Some may feel that there is a tad too much of history on my site. I have an excuse. History is made by people and it is the people I am interested in. Time and again it surprises me to see how people have deliberately and blindly acted against their own best interests even when the unholy alliance of business and politics had not smeared mud into their eyes.

As I write, the German state has reached a crucial phase in the demolition of its system of state pensions. The betrayal of the elderly is now official, and here in Britain the victims of Margaret Thatcher look on somewhat bewildered how these efficient Germans can be so stupid to make the same mistake. Before Thatcher, Britain, too, had a working system of state pensions. It was not as good as the one on the continent, but it kept the wolf at bay and even offered the pensioner the occasional holiday at a spa. A thing like the current poverty trap of the elderly was not a prospect one would even imagine. And in Britain this is aggravated by the housing situation on the English Isles, but let us stay with the pensions.  

The misinformation of the public in this matter is staggering. 

In economical terms every country in Europe had lost WW II. Whether victorious Great Britain, or the defeated German rump state(s), the countries came out of the war dead broke, the currency was barely good enough to wipe your ass with a banknote. So instead of tying up reserves in retirement funds and so intercept a much needed cash flow, the lifeblood of every economy, the “contract of generations” was introduced, which means that the people contributing to the gross national income pay towards their own retirement by paying for the elderly now and here, and when it is their own turn to retire, will receive pensions by the next generation to follow. Whatever you may think, this is fair. One day, you too, will be a pensioner and then somebody has to forward the funds for a pension covering 74% of your last income before the legal retirement age, with tax advantages. Should you have a private insurance, this will be deducted from your state pension. So your private insurance has to be very good indeed to exceed the 74% of the generation’s contract, and given the level of average income for salary earners, even in a rich nation, there is not a single pension scheme the private sector has to offer that would be able to deliver. 

The payout to the pensioner is not linked to the number of contributors paying in but to the gross national product, that is the productivity of the contributors in pay. If fewer people are working, that does not mean their productivety in a modern economy is lacking, in fact it might even be higher and still produce economical growth. If on the other hand, despite of full employment the overall productivity is falling so will the incomes earned. 74% of a small income is still 74%. The pensioner will feel the pinch, but a difference between a higher and a lower pension is beating hands down to be on social welfare with no pension at all.

The overhead of this type of state pension is minimal. With all the disadvantages of an overbearing bureaucracy it is just 1.5% of the contributions. There are no obscenely high salaries to be paid to CEOs and there will be no salespeople on commission crowding your doorstep. There are no promotional budgets, only public servants on a regular salary. And the money is transferred directly without taking a detour through investment funds and assemblies of stockholders keeping an eye on their profit margins.

In other words if the gross national income is the cake, the pensions are the big wedge, admittedly a large wedge, from which every slice and every crumb is paid towards the pensions. But the private sector wouldn’t be what it is if it wouldn’t try getting its paws on the wedge; at least a slice of it. And when I speak of private sector I mean sharks like the biggest Insurer in Europe if not world wide, the Alliance, who in 1974 was capable to sell a front end loaded product they had the audacity to label as “life insurance” where the insured after having paid in 12,000 got the princely lump sum of 8,500 paid out, because he had failed to read through the obtuse prose of twenty pages in fine print. Not the insurer's fault, is it? The last time I checked they still sold life insurance. So, the industry’s spin doctors went to work, and they employed the services of statisticians and mathematical wizards. 

The first thing these people did, was to put a linguistic muzzle on the term ‘gross national product’ and instead talk at great length about the “bell-curve.” In fact they talk about nothing else. What is this supposed to mean? It is the demographic ratio between people paying contributions and the number of elderly and their rising life expectancy. 

Whatever BS the sales-pitch is giving you, don’t be led to believe that the bell curve has any bearing whatsoever on the size of the wedge. (The distribution and redistribution of this wedge to an increasing clientele of elderly with a growing life expectancy, that would be a different story and for the politician in charge it is a hot potato that has the potential for ruining his career.) Even if only one person is actually working and producing all the gross national income, his productivity is the link to the pensions, not the fact that he is the only one paying contributions (from a presumably insanely high salary - remember he or she is the nation’s last working person). The percentage of a pension in relation to the last income may change according to strains or improvements of the overall productivity, the annual growth is a necessary buffer for little matters like inflation, even the 74% margin is not hewn in stone, but it has nothing to do with the number of people who pay contributions.

But that’s not what politicians and sales-agents are saying. 

They dare telling us with a straight face that the state, meaning the tax-payer, all of a sudden can no longer carry the burden of the bulging bell-curve. What do Mr. Brown and Mrs. Merkel think the state is for? Despite Kennedy’s sound bite, we have the state to protect us and to serve, nothing else. Would it be different, then in 1789 the thousands of aristocratic heads would have sneezed in vein into the bucket under the guillotine. This is not a cost cutting exercise for a company in receivership, this is the state, the sharp edge of the people, who pay for it with their taxes to be protected against those in their midst who take undue advantages and gamble with our future on the market for futures. If such individuals don’t quake in their boots with fear what the state can do to them, then something is very wrong. To say that the developing geriatric curve on the bell-shaped graph of our demographics would force us to add to the wedge from our own contributions if we wish to secure retirement, is a sales pitch. The pitch of an unholy alliance of insurance sharks and Tories. It is a downright lie. Don’t get me wrong. If you can afford it then by all means do add privately to the allocated percentage of your future pension, which may very well be lower than currently expected, and I am all for reducing overheads, but there is everything wrong with giving up custody over this wedge of the big cake and handing it over to the private sector to be sliced up and sold peace meal to the dorks - us - who don’t have a clue about insurance mathematics if we don’t work in the industry ourselves. 

This is not “minimizing the state” and adding “choices” to how we wish to live our lives. This is high treason and a blatant betrayal of parents and grand parents who had fed us, sent us to school and guided our steps into what they thought would be a better future.

They didn’t anticipate Margaret Thatcher, they didn’t anticipate Angela Merkel, both of them by the way people with a background in the sciences who get infatuated not just with their own political slogans, but with figures and graphs of a neat looking mathematical theorem. Incidentally Mrs. Thatcher is now a peer and her income has lifted her way above the margin where her only hope of survival would be that state and people honor the contract of generations. What does she know about people cheated out of their pensions? Is she even aware that it was she and her advisors, who was the scam artist?

Because that’s what it is: a scam.

In Britain the “reform” has almost come to a close, Germany is still busy working towards it. Now as then the employer is paying a percentage of the employee’s retirement contributions, but the money no longer is carried towards the state owned wedge. Instead uncounted slices of private insurances and company insurance schemes are supposed to secure you in old age. You are made to believe that it is your own money that will secure your own retirement. As it turns out however, the cash you think you are paying towards your own pension has a fatal tendency to disappear entirely in a black hole - there is no such thing as stability for company pensions in the volatile world of boom and bust - and the insurance industry who has caused the debacle has the nerve to call on the state to pitch in. In other words, you, the tax payer, is made to pay twice for services not received. But should you by some miracle succeed in seeing it through and the company or the receivership has not had sticky fingers with these funds, it will be paid out to you in form of a lump sum which the pensioner then has to reinvest again in order to live on the monthly interest. After a lifetime of working and paying the old state pension had offered retirement and enjoying old age with the occasional spa visit; instead the poor soul is now left with a fistful of cash he can’t afford to spend and is expected to shop around and go through the chicaneries of endless paperwork written in legalese. 

This is where the much vaunted “choice” is coming in, and it comes in the form of brokers and insurance salesmen all of whom with a finger in the pie. If you are naïve, you may think they are here to advise and help - get real: they are here to make money from your money.

Since most of these pensions fall considerably short of the margin that allows to relax on the interest payments, the pensioner who enjoys the miracles of modern medicine and lives well into his nineties and beyond, inevitably will face the day when his pension scheme is running out of funds and the insurer will ask him to advance more contributions. But then it will be too late. The state has no longer any obligation to help.

The overhead is enormous. The wedge has been divided in countless slices, each slice ending up in some or other money scheme in the speculator’s big casino, like trading “futures,” which is still waiting to be branded for what it is, a criminal activity, that so far has driven up oil prices by 40% and is the current cause for world wide food shortages. Considering the salaries, commission margins and profits skimmed from the pool for the investors, the average overhead for every front end loaded single slice is nearer to between 28 and 45% than the 1,5% administration costs of the old state pension.

It is a crying shame. And they dare telling us Karl Marx is passé?

But let this not disturb your lunch. Enjoy the new entries below; some are rather juicy.

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Introduction

 

Fiction is like the hypnotist's touch on your shoulder.

The doorbell rings and there she is, painted toe-nails, the sandaled foot rubbing up the suntanned calf of her other leg, her left hand with lipstick and makeup mirror still poking backward for the tiny purse dangling from the thinnest of shoulder straps. She looks at you, the face seems serious. And then a little flutter of her mascara smudged eyelashes gives away the mirth in her narrowing eyes.

People who recognized Tolstoy in the streets used to ask the writer how Oblonsky was doing. They knew of course Mrs. Karenin had thrown herself before a train, but nobody could forget her appearance in that black ballroom dress with a deep plunging neckline. Fiction is a pleasing lie, and it doesn’t fail because it is telling a falsehood; it fails when it ceases to amuse.

Through geological ages the animal mind had found relief only in muscular discharge, a torrid routine of howling, scraping and honing; then we arrived and with us the word, an innovation of greater import, than even Gutenberg’s. Perhaps it began with a lover’s whisper, a gossipy nudge at the fireside. This opened the window. Already at sunrise a muffled murmur accompanies the chores of breaking camp and the words rush ahead into the receding shadows and to the next water well. Fiction in its infancy! According to the anthropologists, speech in primitive societies is mainly the purveyor of gossip; it accompanies the daily labors with talk and singsongs, stringing together just so stories about anything and everything. It made us fit to verbalize our thoughts and to develop mental cookie cutters turning the whole world to bits of manageable bite size.

By stretching the limits of plausibility stories have taught us to speculate about the unknown and actually discover what might be out there.

Where the monkey only knows to throw a stone and then duck, we’ve learned to throw out a counterfactual and then draw conclusions from how it is received. But for most of us the attraction lies in the luster a story is lending to our existence. We drift along the Banale Grande of a shopping mal and stop for a glance at the display in the jewelry section. A fantasy is abducting the mind and we suddenly find ourselves drifting downstream the Amazon, on a secret mission in search of El Dorado. A world entirely of your own, the person standing next to us, has no idea. Left and right of our canoe we feel the forbidding mystique of silent treetops. A cormorant is spying for fish from the back of a half submerged reptile as his observation post; the bird is dropping guano on the alligator. Then the images begin to morph and I remember stories I’ve seem to have heard before.

© - 12/19/2006 - by michael sympson, 500 words, all rights reserved

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