The financial pressures generated by the gradual ageing of Western societies are now widely recognised, even if the action taken to cope with these pressures has been fragmented and maybe even perverse. Obviously, pension provision is one of the key issues, though by no means the only one, for finding ways of persuading people to stay longer in the workforce will be equally important. In a sense, the problems of ageing are welcome - few of us would really wish people to die younger - but they need tackling all the same.
So what should be done? Different developed countries have chosen a different balance between private sector and state provision, but all have some mixture of these. In the US and some European countries such as the UK, the Netherlands and Switzerland, the emphasis has been on the private sector carrying a large part of the burden. In much of the rest of continental Europe, the taxpayer will have to bear a larger portion of the costs.
There are some interesting modifications to this, such as compulsory saving, pioneered in Singapore and proposed by the Turner Commission for the UK. But, basically, people either save for their own pensions, through a company scheme or on their own, or they rely on the generosity of future taxpayers.
The situation has been made worse by the way state pensions are organised, with each generation of working people paying the previous one's pensions. Working people pay into state social security schemes thinking they are saving for their pension, but actually they are paying the pensions of the present retired. That worked all right when there were four or five workers for every pensioner. But a combination of lower birth rates and longer lives means that within a generation there will be only two workers for each pensioner in most of Europe and only one in some countries, notably Italy. Nearly all state security systems have large actuarial deficits.
A lot of solutions have been proffered but, as the Turner report pointed out, either people have to retire later, or they have to save more, or they have to put up with very low incomes in retirement - or some combination of all three. There is no magic wand.
Robin Blackburn would disagree. His plan is for some form of compulsory levy on company profits that would fund a much more generous state pension scheme.
He calls it a share levy - a levy on dividends carried by the shareholders rather than the company, and therefore not to be passed on in higher prices. The rich would pay since they own most of the shares. The money would be invested by the state for the good of all.
Well, you can see from that where the author is coming from: he is deeply critical of the entire capitalist system. He is particularly critical of the US and UK system, and particularly trusting of the state's ability to make just decisions on our behalf. For people who take a similar view of the world this will be seductive stuff. There are at least two powerful practical objections.
The first is that this is not going to happen. No developed country would dare give such an anti-enterprise signal if it wished to attract investment. Companies are mobile; the rich people he wants to pay more are mobile. Indeed, Western governments are so concerned now about companies moving abroad that President Chirac recently promised to cut French company taxes to 20 per cent.
The second is that governments - even a fundamentally honourable one such as the UK - have a record of deceit about finance. By rights, were governments making proper provision for the pressures of ageing they would be running surpluses, not deficits. The true cost of public-sector pensions has not been fully revealed. The deficits of the various social security systems are not fully disclosed. The lottery money is siphoned off to pay for things that previously would have been funded by the taxpayer. Further, governments have a poor record on running investments.
What will happen everywhere will be some mixture of state and private provision. At the moment, private pensions are rising fast in countries, such as France, in which up to now the state has had a dominant role.
There are a lot of legitimate criticisms of the financial services industry, including its level of costs, and there are lots of legitimate criticisms about corporate governance more generally. But a combination of blanket condemnation of the private sector and the elevation of a wise state scheme (funded by the private sector) as a solution to the pension problem has a curious "class struggle" ring to it. Pensions should be taken out of politics, not seen as some way of bashing the company sector and their shareholders.
Hamish McRae is chief economics commentator of 'The Independent'Reuse content