the diversity of what cities do. The definition of global cities introduces a criteria to follow, and forces conformity in cities worldwide. Mega cities are not negative but have been constructed as being so. There remains a danger of following a path towards 'worlding' cities: who is included and invited to participate in it? [1] Potts, 2009. | |
Evictions show the government are recognising residents as holding rights and entitlements - rights to live in a safe environment, rights to a home, and rights to sanitary conditions. The Millenium Development Goals will be met as a result of such policies - ensuring environmental sustainability, reducing child mortality, improving maternal health, and combating diseases [1] . [1] UN MDGs, 2013. | |
Within cities land grabbing is a myth. A number of cases shown as political land-grabbing and rent-seeking are misrepresented, and misunderstood. Difficulties remain in defining what is a land grab and the extent of which the state, and politics, are involved in land speculations. The media coverage of evictions in Mogadishu showcase the myth and hyperbole surrounding African politics and evictions. The government are entitled to reclaim land and reform it for public use [1] . [1] See BBC News (2013) for full debate, whereby Mohammed Yusuf, an Official at Mogadishu City, defends the eviction. | |
The change to remittances may or may not benefit the countries themselves. It is likely that remittances will go directly to individuals. Rwanda may have managed to persuade Rwandans in foreign countries to put money into its sovereign wealth fund but this will often not be an option or individuals will not want to give to their government rather than their families. Most of the time the government will be less well off. | |
Provides autonomy for developing countries Rwanda has been trying to increase the size of remittances in order to increase its autonomy. The President Paul Kagame has said “aid is never enough and we need to complement it with homegrown schemes to accelerate growth.” He wants “a higher level of direct ownership in the nation’s projects” and wants it because western donors had suspended aid. [1] A change to remittances would reduce this vulnerability; it would be much more difficult for ‘donors’ to suspend the tax breaks they provide for remittances to individual countries than it is to cut aid. Indeed remittances are noticeably stable with money still being sent home during recessions and can even be countercyclical as migrants will send more if they know things are bad back home. [2] This then takes the issue out of the hands of the politicians and puts it into the hands of the people. [1] Procost, Claire, ‘Rwanda seeks diaspora investment to cut reliance on foreign aid’, global development guardian.co.uk, 11 October 2012 [2] Ratha, Dilip, ‘Remittances: Funds for the Folks Back Home’, International Monetary Fund | |
Remittances are of course an excellent way of reducing poverty for those who receive them; more broadly however they are unlikely to be successful. Money sent back as remittances are unlikely to be used to target the development needs of the nation so it will not be creating the basis of sustainable growth in the future. | |
Remittances creates freedom of choice for individuals Changing from ODA to Remittances is good for freedom of choice in two ways. First tax breaks and other incentives will mean that migrants have more money. It will clearly be up to the migrant to decide if they want to or can afford to send their money home; they can decide how much they want to send, when they want to end it, how they want to send it etc. At the other end it will be up to the individual recipient to decide how they want to spend the money received. Secondly it is good for the freedom of choice of the taxpayer. At the moment they are having their choice taken away from them as they have their own money being spent by the government on someone else; foreign countries. The individual taxpayer sees none of the benefit of this money and often they don’t like paying so much aid, 59% of Americans support cutting aid. [1] [1] Newport, Frank, and Saad, Lydia, ‘Americans Oppose Cuts in Education, Social Security, Defense’, Gallup Politics, 26 January 2011 | |
This creates freedom of choice for the donor, but at the same time takes it away from the recipient. Recipients, whether governments or NGOs, will no longer have the money to spend. They will no longer be able to target that funding towards those areas that need it most instead the money will bypass them. | |
Remittances reduce poverty There has been a lot of concern that aid, particularly from governments and international organisations, does not always help reduce poverty; it might simply create dependence, or it prevents local enterprise. Dambisa Moyo points out that “Between 1970 and 1998, when aid flows to Africa were at their peak, poverty in Africa rose from 11% to a staggering 66%”. [1] Remittances on the other hand can be very beneficial; they provide the money needed to start enterprises, and they are showing that the community is not dependent as its members have taken the initiative to go and find work. Remittances have a statistically significant impact on reducing poverty. In 2005 the World Bank suggested that a 10% increase in per capita international remittances will lead to a 3.5% decline in the share of people living in poverty. [2] Governments should therefore change from the method that is failing to one that is more successful at reducing poverty. [1] Edemariam, Aida, ‘Everybody knows it doesn’t work’, The Guardian, 19 February 2009 [2] Adams, Richard H., Pagem John, ‘Do International Migration and Remittances Reduce Poverty in Developing Countries?’, World Development, Vol.33 No.10, 2005, pp.1645-1669, p.1660 | |
While developed countries may be making it more financially attractive to come to them to work and send back remittances in practice they are unlikely to actually allow more immigrants into their countries. Secondly the brain drain is not all negative for the countries concerned; migrants may return home with new skills, and considerably more money to invest and create new businesses. It is also likely that many of those who go abroad would not have found jobs at home, particularly if highly skilled as the developing country has few jobs available for people with their skills, so would have been a drain rather than a benefit to the economy no matter their skill level. It should also be remembered that the costs of educating these skilled workers will be paid all the faster due to increases in remittances – a study of Ghanaian migrants found that the cost of education of emigrants was paid 5.6 times over by remittances. [1] [1] Economics focus, ‘Drain or gain’, The Economist, 26 May 2011 | |
Of course not all aid is ending, it will simply fall to aid agencies and charities to provide for the very poorest rather than governments. These aid agencies will no longer need to help out those who are getting remittances so will have more to spend on the poorest. There may even be an increase in individual donations in rich countries to provide aid when individuals realise their tax dollars are no longer being spend on aid so they may feel the responsibility to do something themselves, something that giving through the government shields us from. | |
Remittances won’t be focused on development work Official development aid is spent on projects that will help encourage long term growth for poor countries, for example building schools and hospitals. These benefit the education and health of the recipient country. Remittances on the other hand are most likely to be spent on day to day needs such as food and clothing. [1] The money may also be spent on schooling and health but it would be on the individual level rather than infrastructure so does not increase the overall capacity of the country. [1] Julca, Alex, ‘Can remittances support development finance in developing countries?’ un.org, 2012, p.8 | |
Encourages a brain drain Any change from aid to remittances is going to create a brain drain because it will encourage working abroad. If developed countries governments are going to provide tax breaks or top up money for remittances then it becomes more attractive to work abroad and send back remittances because they can earn and send back more. The brain drain is the migration of skilled workers from developing countries to more developed countries. This happens because the more skilled the worker the more in demand their skills are and the more likely they are to know about and have the ability to move to work elsewhere. This is a concerns developing countries because it means their investment in the future; through education often benefits developed countries rather than themselves. Africa for example lost 60,000 professionals between 1985 and 1990. [1] In total Africa has lost a third of its human capital. This loss of human capital will mean that the countries affected do not have the capacity to take advantage of the increase in remittances by building new businesses. [1] Oyelere, Ruth Uwaifo, ‘Brain Drain, Waste or Gain? What We Know About The Kenyan Case’, Journal of Global Initiatives, Vol.2 No.2, 2007, pp.113-129, pp.113-114 | |
Money won’t go to where it is needed most. Aid goes where it is needed, remittances don’t. Development aid is able to be focused on those who need it most, the poorest, those who are unable to grow their own crops etc. Sub-Saharan Africa gets $28bln in ODA or 20.9% of aid [1] whereas only $60bln or 11.5% of remittances goes to Africa. [2] Clearly therefore Africa would be proportionally losing out. It is notable that it is middle income countries that get most remittances, the per capital level of remittances received tends to increase until that country has an income of about $2200 before falling back. [3] There would be a similar problem with directing aid within nations. Remittances will go to the family of the person who is sending the money regardless of whether they really need this extra money. It is likely that many of the very poorest will be those who do not have family members who have been able to migrate for work and send back money, these people would be left in a much worse position without ODA. [1] ‘Development: Aid to developing countries falls because of global recession’, OECD [2] ‘African Migrants Could Save US$4 Billion Annually On Remittance Fees, Finds World Bank’, The World Bank, 28 January 2013 [3] Julca, Alex, ‘Can remittances support development finance in developing countries?’ un.org, 2012, p.11 | |
This is to ignore the influence of remittances on the market. Of course ODA may build a school, but it is just as likely to make something that the donor country believes the recipient needs when it does not in fact need that investment. Money being sent home and then invested in an individual’s information will help signal to the market that there is greater need for educational facilities and so someone will build a school when there is enough demand. | |
Employers’ reluctance to hire older staff and attempts to remove aging staff from payrolls can both be addressed more efficiently via the free market. It is true that employer-provided pension plans are beginning to falter under the burden of an increasingly long-lived work force. However, this only serves to illustrate the flaws in employee benefit schemes of this type. The state should not attempt to prop up a method of social welfare provision that is clearly ill suited to current trends in the labour market. Long term employment with particular firms, and especially jobs-for-life, are dwindling. If individual workers were incentivised or obliged to obtain their own health insurance, and to set up their own pension plans, the burden of doing so would be shifted away from employers. Demand and consumer preference would dictate the price at which these services were delivered, reducing the overall cost of obtaining health insurance or paying into a pension pot. Employers would no longer be required to assess potential employees in terms of the sums of money they are likely to draw from health insurance and pension funds. Businesses could once again focus on selecting new employees by merit. Under the status quo, the increasing inaccessibility of employer-led pension schemes has left young adults stranded in a pension market where lack of demand has led to individual retirement plans becoming massively over-priced. Under the resolution, although the financial burden presented by a corporate pension scheme would be more predictable, it would still impact massively on businesses’ profits and artificially restrict the size of the pensions market. Rather than bear the transaction costs inherent in continual renegotiation of pension schemes and employee benefit plans, rather than accept that worries about healthcare and pension liabilities will cause employers to avoid employing older people, side proposition should trust that the market will be as competent at providing fairly priced pensions as it is at providing fairly priced commodities. | |
Maintaining access to pension and healthcare plans Creating a mandatory retirement age ensures that businesses will be able to maintain employees’ pension plans and healthcare schemes. In many liberal democracies that operate without centralised, government sponsored welfare systems, the support provided by employers’ insurance systems is the only means of obtaining hospital care or a retirement income for a large number of working age individuals. Many firms also offer so-called defined benefit pension plans to their workers. Pensions of this type guarantee that a worker will receive a certain, regular level of income on retirement – an amount calculated according to a fixed formula that takes account of an employee’s salary and the length of their service with a company. As the Ford motor company attempted to do in 2010, many firms will attempt to remove older employees who show no desire to retire of their own volition. The older an employee is at the point of retirement, the more money- under a defined benefit plan- a firm will have to pay out in the form of pension contributions. Further, as individuals age they will represent more of a risk in terms of healthcare liabilities. As an individual ages, the likelihood that she will develop chronic diseases such as cancer increases. The greater the aggregate age of a company’s workforce, the more likely it is that the company will, at some point, have to cover the costs of treating a serious illness. Two specific harms result from this situation. First, employers will become reluctant to hire older individuals, aware of the increased risk that their productivity may be affected by an illness that will be treated at their firm’s expense. Second, as employees age, their retirement settlements will constitute an ever increasing burden on their employer. Life spans across the western world are collectively increasing. The longer an employee remains in work, the larger their pension, the greater the liability they represent to a business. As a consequence, between the cost of maintaining a previous generation’s pension settlements and the cost of treating the afflictions of longer-lived workers, it is highly likely that some employee support schemes will collapse. Other schemes, as has occurred in many UK businesses, will be closed off to new employees. Either way, the obstacle presented by an aging workforce will deny a younger generation the chance to benefit from schemes and subsidies that their employer provided to their fathers and grandfathers. | |
Dismantling gerontocracies A mandatory retirement age creates increased opportunities for younger workers, especially in higher ranking jobs. There is no need to apply a universal retirement age will across every sector of the economy. Different retirement ages can reflect the differing demands of particular jobs. The job performance of fighter pilots or surgeons may suffer as a result of the creeping debility uniformly associated with aging – a process known as senescence. Individuals in these occupations are usually compelled to retire earlier than the general population. However, there is one factor that justifies both collective adjustment of existing mandatory retirement ages, and the imposition of mandatory retirement ages on jobs that do not become significantly harder or riskier as workers age. The absence of mandatory retirement may create gerontocracies – businesses that promote employees according to their seniority. The leadership of gerontocratic businesses and organisations are usually dominated by older individuals [i] . Where retirement ages are high, or a culture of absolute deference to seniority is entrenched- as in Japan- a gerontocracy can emerge. An aging class of executives and directors can engage in patrimonial practices that ensure only other, older workers are able to access senior management positions. This has the effect of suppressing pay rates among younger employees and discouraging innovation and independent thought [ii] . After all, why would a young employee engage in the extra labour and learning necessary to solve intractable problems or develop new products if they will gain no recognition for their efforts? Requiring skilled or semi-skilled workers to retire at a particular age will also assist in reducing unemployment figures among the young. Retirees will vacate jobs for individuals who are approaching an age where financial independence and building a family become significant life-objectives. This approach is also economically efficient – it makes more sense for the state to pay out on a larger number of pensions- supported by private pension schemes- than to support the young unemployed. If young adults miss opportunities to build careers for themselves, or to become established in a particular trade, the costs associated with joining the labour force begin to rise. Skill sets decay or become outmoded; lack of personal funds reduces workers’ mobility. Thus, it can prove costly for the state to facilitate entry into the labour market for the chronically unemployed. The resolution is necessary for the long-term health of the workforce as a whole. [i] “Poorer, yes. But by how much?” The Economist, 09 January 2003. [ii] “Corporate governance in Japan: Bring it on.” The Economist, 29 May 2008. | |
It is justifiable, in the interests of public safety and the reputation of key professions, to compel individuals to retire from jobs that are dependent on high levels of physical or mental health. However, proposition’s attempt to depart from the status quo is deeply flawed. The proposition side seem to be presenting an argument in favour of a better regulated wage market and a better constructed corpus of employment law. Neither of these flaws in the status quo would be adequately addressed by the resolution. Moreover, forcibly excluding older individuals from the labour market could harm productivity of the state’s economy by increasing the time and cost of training new workers, and reducing the breadth of skills and expertise available to employers. Japan is frequently cited as an example of the harm that a “seniority-wage system” can do to both corporate accountability and innovation. The flaws of this approach to remuneration are not causally linked to the age of the individuals that a firm chooses to employ, but to a widespread refusal to assess their productivity and suitability for promotion according to other criteria. As a report published in the Economist notes, the Japanese gerontocracy “has few legal underpinnings; rather, it has to do with culture and tradition. A few business leaders have condemned it, but… politicians have largely kept [silent].” [i] A full merit based system of pay and promotion would allow older employees to continue to participate, without having to permanently bar them from the workforce. This approach would resemble the status quo to a degree. Employees would be sought according their ability to fulfil the specific needs of the employer; irrespective of their age, the ability of an employee to successfully and efficiently carry out tasks assigned to her would be basic the indicator used to make decisions on pay and promotion. Even where age and seniority assume a wider, more ingrained cultural significance, as in Italy and Japan, it would be grossly disproportionate to address an apparent bias in favour of promoting senior citizens by excluding them from the workforce entirely. [i] “Corporate governance in Japan: Bring it on.” The Economist, 29 May 2008. | |
It is equally naïve to assume that professional education can only be delivered effectively by an age-based hierarchy. A more dynamic approach to the division of labour within the professions could eliminate an overreliance on seniority-led training and professional development. For example, both the UK and the USA draw members of their respective judiciaries from the ranks of lawyers and barristers. These individuals receive relatively little formal training, with the state relying on legal professionals’ prolonged contact and interaction with other judges to provide aspirant members of the judiciary with an understanding of their role and duties. Consequently, barristers and advocates may practice for decades before they are regarded as having accumulated sufficient experience to take up a place on the bench. This reduces the total number of judges able to oversee cases and, consequently, reduces the number of cases that a court system can process. Many European jurisdictions, by contrast, do not require judges to have practiced as lawyers. Instead, specific training is offered to law students considering a career in the judiciary, in a similar fashion to the specialised training offered to medical students. Focussed education of this type, delivered by academic institutions, produces a more consistent, predictable standard of legal reasoning across the judiciary. It also enable judges to begin sitting at a younger age, ensuring that there are more judges available within the court system, thereby allowing more cases to be heard. Danute Jociene, Lithuania’s judicial representative in the European Court of Human Rights was only 33 years old when appointed. Rosalie Silberman Abella, the youngest justice of the Canadian Supreme Court was 59 years old when she was admitted to the superior bench. | |
As stated in side proposition’s first argument, the age at which retirement becomes mandatory can be flexible. The state will always be able to raise or lower the retirement age in response to demographic factors, such as the rate at which diseases of senescence begin to appear in the general population. Spain [i] and France [ii] have already passed laws raising the age at which individuals can qualify for a state pension. Proposition side’s arguments do not run contrary to this type of action. If the general fitness, wellbeing and life expectancy of the population increases, the age of retirement can be raised in response. An increase in the retirement age can be made relative to a population’s average lifespan. If an adult’s working life is extended, then the amount of time that they spend paying tax will also be extended. This increase in tax income will offset some of the financial burden associated with an increasingly long-lived population. Moreover, as opposition point out, advances in treatments for diseases linked to senescence have effectively reduced the amount of time that individuals reaching the ends of their lives will spend as dependents. The late entry into the labour market of many young adults can be blamed on an ill-advised attempt by the UK and other European states, to use universities to deliver courses unsuited to being taught in a free-form academic context. Many subjects, especially those based on engineering, mechanics and construction require immediate engagement with real-world Apprenticeships and training schemes that emphasise placements within industry and hands-on teaching of core skills will do more to address the needs of the young adult work force than current forms of post-eighteen education. Concerns raised by both state and industry about late entry into the work force can be adequately addressed by bringing the world of work into the classroom at a much earlier stage. [i] “Spain to raise retirement age to 67.” The New York Times, 27 January 2011. [ii] “Pension rallies hit French cities.” BBC News online, 7 September 2010. | |
Maintain the diversity of the labour market Compelling retirement at a set age reduces the diversity of the labour market. The advantages of employing older workers are increasingly being recognised. Higher levels of experience, training and education make for a more adept, reliable employee and lower training costs. Loyalty is increasingly becoming a characteristic of older workers; a well-known study conducted by Warwick University in 1989 observed the effect of staffing a branch of a large British retailer exclusively with individuals aged fifty or over. The study’s supervisors noted that staff turnover at the store was six times lower than- accounting for statistical controls- than the study’s chosen comparator. Profits, meanwhile, increased by 18% and the store staff were found to have a much wider skill base than average. [i] These trends are a marked contrast to the behaviours that are coming to dominate the rest of the working age population. Indeed, given the increasing uptake of university degrees and other forms of higher education, it is now the case that many young Europeans are entering the labour market later than their parents and grandparents. This imbalance at the entry point to the labour market is easily corrected by avoiding any form of compulsory retirement age. However, the resolution would inhibit this process of automatic adjustment, restricting the age range from which new workers can be drawn and restricting the total pool of workers available to the economy. It cannot be denied that there are advantages to employing younger workers. However, businesses will function more efficiently if they are able to choose, on an open labour market free of artificial restriction, the right hire for the right job. Under certain circumstances, this may mean a young graduate, familiar with information technology and with greater geographic flexibility. Under other circumstances, it may mean seeking out a more experience, older worker and making arrangements to allow for part time working while he cares for grandchildren, addresses reduced mobility or simply enjoys the freedom that comes with being able to afford to work less. Both classes of employee are suited to differing tasks and needs within contemporary businesses. [i] “B&Q, Ireland: Comprehensive approach’, Eurofound, 28 March 2007, | |
Professional roles and professional knowledge It is naïve to assume- as side proposition do in their opening argument- that standards of innovation, knowledge and insight will improve within a business simply because it is compelled to hire younger workers. This is especially true of the professions – jobs and businesses that service pressing social needs tightly regulate the knowledge and conduct of their members and, typically, require them to continually maintain, revise and update their knowledge and skills. In many professional roles expertise and mastery of the skills underlying the job itself take an unavoidably long time to achieve. Judges in the UK have to have held legal qualifications for five to seven years, [i] consulting physicians for which it takes twelve years to get the relevant qualifications and training, [ii] architects and master craftsmen are all as much a product of experience and practice as they are education and investment. Implicit in the cost advantage of hiring a young professional is the knowledge that they will have to work under the supervision and tutelage of older colleagues for most of their lives. Professionals are also a product of knowledge sharing and mentorship. Put simply, arbitrarily using age to exclude older professionals from their fields of expertise will have a material impact upon the training and development of younger professionals. Western liberal democracies’ professional classes are based partly on communitarian principles of a carefully curated shared culture. Removing senior practitioners in law, medicine and civil administration severs a link with the collective knowledge of that professional culture – a link that cannot easily be replicated in the classroom environment. [i] “Becoming a Judge”, Judiciary of England and Wales, [ii] “The length of training involved in becoming a doctor”, Medical Careers, | |
Western workers are remaining healthier for longer The populations of almost all wealthy western liberal democracies are aging. Quite simply, individual citizens are living longer. Throughout the EU the number of individuals of working age is likely to drop from the 2010 figure of 305m to 286m in 2030. Concurrently, the number of EU citizens aged over 65 will rise to 142m [i] . Compelling retirement simply increases the economic burden that pensioners place on the state. An aging population increases the ratio of dependent individuals to working individuals within a state. A mandatory retirement age is an arbitrary and unnecessary measure which exacerbates this problem. The resolution also fails to take account of the fact that life expectancies throughout most of the western world are rising. The life expectancy of a 65 year old American male is now 17.52 years. The life expectancy of a 70 Japanese female has reached 19 years [ii] . Advances and health care and improvements in living standards have extended the average male life span in some areas of the world to 83. As citizens grow ever older, their dependence on their families and on the state for medical care and economic support grows too. Although this observation might seem to go against side opposition’s case, it should be pointed out that the same advances in medical care that extend our life spans also extend our productive lives. [iii] We may live longer, but improvements in diagnosis and treatment for diseases of aging mean that we stay can healthier for longer. This being the case, mandatory retirement would only serve to expropriate the labour of otherwise active, productive members of society. It would create a class of financial dependents (“young” retirees in their sixties), with no means of securing themselves against the physical and medical dependence that characterises senescence. Increasing the age at which retirement becomes mandatory will not adequately offset these dual phenomena. As has been seen in Greece, Spain and France, an attempt to alter an entrenched retirement age- even if it is not linked to mandatory retirement- can provoke substantial opposition among youth and labour movements [iv] . These groups are likely to see such a move as a direct political attack, and will respond accordingly. Secondly, demographers’ predictions about the future habits, health and behaviour of a population are infamously broad and inaccurate. In short, an upward trend in human life spans correlates strongly with a downward trend in the frequency and immediacy with which older people are affected by diseases of aging. Citizens of western liberal democracies are staying healthier for longer. Requiring these otherwise productive, engaged individuals to withdraw from the work force would burden the pension system with a disproportionate number of financial dependents. [i] “Special report: Pensions.” The Economist, 7 April 2011. [ii] “Special report: Pensions.” The Economist, 7 April 2011. [iii] “Active and Healthy Aging – A Long-term View up to 2050”, Miriam Leis, and Govert Gijsbers, European Foresight Platform, 31 January 2011, pp.11-12 [iv] “France burns as strike descends into violence.” The Independent, 20 October 2010. | |
Diversity within the labour market is less important than inclusiveness. States are less likely to implement schemes that will allow individuals from disadvantaged socio economic backgrounds to obtain expensive forms of vocational or higher education if those individuals will be prevented from putting their skills to use by an obstructive gerontocracy. The existence of subsidised university places, school vouchers and government sponsored internships and apprenticeships depend on economic demand for skilled workers. Without a mandatory retirement age providing a predictable degree of attrition within a workforce, there is no guarantee that socially inclusive education policies will increase the number of young adults entering the workplace. Correspondingly, it will become increasingly unlikely that governments will be willing to continue funding inclusive education. Why should the state continue to subsidise the teaching of skills that will go unused and eventually atrophy? Older workers are more likely to have built up pension plans, and to have substantial personal savings. It is also more probable that they will have met their mortgage liabilities (that is, they will be in full possession of their own homes) and paid off any student debt that they have incurred. In general, older workers will suffer little if they are compelled to leave the workforce at a certain age. We can contrast this situation with that of younger workers who, if they are excluded for the work place due to a lack of demand for fresh labour, will be unable to build up the assets and capital that will provide them with a safety net and a comfortable standard of living later in life. The efficient operation of businesses must be balanced against the financial freedom and quality of life of a state’s citizens. | |
Nobel Laureate economist Paul Krugman. Argued in 2004 that: “Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it." [1] The problem with Social Security is not that it does not work, nor that it fails the poor. Rather, as Krugman notes, social security uses limited taxation to implement a clear and successful vision of social justice. As a consequence, the social security system has been repeatedly attacked by right wing and libertarian politicians. Such attacks are not motivated by the merits or failure of the social security system itself, but by political ambition and a desire to forcefully implement alternative normative schema within society. Privatizing Social Security would require costly new government bureaucracies. From the standpoint of the system as a whole, privatization would add enormous administrative burdens – and costs. The government would need to establish and track many small accounts, perhaps as many accounts as there are taxpaying workers—157 million in 2010. [2] Often these accounts would be too small so that profit making firms would be unwilling to take them on. There would need to be thousands of workers to manage these accounts. In contrast, today’s Social Security has minimal administrative costs amounting to less than 1 per cent of annual revenues. [3] It is also unlikely that individuals will be able to invest successfully on their own, although they may believe they can, leading to a great number of retirees actually being worse off after privatization. [1] Paul Krugman. "Inventing a crisis." New York Times. 7 December 2004. [2] Wihbey, John, ‘2011 Annual Report by the Social Security Board of Trustees’, Journalist’s Resource, 9 June 2011, [3] Anrig, Greg and Wasow, Bernard. "Twelve reasons why privatizing social security is a bad idea". The Century Foundation. 14 February 2005. | |
Privatising social security will increase the amount of money that reitrees can draw on Private accounts would provide retirees with a higher rate of return on investments. [1] Privatization would give investment decisions to account holders. This does not mean that Social Security money for the under 55’s would go to Wall Street.. This could be left to the individual's discretion. Potentially this could include government funds. But with government’s record of mismanagement, and a $14 trillion deficit, it seems unlikely that many people would join that choice. [2] As Andrew Roth argues, "Democrats will say supporters of personal accounts will allow people's fragile retirement plans to be subjected to the whims of the stock market, but that's just more demagoguery. First, personal accounts would be voluntary. If you like the current system (the one that [can be raided by] politicians), you can stay put and be subjected to decreasingly low returns as Social Security goes bankrupt. But if you want your money protected from politicians and have the opportunity to invest in the same financial assets that politicians invest in their own retirement plans (most are well-diversified long term funds), then you should have that option." [3 Social Security privatization would actually help the economically marginalised in two ways. Firstly, by ending the harm social security currently does; Those at the poverty level need every cent just to survive. Even those in the lower-middle class don’t money to put into a wealth-generating retirement account. They have to rely on social security income to pay the bills when they reach retirement. Unfortunately, current social security pay-outs are at or below the poverty level. The money earned in benefits based on a retiree’s contributions during their working life is less than the return on a passbook savings account. [4] Secondly, these same groups would be amongst the biggest 'winners' from privatization. By providing a much higher rate of return, privatization would raise the incomes of those elderly retirees who are most in need. The current system contains many inequities that leave the poor at a disadvantage. For instance, the low-income elderly are most likely to be dependent on Social Security benefits for most or all of their retirement income. But despite a progressive benefit structure, Social Security benefits are inadequate for the elderly poor's retirement needs. [5] Privatizing Social Security would improve individual liberty. Privatization would give all Americans the opportunity to participate in the economy through investments. Everyone would become capitalists and stock owners reducing the division of labour and capital and restoring the ownership that was the initial foundation of the American dream. [6] Moreover, privatized accounts would be transferable within families, which current Social Security accounts are not. These privatized accounts would be personal assets, much like a house or a 401k account. On death, privatised social security accounts could pass to an individual’s heirs. With the current system, this cannot be done. Workers who have spent their lives paying withholding taxes are, in effect, denied a proprietary claim over money that, by rights, belongs to them. [7] This would make privatization a progressive move. Because the wealthy generally live longer than the poor, they receive a higher total of Social Security payments over the course of their lifetimes. This would be evened out if remaining benefits could be passed on. [8] Privatizing Social Security increases personal choice and gives people control over what they paid and thus are entitled to. Overall, therefore, privatizing Social Security would increase the amount of money that marginalised retirees receive and would give all retirees more freedom to invest and distribute social security payments. [1] Tanner, Michael. "Privatizing Social Security: A Big Boost for the Poor." CATO. 26 July 1996. [2] Roth, Andrew. "Privatize Social Security? Hell Yeah!". Club for Growth.21 September 21 2010. [3] Roth, Andrew. "Privatize Social Security? Hell Yeah!". Club for Growth.21 September 21 2010. [4] Tanner, Michael. "Privatizing Social Security: A Big Boost for the Poor." CATO. 26 July 1996. [5] Tanner, Michael. "Privatizing Social Security: A Big Boost for the Poor." CATO. 26 July 1996. [6] Tanner, Michael. "Privatizing Social Security: A Big Boost for the Poor." CATO. 26 July 1996. [7] Roth, Andrew. "Privatize Social Security? Hell Yeah!". Club for Growth.21 September 21 2010. [8] Tanner, Michael. "Privatizing Social Security: A Big Boost for the Poor." CATO. 26 July 1996. | |
Social Security is not in crisis and there is no need for privatization. Social Security is completely solvent today, and will be into the future because it has a dedicated income stream that covers its costs and consistently generates a surplus, which today is $2.5 trillion. Proposition’s dire prediction of the collapse of social security’s financial situation is misleading. The Social Security surplus will grow to approximately $4.3 trillion in 2023, and that reserves will be sufficient to pay full benefits through to 2037. Even after this it would still be able to pay 78%. Moreover, there are plenty of ways to reform Social Security to make it more fiscally sound without privatizing it, including simply raising taxes to fund it better. [1] Furthermore the problem that affects social security of falling numbers of contributors to each retiree will also affect private pensions, at least in the short to medium term, just in a different way. If all younger pensioners went over to just paying for their own future retirement who is to pay for current retirees or those who are shortly to retire. These people will still need to have their pensions paid for. They will not have time to save up a personal pension and so will be relying on current workers – but such workers will not want to pay more when they are explicitly just paying for someone else as they are already paying for themselves separately. [1] Roosevelt, James."Social Security at 75: Crisis Is More Myth Than Fact." Huffington Post. 11 August 11 2010. | |
Privatising social security would improve economic growth Privatizing social security would enable investment of savings. Commentator Alex Schibuola argues that: "If Social Security were privatized, people would deposit their income with a bank. People actually save resources that businesses can invest. We, as true savers, get more resources in the future." [1] As a result private accounts would also increase investments, jobs and wages. Michael Tanner of the think tank the Cato Institute argues: "Social Security drains capital from the poorest areas of the country, leaving less money available for new investment and job creation. Privatization would increase national savings and provide a new pool of capital for investment that would be particularly beneficial to the poor." [2] Currently Social Security represents a net loss for taxpayers and beneficiaries. Social Security, although key to the restructuring the of USA’s social contract following the great depression, represents a bad deal for the post-war American economy. Moreover, this deal has gotten worse over time. 'Baby boomers' are projected to lose roughly 5 cents of every dollar they earn to the OASI program in taxes net of benefits. Young adults who came of age in the early 1990s and today's children are on course to lose over 7 cents of every dollar they earn in net taxes. If OASI taxes were to be raised immediately by the amount needed to pay for OASI benefits on an on-going basis, baby boomers would forfeit 6 cents of every dollar they earn in net OASI taxes. For those born later it would be 10 cents. [3] Change could be implemented gradually. Andrew Roth argues: “While Americans in retirement or approaching retirement would probably stay in the current system [if Social Security were to be privatized], younger workers should have the option to invest a portion of their money in financial assets other than U.S. Treasuries. These accounts would be the ultimate "lock box" - they would prevent politicians in Washington from raiding the Trust Fund. The truth is that taxpayers bail out politicians every year thanks to Social Security. Congress and the White House spend more money than they have, so they steal money from Social Security to help pay for it. That needs to stop and there is no responsible way of doing that except with personal accounts.” [4] This would make social security much more sustainable as there would no longer be the risk of the money being spent elsewhere. Put simply, privatizing Social Security would actually boost economic growth and lead to better-protected investments by beneficiaries, benefiting not only themselves but the nation at large. Thus Social Security should be privatized. [1] Schibuola, Alex. "Time to Privatize? The Economics of Social Security." Open Markets. 16 November 2010. [2] Tanner, Michael. "Privatizing Social Security: A Big Boost for the Poor." CATO. 26 July 1996. [3] Kotlikoff, Lawrence. "Privatizing social security the right way". Testimony to the Committee on Ways and Means. 3 June 3 1998. [4] Roth, Andrew. "Privatize Social Security? Hell Yeah!". Club for Growth.21 September 21 2010. ? | |
Privatizing Social Security would harm economic growth, not help it. Privatization during the current economic crisis would have been disaster, and so doing it now is a risk for any upcoming or future crisis. Privatization in the midst of the greatest economic downturn since the Great Depression would have caused households to have lost even more of their assets, had their investments been invested in the U.S. stock market or in funds exposed to complicated and high risk financial instruments. Privatizing social security might therefore increase economic growth in the boom times but this would be at the expense of sharper downturns. Proposition’s argument implicitly assumes that the money at the moment does not improve economic growth. On the contrary the government is regularly investing the money in much the same way as private business would – and often on much more long term projects such as infrastructure that fit better with a long term saving than the way that banks invest. | |
The social security system is unsustainable in the status quo Social Security is in Crisis. Social Security in the United States, as in most western liberal democracies, is a pay-as-you-go system and has always been so. As such, it is an intergenerational wealth transfer. The solvency of the system therefore relies on favourable demographics; particularly birth rate and longevity. In the United States the birth rate when Social Security was created was 2.3 children per woman but had risen to 3.0 by 1950. Today it is 2.06. The average life expectancy in 1935 was 63 and today it is 75. While this may be representative of an improvement in quality-of-life for many Americans, these demographic changes also indicate the increasing burden that social security systems are being put under. [1] As a result of changing demographic factors, the number of workers paying Social Security payroll taxes has gone from 16 for every retiree in 1950 to just 3.3 in 1997. This ration will continue to decline to just 2 to 1 by 2025. This has meant the tax has been increased thirty times in sixty-two years to compensate. Originally it was just 2 percent on a maximum taxable income of $300, now it is 12.4 percent of a maximum income of $65,400. This will have to be raised to 18 percent to pay for all promised current benefits, and if Medicare is included the tax will have to go to nearly 28 percent. [2] Social Security is an unsuitable approach to protecting the welfare of a retiring workforce. The social security system as it stands is unsustainable, and will place an excessive tax burden on the current working population of the USA, who will be expected to pay for the impending retirement of almost 70 million members of the “baby boomer” generation. This crisis is likely to begin in 2016 when- according to experts- more money will be paid out by the federal government in social security benefits than it will receive in payroll taxes. [3] In many ways Social Security has now just become a giant ponzi scheme. As the Cato Institute has argued: “Just like Ponzi's plan, Social Security does not make any real investments -- it just takes money from later 'investors' or taxpayers, to pay benefits to the scheme’s earlier, now retired, entrants. Like Ponzi, Social Security will not be able to recruit new "investors" fast enough to continue paying promised benefits to previous investors. Because each year there are fewer young workers relative to the number of retirees, Social Security will eventually collapse, just like Ponzi's scheme.” [4] Faced with this impending crisis, privatizing is at worst the best of the 'bad' options. It provides an opportunity to make the system sustainable and to make it fair to all generations by having everyone pay for their own retirement rather than someone else’s. [5] [1] Crane, Edward. "The Case for Privatizing America's Social Security System." CATO Institute. 10 December 1997. [2] Crane, Edward. "The Case for Privatizing America's Social Security System." CATO Institute. 10 December 1997. [3] San Diego Union Tribune. "Privatizing Social Security Still a Good Idea." San Diego Union Tribune. [4] Cato Institute. “Why is Social Security often called a Ponzi scheme?”. Cato Institute. 11 May 1999. ; [5] Kotlikoff, Lawrence. "Privatizing social security the right way". Testimony to the Committee on Ways and Means. 3 June 3 1998. | |
The American people do not oppose privatization -in fact, most support it. A 2010 poll showed overwhelming support for personal accounts. Republican voters support it 65-21, but even Democrat voters like it, 50-36. [1] A poll commissioned by the Cato Institute through the prestigious Public Opinion Strategies polling company showed that 69 percent of Americans favored switching from the pay-as-you-go system to a fully funded, individually capitalized system. Only 11 percent said they opposed the idea. [2] A 1994 Luntz Research poll found that 82 percent of American adults under the age of 35 favored having at least a portion of their payroll taxes invested instead in stocks and bonds. In fact, among the so-called Generation Xers in America, by a margin of two-to-one they think they are more likely to encounter a UFO in their lifetime than they are to ever receive a single Social Security check. Even more remarkable, perhaps, was a poll taken in 1997 by White House pollster Mark Penn for the Democratic Leadership Council, a group of moderate Democrats with whom President Clinton was affiliated prior to his election. That poll found that 73 percent of Democrats favor being allowed to invest some or all their payroll tax in private accounts. [3] Moreover, the 'alternatives liks raising taxes and reducing benefits are merely kicking the problem further down the road but it will still become a problem at some point. At the same time either raising taxes or reducing benefits would be unfair – raising taxes because it would mean today’s generation of workers paying more than their parents for the same benefit and cutting benefits because it would mean that retirees would be getting less out than they were promised.' The alternatives would also be particularly devastating for the poor. Individuals who are hired pay the cost of the so-called employer's share of the payroll tax through reduced wages. Therefore, an increase in the payroll tax would result in less money in workers' going to workers. It is also important to remember that the payroll tax is an extremely regressive tax. Likewise a reduction in benefits would disproportionately hurt the poor since they are more likely than the wealthy to be dependent on Social Security benefits. [4] [1] Roth, Andrew. "Privatize Social Security? Hell Yeah!". Club for Growth.21 September 21 2010. [2] Crane, Edward. "The Case for Privatizing America's Social Security System." CATO Institute. 10 December 1997. [3] Crane, Edward. "The Case for Privatizing America's Social Security System." CATO Institute. 10 December 1997. [4] Tanner, Michael. "Privatizing Social Security: A Big Boost for the Poor." CATO. 26 July 1996. | |
Most of these arguments can be undercut by noting that the privatization of Social Security accounts would be voluntary, and thus anyone who believed the argument that the government invests better would be free to leave their account as it is, unchanged. Those who believe they can do a better job of investing and managing their money on their own should be given the freedom to do so. In this respect it is important to remember the origin of the money in these accounts: it has been paid in by the individuals themselves. As James Roosevelt (CEO of the health insurance firm Tufts Health Plan) notes: " Those ‘baby boomers’ who are going to bust Social Security when they retire? They have been paying into the system for more than 40 years, generating the large surplus the program has accumulated. Much of the money that baby boomers are and will be drawing on from Social Security, is, and will be, their own.” [1] As it is their money which they have paid in in the first place, members of the baby boomer generation should have a right to choose how they invest –it. If that means choosing to go private and pursue riskier investments, so be it. The money paid out by the social security system belongs to those who paid it in, and the government should not deprive taxpayers from exercising free choice over the uses to which their money is put. Moreover, none of the other arguments adduced by side opposition do anything to address the ways in which Social Security currently harms the poor, the redressing of which alone justifies privatizing Social Security. [1] Roosevelt, James."Social Security at 75: Crisis Is More Myth Than Fact." Huffington Post. 11 August 11 2010. | |
Privatising the social security system would harm economic growth Creating private accounts could have an impact on economic growth, which in turn would hit social security's future finances. Economic growth could be hit as privatizing Social Security will increase federal deficits and as a result debt significantly, while increasing the likelihood that national savings will decline which will happen as baby boomers retire anyway and draw down their savings. An analysis by the Centre on Budget and Policy Priorities shows that the proposed privatization by Obama would add $1 trillion in new federal debt in its first decade of implementation, and a further $3.5 trillion in the following decade. [1] Because households change their saving and spending levels in response to economic conditions privatization is actually more likely to reduce than increase national savings. This is because households that consider the new accounts to constitute meaningful increases in their retirement wealth might well reduce their other saving. Diamond and Orszag argue, 'If anything, our impression is that diverting a portion of the current Social Security surplus into individual accounts could reduce national saving.' That, in turn, would further weaken economic growth and our capacity to pay for the retirement of the baby boomers." [2] The deficit, and as a result national debt, would increase because trillions of dollars which had previously been paying for current retirees would be taken out of the system to be invested privately. Those who are already retired will however still need to draw a pension so the government would need to borrow the money to be able to pay for these pensions. [3] Contrary to side proposition’s assertions, privatization also would not increase capital available for investment. Proponents of privatization claim that the flow of dollars into private accounts and then into the equity markets will stimulate the economy. However, as the social security system underwent the transition into private ownership, each dollar invested in a financial instrument via the proprietary freedoms afforded to account holders, would result in the government borrowing a dollar to cover pay outs to those currently drawing from the social security system. Thus, the supposed benefit of a privatised social security system is entirely eliminated by increased government borrowing, as the net impact on the capital available for investment is zero. [4] While four fifths of tax dollars for social security is spent immediately the final fifth purchases Treasury securities through trust funds. Privatization would hasten depletion of these funds. President Bush proposed diverting up to 4 percentage points of payroll tax to create the private accounts but with payroll currently 12.4% this would still be significantly more than the one fifth that is currently left over so depleting reserves. Funds now being set aside to build up the Trust Funds to provide for retiring baby boomers would be being used instead to pay for the privatization accounts. The Trust Funds would be exhausted much sooner than the thirty-eight to forty-eight years projected if nothing is done. In such a short time frame, the investments in the personal accounts will not be nearly large enough to provide an adequate cushion. [5] [1] Anrig, Greg and Wasow, Bernard. "Twelve reasons why privatizing social security is a bad idea". The Century Foundation. 14 February 2005. [2] Anrig, Greg and Wasow, Bernard. "Twelve reasons why privatizing social security is a bad idea". The Century Foundation. 14 February 2005. [3] Spitzer, Elliot. "Can we finally kill this terrible idea?" Slate. 4 February 2009. [4] Spitzer, Elliot. "Can we finally kill this terrible idea?" Slate. 4 February 2009. [5] Anrig, Greg and Wasow, Bernard. "Twelve reasons why privatizing social security is a bad idea". The Century Foundation. 14 February 2005. | |
The problems with the social security are systemic, not inherent Social security is currently solvent and will be into the future due to its dedicated income stream that consistently generates a surplus, which today is $2.5 trillion. This surplus will even grow to approximately $4.3 trillion in 2023, It is only after 2037 when there will begin to be a deficit.(11) Side opposition will concede that there is a long-run financing problem, but it is a problem of modest size. There would only need to be revenues equal to 0.54% of GDP to extend the life of the social security trust fund into the 22nd century, with no change in benefits. This is only about one-quarter of the revenue lost each year because of President Bush's tax cuts. [1] Budget shortfalls- of the sort that side proposition’s case is based on- Nobel Laureate economist Paul Krugman argues: " has much more to do with tax cuts - cuts that Mr. Bush nonetheless insists on making permanent - than it does with Social Security. But since the politics of privatization depend on convincing the public that there is a Social Security crisis, the privatizers have done their best to invent one." [2] Krugman goes on to argue against the twisted logic of privatization: “My favorite example of their three-card-monte logic goes like this: first, they insist that the Social Security system's current surplus and the trust fund it has been accumulating with that surplus are meaningless. Social Security, they say, isn't really an independent entity - it's just part of the federal government… the same people who claim that Social Security isn't an independent entity when it runs surpluses also insist that late next decade, when the benefit payments start to exceed the payroll tax receipts, this will represent a crisis - you see, Social Security has its own dedicated financing, and therefore must stand on its own. There's no honest way anyone can hold both these positions, but very little about the privatizers' position is honest. They come to bury Social Security, not to save it. They aren't sincerely concerned about the possibility that the system will someday fail; they're disturbed by the system's historic success.” [3] There are many other ways to improve and reform Social Security without privatizing it. Robert L. Clark, an economist at North Carolina State University who specializes in aging issues, formerly served as a chairman of a national panel on Social Security's financial status; he has said that future options for Social Security are clear: "You either raise taxes or you cut benefits. There are lots of ways to do both." These alternatives are also backed by the American people. The American people, despite voting for Republicans, have said over and over in polls that they would pay more in taxes to save entitlements such as Social Security. [4] Therefore Social Security is not fundamentally unsound, and alternative reforms should be made without privatizations. [1] Paul Krugman. "Inventing a crisis." New York Times. 7 December 2004. [2] Paul Krugman. "Inventing a crisis." New York Times. 7 December 2004. [3] Paul Krugman. "Inventing a crisis." New York Times. 7 December 2004. [4] Dick, Stephen. "Op-Ed: Yes, leave Social Security alone." CNHI News Service. 19 November 2010. | |
Privatising social security will harm retirees As Greg Anrig and Bernard Wasow of the non-partisan think tank the Century Foundation argue: "Privatization advocates like to stress the appeal of 'individual choice' and 'personal control,' while assuming in their forecasts that everyone’s accounts will match the overall performance of the stock market. But… research by Princeton University economist Burton G. Malkiel found that even professional money managers over time significantly underperformed indexes of the entire market.” [1] Most people don’t have the knowledge to manage their own investments. A Securities and Exchange Commission report showed the extent of financial illiteracy for example half of adults don’t know what a stock market is, half don’t understand the purpose of diversifying investments and 45% believe it provides “a guarantee that [their] portfolio won’t suffer if the stock market falls” [2] Including all the management costs it is safe to say that growth from individual accounts will be lower than the market average. The private sector is therefore in no better a position to make investment decisions than the state. Privatised accounts would bring their own problems. They are vulnerable to market downturns. Despite crashes the long term return from shares has always been positive. But this does not help those that hit retirement age during a period when the stock market is down. With private pensions people would be relying on luck that they retire at the right time or happened to pick winning stocks. [3] The economist Paul Krugman has pointed out, privatizers make incredible assumptions about the likely performance of the market in order to be able to justify their claim that private accounts would outdo the current system. The price-earnings ratio would need to be around 70 to 1 by 2050. This is unrealistic and would be an immense bubble as a P/E ratio of 20 to 1 is considered more normal today. [4] If returns are low then there the added worry that privatized social security may not beat inflation. This would mean that retiree’s pensions become worth less and less. At the moment Social Security payouts are indexed to wages, which historically have exceeded inflation so providing protection. Privatizing social security would have a big impact on those who want to remain in the system through falling tax revenues. Implementing private accounts will take 4 per-cent of the 12.4 per-cent taken from each worker’s annual pay out of the collective fund. Thus, almost a 3rd of the revenue generated by social security taxes will be removed. Drastic benefit cuts or increased taxes will have to occur even sooner, which is a recipe for disaster. [5] It is for reasons such as these that privatization of similar social security systems has disappointed elsewhere, as Anrig and Wasow argue: "Advocates of privatization often cite other countries, such as Chile and the United Kingdom, where the governments pushed workers into personal investment accounts to reduce the long-term obligations of their Social Security systems, as models for the United States to emulate. But the sobering experiences in those countries actually provide strong arguments against privatization. A report last year from the World Bank, once an enthusiastic privatization proponent, expressed disappointment that in Chile, and in most other Latin American countries that followed in its footsteps, “more than half of all workers [are excluded] from even a semblance of a safety net during their old age.”” [6] Therefore privatizing Social Security would actually harm retirees and undermine the entire system, and so Social Security should not be privatized. [1] Anrig, Greg and Wasow, Bernard. "Twelve reasons why privatizing social security is a bad idea". The Century Foundation. 14 February 2005. [2] Office of Investor Education and Assistance Securities and Exchange Commission, ‘The Facts on Saving and Investing’, April 1999, pp.16-19 [3] Spitzer, Elliot. "Can we finally kill this terrible idea?" Slate. 4 February 2009. [4] Spitzer, Elliot. "Can we finally kill this terrible idea?" Slate. 4 February 2009. [5] Anrig, Greg and Wasow, Bernard. "Twelve reasons why privatizing social security is a bad idea". The Century Foundation. 14 February 2005. [6] Anrig, Greg and Wasow, Bernard. "Twelve reasons why privatizing social security is a bad idea". The Century Foundation. 14 February 2005. | |
Privatization would increase national savings and provide a new pool of capital for investment that would be particularly beneficial to the poor. As it stands, Social Security is a net loss maker for the American taxpayer, and this situation will only continue to get worse unless privatization is enacted: those born after the baby boom will forfeit 10 cents of every dollar they earn in payments towards the up keep of the Social Security system. By contrast, under privatization people would actually save resources that businesses can invest. As Alan Greenspan has pointed out, the economic benefits of privatization of Social Security are potentially enormous. In Chile, as Dr. Piñera has noted, there has been real economic growth of 7 percent a year over the past decade, energized by a savings rate in excess of 20 percent. [1] Martin Feldstein, a Harvard economist, formerly Chairman of the Council of Economic Advisors under President Reagan, estimated that the present value to the U.S. economy of investing the future cash flow of payroll taxes in real assets would be on the order of $10 to $20 trillion. That would mean a permanent, significant boost to economic growth. [2] [1] Crane, Edward. "The Case for Privatizing America's Social Security System." CATO Institute. 10 December 1997. [2] Crane, Edward. "The Case for Privatizing America's Social Security System." CATO Institute. 10 December 1997. | |
While it is of course socially desirable that everyone be able to find gainful employment and pursue happiness, this is not accomplished even remotely by the existence of a minimum wage. In fact, it denies more people the ability to pursue happiness because the minimum wage forces unemployment up as it becomes more expensive to hire workers. The choice to work should belong to the individual, whether his decisions have an effect on the wages of others or not. Individuals can only have control of their destinies when they are not limited in the range of their potential actions, which must include the right to sell their labor at whatever rate they find acceptable, be it at some arbitrary minimum or lower. | |
The minimum wage provides a baseline minimum allowing people to embark freely in the pursuit of happiness Without a minimum wage, the lowest paid members of society are relegated to effective serfdom, and their decisions of these members often force others to follow suit, accepting similarly low wages. There is no real freedom of choice for people at this lowest level of the social structure, since they must accept whatever wage is offered in order to feed themselves and their families. Their poverty and desperation for work makes it much more difficult for them to act collectively to bargain for better wages. The minimum wage frees people from this bondage and guarantees them resources with which to make meaningful choices. [1] Without resources there can be no true choice, as all choices would be coerced by necessity. Because people’s choices are intrinsically interconnected, and wages tend to reflect the prevailing pressures of demand and supply, when an individual makes the choice to work for less than anyone else, he necessarily lowers the wage that others can ask, leading to a downward spiral of wages as workers undercut one another, each competing to prove he is worth the least. A minimum wage ensures workers do not harm each other through self-destructive wage competition. [2] What the minimum wage does to alleviate these problems is that it gives individuals the ability to pursue the good life, something that has become a global ideal. People want to be happy, and find that only way to obtain the resources necessary to attain comfort and security is through employment. Fundamentally, the minimum wage grants the freedom not to be exploited, giving individuals the freedom to control their own destinies. [1] Waltman, The Politics of the Minimum Wage, 2000 [2] Hillman, Public Finance and Public Policy: Responsibilities and Limitations of Government, 2009 | |
Employers are not stupid. Many do see the value of higher paid workers and appreciate their harder work and dedication. That is exactly why a minimum wage is unnecessary; firms in pursuit of their own self-interest will pay workers competitive wages. Furthermore, social welfare payments will not decrease with the advent of a minimum wage since while some workers will not require income supplements from the state, the higher numbers of unemployed workers will look to the state exclusively as their source of income, raising the cost to the state and the taxpayer. | |
The minimum wage aids in the propagation of social justice and the fair treatment of workers Businesses operating in a free market are concerned principally with their bottom lines. In order to increase profits, firms will seek to exploit workers, to lower wages as far as possible. This exploitation will continue indefinitely, unless the state intervenes. The state does so by implementing a minimum wage. The lowest paid workers tend to be less educated, less skilled, and less organized than higher-paid employees. This makes them the easiest to manipulate and the easiest to replace. [1] In order to stop this outright exploitation of the most vulnerable members of society, the power of wage setting must fall to some extent within the purview of the state. Certainly, it is far better for state, which has citizens’ best interest at heart, to weigh in on the issue of setting wages than businesses, which tend not to care about their workers’ welfare or have competing interests. Furthermore, a minimum wage sends a social signal of valuation; it affirms that all people have worth, cannot be exploited, and are owed by dint of their humanity a certain level of treatment in the workforce, i.e. a minimum wage. This is important as a means to assist the self-empowerment of the poorest members of society, by encouraging them to value themselves. Also, the minimum wage aids in promoting social justice and equality by lowering wage disparities. [2] Citizens of more equal societies tend to have more in common and can share more in the construction of societal goals and aims. This form of social justice is certainly preferable to the class divisions propagated in the absence of a minimum wage, in which a part of society is relegated to permanent wage slavery. [1] Filion, EPI’s Minimum Wage Issue Guide, 2009 [2] Waltman, The Politics of the Minimum Wage, 2000 | |
There is no social justice in denying people the ability to work. The minimum wage serves to benefit insiders who are employed and harm outsiders who do not have jobs and cannot get them due to the dearth of jobs created by the wage laws. [1] The state may have the best interests of its citizens at heart when it institutes a minimum wage, but it accomplishes little when it leaves more of its citizens without work, and thus dependent upon the state for survival. [1] Dorn, Minimum Wage Socialism, 2010 | |
The incentive to enter the illicit market is actually higher when there is a minimum wage. While the relative advantage of entering the black market might be diminished for some who can enter the legitimate workforce and find employment, the higher numbers of people now unemployed would find it necessary either to seek welfare payments from the government or find alternative employment. Such employment could be readily found in the illegal market. | |
Higher wages boost economic growth Employees work harder when they are paid more, but employers can often be more concerned with the short-term bottom line and will not treat workers in the lowest echelons of their firms with much consideration, viewing them instead as disposable and replaceable economic units. [1] Mandating a minimum wage can thus benefit firms, even if they do not recognize it, by making workers more productive and also fostering a general work ethic. [2] As workers feel more valued in the economic system, the more likely they are to work loyally and diligently for their employers. Furthermore, better pay means more disposable income in the hands of employees, which leads to greater demand by them for goods and services. This demand-induced economic growth is a very important part of economic growth. The more people are able to spend, the more money flows into the economy, leading to more business and higher employment. Without the minimum wage, a downward spiral of spending can ensue, proving deleterious to firms and the economy generally. Additionally, the minimum wage decreases expensive social welfare payments, since workers no longer need as many supplements to their wages from the state in order to make up for the shortfall created by too-low wages. [1] Freeman, Minimum Wages – Again!, 1994 [2] Filion, EPI’s Minimum Wage Issue Guide, 2009 | |
The minimum wage encourages people to join the workforce rather than pursuing income through illegal channels When wages are extremely low the incentive to enter alternative markets is increased. This is particularly harmful in the case of illegal markets, such as those for drugs or prostitution. [1] When there is little to be gained from obtaining a legitimate job, no matter how plentiful they might be in the absence of a minimum wage, they would be undesirable by comparison to potentially highly lucrative black market opportunities. The minimum wage is essential for keeping the opportunity cost of entering the black market sufficiently high that people opt always to enter the mainstream, legal market. Furthermore, when the possibility of work in the legitimate market exists, even if work is harder to find due to a minimum wage, the very possibility of getting such a job will serve as a disincentive to pursuing illegal employment. [1] Kallem, Youth Crime and the Minimum Wage, 2004 | |
While economies may bounce back somewhat less quickly from downturns if wages are prevented from falling beneath a set minimum, it is a worthwhile sacrifice for the sake of preventing the exploitation of workers. The minimum wage is particularly important to uphold in times of recession, since increased unemployment encourages employers to slash wages unmercifully. Such reductions can severely harm individuals and families that often suffer from reductions in real wealth as a result of recessions. Furthermore, in the case of competitiveness, companies do not make their decisions of where to locate based solely on prevailing wage rates. Rather, they value educated, socially stable populations. A minimum wage ensures that working individuals have the resources to provide for the necessities of their families and tends to promote social stability and contentment by engendering feelings of social buy-in that are absent in the presence of exploitation and meager wages. [1] Furthermore, it is not clear that the minimum wage has a significantly detrimental impact on employment. [2] [1] Waltman, The Politics of the Minimum Wage, 2000 [2] Allegretto et al, Do Minimum Wages Really Reduce Teen Employment?, 2011 | |
The state has an obligation to protect people from making bad decisions. Just as it tries to protect people from the harms of drugs by making them illegal, the state protects people from exploitation by setting wages at a baseline minimum. Everyone deserves a living wage, but they will not get this if there is no minimum wage. Businesses ruthlessly seeking to increase profit margins will always seek to reduce wages. This behavior is particularly harmful to those who receive the lowest wages. Upholding the right to work for any wage does not give people on the lowest wages a real choice, since it means people must work for what they are given, resulting in terrible exploitation. [1] Clearly, the minimum wage is a necessary safeguard for the protection of the weak and the vulnerable, and to guard people from unconscionable choices that an absolute right to work would force. Furthermore, the right to work does not mean much if an individual can only find employment in jobs which pay so lowly that they cannot support themselves. Thus, there is little difference between being employed below the minimum wage and being unemployed at the minimum wage. When employed, a person is no longer on unemployment statistics and the government has less pressure to act. When unemployed, they have the incentive and time to campaign for government action. [1] Waltman, The Politics of the Minimum Wage, 2000 | |
Individuals gain a sense of dignity from employment, as well as develop human capital, that can be denied them by a minimum wage The ability to provide for oneself, to not be dependent on handouts, either from the state in the form of welfare or from citizens’ charity, provides individuals with a sense of psychological fulfillment. Having a job is key to many people’s self worth, and most capitalist-based societies place great store in an individual’s employment. Because the minimum wage denies some people the right to work, it necessarily leaves some people unable to gain that sense of fulfillment. [1] When people are unemployed for long stretches of time, they often become discouraged, leaving the workforce entirely. When this happens in communities, people often lose understanding of work entirely. This has occurred in parts of the United States, for example, where a cycle of poverty created by a lack of job opportunities has generated a culture of dependence on the state for welfare handouts. This occurrence, particularly in inner cities has a seriously corrosive effect on society. People who do not work and are not motivated to work have no buy-in with society. This results in crime and social disorder. Furthermore, the minimum wage harms new entrants to the workforce who do not have work experience and thus may be willing to work for less than the prevailing rate. This was once prevalent in many countries, often taking the form of apprenticeship systems. When a minimum wage is enforced, it becomes more difficult for young and inexperienced workers to find employment, as they are comparatively less desirable than more experienced workers who could be employed for the same wage. [2] The result is that young people do not have the opportunity to develop their human capital for the future, permanently disadvantaging them in the workforce. The minimum wage takes workers’ dignity and denies them valuable development for the future. [1] Dorn, Minimum Wage Socialism, 2010 [2] Butler, Scrap the Minimum Wage, 2010 | |
The free market tends to treat workers fairly In the absence of a minimum wage the free market will not tend toward the exploitation of workers. Rather, wages will reflect the economic situation of a country, guaranteeing that employment will be at the highest possible rate, and not be hampered by an artificial minimum. Some incomes may fall, but overall employment will rise, increasing the general prosperity of the country. [1] Employers understand that high pay promotes hard work. Businesses will not simply slash wages in the absence of a minimum wage, but will rather compete with one another to coax the best and most dedicated workers into their employ. This extends even into the lowest and least-skilled lines of work, as although workers may be largely interchangeable in terms of skill, they are distinct in their level of dedication and honesty. There is thus a premium at all levels of a business to hire workers at competitive wages. Furthermore, employers also take into account that there is a social safety net in virtually every Western country that prevents unemployed workers from starving or losing the barest standard of living. For this reason, wages can never fall below the level of welfare payments, as individuals will necessarily withhold their labor if they can receive the same or better benefit from not working at all than from being employed. Clearly, businesses will seek to employ the best workers and will thus offer competitive wages. [1] Newmark and Wascher, Minimum Wages, 2010 |
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