Switzerland Votes to Fleece Its Kids

 

The Swiss might have a reputation for thrift and self-discipline.  However, the results of Switzerland’s March 3 pension referenda show that even the Swiss have no taste for entitlement reform.  If pension reform is a political non-starter in Switzerland, why should young Americans have any hope that Washington will save Social Security? 

On Sunday 58% of Swiss voters decided to give themselves a pension raise and stick their kids with the bill. 

The raise took the form of a thirteen monthly pension check.  Starting in 2026, every Swiss pensioner will get a double payment in the month of November.  Payments in the other months will remain the same.  This amounts to an 8% pay raise for every pensioner, every year, forever. 

A sweet deal if you can get it.

Younger Swiss voters opposed the pay boost.  The vote reflects a generational divide.  Fifty-five percent of voters under 40 opposed the pension hike.  Older Swiss voters showed that they had no qualms about fleecing younger generations. 

Swiss voters also rejected by a margin of 75% to just 25% a proposal to raise the pension age from 65 to 66 by 2033.   

The proposal to raise the pension age was put forward by the Young Radical-Liberals.  The group gathered 145,000 signatures to put the referendum on the ballot. 

The Radical-Liberal Party, better known as the Free Democratic Party or the Liberals, is Switzerland’s classical liberal party.  The Free Democrats are the fourth largest party in the Swiss National Council.  The Young Radical-Liberals are the youth wing of the Free Democrats.

The proposal for the pension raise was put forth by labor unions and Swiss left-wing parties.  Unions and left-wing parties also opposed the increase in the pension age. 

Young people in Switzerland and elsewhere should take note:  unions and the left are not on your side. 

Switzerland badly needs pension reform.  The country is running out of young people.  Swiss government pensions are funded on a pay-as-you-go basis.  Low birth rates mean that the number of Swiss workers per pensioner is going to collapse in the near future. 

Below is the population pyramid of Switzerland.  The Switzerland is about to experience as wave of retirements as the Swiss equivalent of the Baby Boomers and Gen Xers are reaching retirement age in the next decade and a half.    

The results of the Swiss referenda show how unlikely it is that voters or politicians will enact reforms that put entitlements on a sustainable path. 

America also has a generational divide on entitlements.  As in Switzerland, young Americans are more likely to support changes to Social Security like cutting benefits or raising the retirement age.  A majority of older voters and organized interest groups like the AARP oppose changes that will improve the financial viability of the Social Security System. 

If even the Swiss have no taste for even modest changes to their pension system, there’s little reason to expect that Washington politicians or the American electorate will back changes to Social Security or other entitlements absent an imminent financial collapse. 

Young People in France Are Looking for Political Change But Likely Won’t Get It

 

Results of the first round of the French presidential election show that most young people in France are looking for alternatives to the current political order. 

Results of polling by Ipsos of the first round of the April elections appear below.

 

In the first round, Emmanuel Macron was bested by both Marine Le Pen and Jean-Luc Mélenchon among voters under 32 and attracted less than 25 percent support among voters under 60.      

This being France, only Valérie Pécresse from Les Républicans and Éric Zemmour offered free market economic programs.  Zemmour focused on tax cuts while Pécresse planned to cut France’s bloated bureaucracy and regulatory state. 

Macron is a corporatist.  Macron wants more intervention in business with government directing capital to and providing protectionist measures to politically-favored businesses and industrial sectors. 

LePen is also a protectionist and advocates for expansion of entitlement spending by reducing the retirement age from 62 to 60.  She offers a particularly innovative approach to taxation by exempting workers below the age of 30 from the income tax.  This will allow young people to build wealth, buy homes and start families. 

Mélenchon’s economic program is straight out of Bernie sanders playbook—more spending, bigger government and more regulation of the private sector.

Polls show that Macron is ahead of Le Pen in the second round.  Poll show that Macron is favored to win.  That may be the case.  However, a macron victory will not bring about the type of political and economic change that young people in France long for.     

The Economist: Europe's Labor Markets Stacked Aginst The Young

In this week's issue The Economist notes that youth unemployment may, in the long run, prove to be the worst of Europe's many problems 

OF ALL the euro zone’s many problems, youth unemployment is perhaps the most distressing. Joblessness among young workers is around 30% in Portugal and nearly 50% in Spain. Above-average unemployment is the norm for young people, even in more liberal markets like America’s. But Spain’s youth unemployment rate jumped by nearly 20 percentage points between 2007 and 2009, compared with a rise of seven points in America. Labour-market regulations take much of the blame: while hard-to-fire older workers luxuriate on permanent contracts, the young are typically hired temporarily and are easier to sack.

Read the whole thing!