The Nobel Prize in Economics Richard Thaler has pointed this Wednesday to migration as a safe conduct to maintain the pension system in the coming decades. “Either we have more babies, or we have to bring more workers,” he stated during a meeting with the media collected by Ical before participating in the inauguration of the International Congress on the Economy of Longevity, organized at the Hospedería Fonseca in Salamanca by the General Foundation of Usal and the International Center on Puffiness (Cenie).
The opening ceremony was also attended by the rector of the University of Salamanca, Ricardo Rivero, the president of the Castilla y León Economic and Social Council, Enrique Cabero, the president of the General Foundation of Usal, Óscar González, the Councilor for the Elderly of the Salamanca City Council, Isabel Macías, and the First Vice President of the Government and Minister of Economic Affairs, Nadia Calviño, who has intervened by videoconference.
After stating that it is “difficult” to determine whether the global inflationary situation will be permanent given all the factors that are taking part in macroeconomic terms, Thaler has begun to assess the question that in the future there will be more retired people than workers. “There are many things that we have to gradually change. We don’t know what will happen in the long term with longevity. Suppose this situation continues and people will live longer and healthier lives. If we continue to have children’s hands more and more, we have a problem”, she reflected.
One of the most serious drawbacks, according to the Nobel Prize in Economics in 2017, is that “perhaps” in the next generation older people will have to pay younger people. “If people can’t support themselves, who will? We’ll have to deploy other resources. And one of them would be migration”, he insisted, although he clarified that “it is clear that there are many political obstacles” when putting this into practice.
“If someone mistakenly decided to put me in charge of the US economy, I would take at least two million people to work,” said Richard Thaler, referring to the problems in his country, where he teaches at the University of Chicago. “The unemployment rate is 3.5 percent. It is a low level, but you are walking down the street and you see job offers, and this is positive. Salaries accompany him and this is also positive. The only thing is that prices continue to rise and this is not positive for everyone”, he warned.
At this point, he has criticized some of the recipes used by economic decision-making bodies in recent years. “We come from a decade in which banks have increased the rate of inflation with monetary policies, lowering interest rates, for example. The failure. In my opinion, if you have a car, you push hard but it doesn’t pick up speed, you can’t ask yourself if the brakes work. Maybe it’s time to think of another tool, like a steering wheel”, she exemplified, using a metaphor.
On the other hand, he wanted to flee from catastrophism regarding the future. “If the population does not increase, something has to change. There are different ways. There are people who make exaggerated claims that this is going to explode suddenly, but it’s not going to be like that. Some measures must be taken, such as reducing benefits, pension rates or increasing the retirement age. But we are not going to suddenly run out of money. Of course, if we are in a situation in which less money is received than is spent, something must be changed. I’m not an alarmist, I don’t think we’ll run out of money in 2027, for example. But we need more workers”, he has reiterated.
Another issue raised to improve the sustainability of the pension system is the private sphere, citing the United Kingdom as an example. “It is a good model that should be studied. There the companies began to encourage their workers to make private pension plans. Little by little, people got excited with small amounts, from one to eight percent gradually. This type of system would not cost so much to the Government. It would not give you as much expense because most of the money comes from people’s pockets. It is saving now to spend your own money later, ”he has stated in this regard.
The Nobel Prize in Economics, asked about measures such as the universal income that exists in Spain, pointed out that, to carry out any of them, it is necessary to find adequate financing. “Reduce benefits, raise the retirement age or reduce taxes. But whose taxes? There are many answers, none wrong. The rich can pay more taxes, but we don’t want them to go. There are many people in my country who are worried about the future and are thinking about where to go. If Spain welcomes wealthy Americans, that would be wonderful. We promise to learn to speak Spanish”, he joked.
Lastly, he has referred to the possibility of combining an increase in immigration with nationalist or xenophobic discourses, which proliferate in different parts of the world. “Democracy in some places doesn’t seem to work, in the sense that people vote for people like Donald Trump and other leaders. Countries like Russia, which is invading Ukraine. I return with the idea of immigration. I think it’s a basic economics argument. We can all be better if we deploy resources efficiently. One of those resources is people. I am not an expert in Spain, but the economies need to grow. And you can’t grow if the local economy declines and you don’t let more people in. They are mathematics”, he has sentenced
For this reason, he has raised the need to be productive, for example, without having to stick to a full day. “COVID-19 showed that you can work remotely. There are highly qualified young mothers who want to work more, but finding caregivers costs more than they earn. The same happens with retirees. Some who follow because pensions are not so high. For this reason, new ways must be found so that people can produce for society, even if it is not full-time. This requires creativity and technology. We have the technology, let’s use it”, he asked to finish.
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The Nobel Prize in Economics Richard Thaler points to migration as a safe conduct for pensions: “Either we have more babies, or we have to bring more workers”