The Dim-Post

April 26, 2010

In conclusion, furthur research is needed in this area

Filed under: economics — danylmc @ 5:30 pm

Via The Herald:

A population professor has come up with a novel idea to cope with New Zealand’s ageing population – pay a higher pension to those who have children.

Professor Natalie Jackson, the new director of Waikato University’s Population Studies Centre, says the welfare state is “a great pyramid scheme” based on a pyramid-shaped population with only a few old people at the top supported by growing numbers of young people at the bottom.

“Just like a pyramid scheme, you have to have a continuous supply of new people coming in to support the numbers of old people,” she said yesterday.

“Once you add in falling fertility since the 1960s, the age structure tips upside down … so eventually the welfare state will have to change dramatically.”

There’s an obvious flaw here: what if I have a bunch of kids, they all go to university, get expensive qualifications and then leave the country, as most of our graduates are like to do? They’ve been a net loss on the nation’s books, but under this proposed scheme I’d get paid an extra pension for them. Maybe you’d change the system so that only resident children would contribute towards a pension – so kids wouldn’t go on their OE because Dad might have to sell the batch. Doesn’t such a system discriminate against the infertile? Would I lose the pension if my children lost their jobs and became beneficiaries, and thus no longer contributed to the state accounts? What if they die?

If a slow-witted half-wit such as myself can spot these problems then why is this idea being floated publically by a university professor running a research centre? Sounds like a good subject for a Marsden grant.

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17 Comments »

  1. Researchers really need to stop just dreaming up with policy prescriptions. People just assume their research is just as daft as their back of an envelope proposals.

    Comment by Richard — April 26, 2010 @ 6:03 pm

  2. Mathematically this wouldn’t work anyway would it? Even if it was effective in increasing the number of children people have, the system would always require more and more people at the bottom (or middle really) of the age pyramid to feed the ever growing number at the top (it would actually be some sort of trapezoid). OK if your population is going to grow forever, but is that what we want? And do we want our population policy determined solely by a desire to maintain the current system of national superannuation? I think that robots will save us eventually anyway.

    Comment by Guy Smiley — April 26, 2010 @ 6:15 pm

  3. a pyramid scheme, I was wondering what Goldman Sachs might do to the welfare state.

    Comment by Neil — April 26, 2010 @ 6:31 pm

  4. Danyl, that all your kids want to leave you as soon as legally possible, doesn’t mean that would be true for the normal people.

    Comment by Berend de Boer — April 26, 2010 @ 6:35 pm

  5. bach

    Comment by x-pat — April 26, 2010 @ 6:36 pm

  6. This research is so full of holes it’s not even worth the paper it’s printed on.

    There are many hundreds of people who either choose not to have children, or cannot physically have children. Why should they be penalised for not having children – for, in effect, not contributing to the so called ponzi scheme?

    Waikato Uni is really displaying the reasons for people to ‘study’ there…. not.

    Comment by Chris — April 26, 2010 @ 6:53 pm

  7. Danyl, that all your kids want to leave you as soon as legally possible, doesn’t mean that would be true for the normal people.

    Comment by Berend de Boer

    Shh. People who’ve had sex are discussing things.

    Comment by dontsurf — April 26, 2010 @ 8:09 pm

  8. I think the baby boomers are becoming increasingly concerned. Expect weirdness.

    Comment by Pascal's bookie — April 26, 2010 @ 9:04 pm

  9. And if you do not have children and can’t get the pension, does it mean that before your retirement age, you don’t have to keep paying for other people’s?

    Only seems fair.

    Comment by Cactus Kate — April 26, 2010 @ 9:27 pm

  10. “Only seems fair.”

    I agree with the sentiment that fair solutions may not be entirely fair. But you tend to go for pure solutons, eg solo mums and the DPB.

    Comment by Neil — April 26, 2010 @ 9:38 pm

  11. all the more reason to structure all your affairs in trusts and holding companies to minimise tax supporting the unsustainable social welfare system.

    Comment by x-pat — April 26, 2010 @ 9:44 pm

  12. Yes Neil, but you can’t have it both ways. Well some people try.

    Exactly x-pat. Welfare is ponzi scheme where the only solution is ultimately higher taxes.

    Comment by Cactus Kate — April 27, 2010 @ 2:54 am

  13. “First, let me assure you that this is not one of those shady pyramid schemes you’ve been hearing about. No sir. Our model is the trapezoid…”

    The underlying (veeeeeeeery deep underlying) issue she raises is a solid one – the superannuation scheme we currently have in play (and particularly that we’ll have in ~15 years) is a pyramid scheme that screws the current worker generation to support a few at the top. Her solution; not so solid.

    Comment by garethw — April 27, 2010 @ 9:34 am

  14. Yeah, for a “Population Professor” to be *advocating* exponential population growth seems a little strange.

    Comment by gazzaj — April 27, 2010 @ 11:03 am

  15. A few solutions I’ve thought about
    – raise age of super-ann to 67 to recognize that people live much longer these days then when scheme was originally designed
    – means test super annuation (why not? As far as I’m aware we means test benefits and I KNOW we means test student allowances since I couldn’t get one)
    – give people half super-ann until they are 70 and pass some (no doubt, extremely complicated piece of legislation)to try and encourage employers to keep people on part-time. Often, when somebody is reaching retirement their salary is so high that the company could take half of it and use it to employ one, less experienced person full time.

    Comment by LucyJH — April 27, 2010 @ 12:02 pm

  16. If each child tithed to their parents, we wouldn’t need a differential pension. Okay, so kids would be tempted to smother their parents to end the tithe. This would benefit the taxpayer, as normally dead people can’t get the super. This is such a good idea of mine that I, too, should get a grant/PhD.

    Comment by Clunking Fist — April 27, 2010 @ 2:02 pm

  17. How about abnormally dead people, CF? Would they still be eligible for the Super?

    Also, why does the phrase ‘abnormally dead’ bring Winston Peters to mind?

    Comment by Ataahua — April 27, 2010 @ 2:30 pm


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