Wednesday, May 06, 2009

Britons face working until 70 to help bring public debt under control

A respectable financial think tank expects that the retirement age in Britain will be raised to 70, to pay for Gordon Brown's mishandling of the economy.

No doubt this will only apply to tax payers. Every tax eater currently on the government pay roll will still be eligible to:

1. Retire at 60
2. Get a final salary pension
3. Have this pension indexed against inflation

As larger and larger proportions of tax go towards paying off government debt and government tax eater pensions, over time, we will also see less and less being spent on the ramshackle 'services' the state currently provides.

Let's imagine in ten years' time, the government collects £50,000 in tax. What will happen to it?

£5,000 disappears in tax handling enforcement and administration costs
£10,000 disappears in government debt interest and principal repayments
£15,000 disappears in government employee pension payments
£10,000 disappears in welfare pay-offs to favoured government client groups

This leaves about £10,000 pounds in effective funding. Using P.J.O'Rourke's handy guide to government waste and inefficiency (found in Eat the Rich), this will be able to provide 'services' that the private sector would produce for about £3,333 pounds.

You pay £50 quid. You get about £3 quid's worth of goods back that you would actually pay for privately. This will not compute.

There will come a snapping point, where tax payers will be shelling out most of their income over to the British state, and seeing very little in return, except lots of government client-state pensioners driving large cars, going on holiday all of the time, and buying up the choicest cuts of meat in supermarkets.

Meanwhile, 85 year-old taxpayers will be collecting shopping trolleys in the car park, for $10 pounds an hour, while government pensioners drive home to enjoy the fruits of the trolley collectors' labour.

Who knows when that snapping point will be. But it's coming.

The welfare state may not be dead yet. But it's dying.

And good riddance.

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