Every day, headlines like “What to do when your financial adviser retires” or “How retiring abroad could affect your long-term-care insurance” grace the retirement planning pages of the New York Times. How wonderful it must be to be the bourgeois retiree, for whom life begins at 60, reading a copy of the Times on a beach in Belize! Meanwhile, the rest of us mere mortals are left to worry if our savings will give out before our bodies and minds do.
Nearly every decision about retirement in the capitalist world, from the day you begin working until the day you day, boils down to a cost-benefit analysis: What 401(k) do I invest in? Do I roll-over my 401(k) to an IRA? Do I buy life or long-term care insurance? And it’s not just the blatantly financialized aspects of the retirement system that require you to boot up Excel, either. Even the socialized parts of the system confront an American with a bewildering number of choices: When do I take Social Security? In which Part D Plan do I enroll? Do I need Medigap or Medicare Advantage? If I’m lucky enough to have a pension from my employer, do I accept a buyout?
Kimberly Blanton, who wrote for the Boston Globe and now writes at Boston College’s Center for Retirement Research blog, illustrates this absurdity while discussing her pension buyout offer. Note the insane complexity of the cost-benefit analysis and then her solution, as elegant as it is impossible for the vast majority of workers – she, who almost certainly knows more about retirement than the vast majority of Americans, goes and grabs a Boston College economist to help weigh her options. And even then, a lot of it comes down to gambling on life expectancy.
Even the relatively well-off middle-class worker faces a bewildering array of choices and options, and choosing poorly early on can fix you on a road to destitution and despair in old age. For instance, after several thousand words describing the difficult choices and tradeoffs facing one far-from-unique older upper middle-class couple – a pharmacist and retired meteorologist with a pension, savings, earnings, and Social Security, but also Alzheimer’s and Parkinson’s – the Washington Post shrugs its shoulders and says – literally – “It’s complicated.”
Welcome to the new normal: every worker their own actuary, and woe betide anyone without an economist on retainer! Take one wrong step, answer one question incorrectly in your 78.74 years of expected life, and at some point down the road you’ll be worse off than Indiana Jones when he forgot Jehovah began with an “I.”
Or maybe not. After all, we have Social Security. That Social Security is both the most popular and most successful social program in the history of the country would be difficult for anyone to deny. Even as staunch a Yankee defender of the free market as Henry Cabot Lodge, Jr. felt inclined to boast about Social Security to Nikita Khrushchev after the Soviet premier rightly criticized the American system of financialized retirement while touring the United States.
Two things stick out from Lodge’s defense. First, Lodge displays the earnest lack of self-awareness about socialism’s success that is so characteristic of the liberal elite. Second, his ideological heirs are now engaged in a strategic battle to turn Social Security and Medicare into a treasury for private interests to loot at their pleasure.
That they want to loot it rather than dismantle it is important. Jamie Galbraith calls the payroll tax the “Mississippi River of cash flows;” it flows entirely to the public. Diverting it into the pockets of banks and wallets of fund managers is the ultimate goal. It is the last world to conquer, the final barricade to pull down for American neoliberals.
In this battle over social insurance lies one of the seeming contradictions of modern capitalism. Without a doubt, one of the great successes of the capitalist era has been the steady and mostly unceasing uptick of life expectancy in the developed world, both due to improvements in infant mortality rates (which drives the oft-quoted statistic of life expectancy at birth) and in healthcare for adults. Removing infant mortality from the question, in 1900, the average American woman who survived to age five could expect to live 62.4 years; in 2010 she could expect to live 81.6 years. The average American who did not die in infancy was not expected to live past age 65, when a person becomes eligible for Medicare, until 1940. Since then, the percentage of the population surviving to, and their life expectancy after, age 65 has raised gradually but steadily.
Of course, to grant this victory to capitalism is to miss the boat, at least somewhat. We need to give social democracy its due. Without Social Security and Medicare in the United States and their equivalents throughout the developed world, fewer people would be alive today, and those alive would certainly be far more destitute. Without Social Security, as the Center on Budget and Policy Priorities shows, the poverty rate for those 65 and older in 2012 would have been 44.4 percent. With Social Security, it was 9.1 percent. It is of especial importance to women, lifetime low earners, and people of color, but the importance of the program to even the upper middle class of retirees cannot be understated.
Social Security and Medicare represent, in addition to incredibly successful antipoverty social programs, the largest socialized distribution of income in the United States since the end of slavery, and unquestionably the steadiest in the nation’s history. Ignore the blowhards who suggest these programs are somehow different from other distributary programs like SNAP or Medicaid because “we earned it.”
While perhaps a useful rhetorical tool to invest those with right-wing tendencies in a social movement, the logic is empty. Social Security and Medicare are distributions of income: from rich to poor, from young to old (with caveats), from singles to married people, from the unfortunates who die at 40 to centenarians. As Matt Bruenig points out at Demos, retirement requires that “people live entirely off of transfers from those currently working.” The Bureau of Labor Statistics is explicit, in its own special way:
The modern human life cycle begins with nearly 20 years of economic dependency in childhood and ends with another 20 or so years of economic dependency in old age, with 40-plus years in between in which workers produce more than they consume and reallocate the surplus to members of other age groups for consumption.
Consumption is where the contradiction arises. Liberal economics, with its usual Malthusian flair, sees such high dependency ratios – that is, a high number of children and retirees compared to workers – as a barrier to economic growth because the state must spend resources taking care of these dependents. But these barriers were burst through political economy, not demographics.
The 1970s weren’t the first time women joined the labor force en masse. Hearkening back to Marx, a central theme of Capital’s chapter on machinery is that it foisted women and children onto the labor market. One suspects the elderly were protected from this not by the magnanimousness of capital but simply because there were so very few proletarian elderly. In effect, the dependency ratio changed composition rather than quantity, as men became paupers and lower-paid women and children became workers. If there was a quantitative change at all it was because men thus removed (“set free,” claimed the political economists who Marx excoriated) from the labor force emigrated, or else starved and died.
Today, mechanization continues apace and productivity of labor is perpetually at an all-time high, while in real terms wages have stagnated or fallen since the 1960s. Pensions, once held by a large portion of the workforce, are today little more than a unicorn for those outside the public sector. 70 percent of people aged 55 to 64 have private retirement holdings of less than $100,000, which Dean Baker points out represents an income of only about $400 per month over a 20 year period.
The persistent lengthening of the lifespan – albeit with significant differences between whites and people of color, rich and poor – means the population of the developed world is older than ever before. While AARP and the New York Times may celebrate the wineries of affluent retirees, in reality this continually growing elderly “class” produces very little, at least in capitalist terms, and they spend nearly all of what they receive from Social Security, their generally modest retirement incomes, and other transfer programs on consumption.
Like railroads in the mid-19th century, aging today serves as a sponge for capitalism’s perpetual growth. In effect, Social Security and to a certain extent Medicare operate as a socialized subsidy which prevent crises of overproduction. Crisis is averted by the silver tsunami.
From here the contradiction emerges. On one hand, seniors help to prevent a capitalist crisis of overproduction thanks to social insurance. On the other, those social insurance systems that allow older people to act as a reliable sponge of demand are circled like vultures by the selfsame forces that benefit from them, having found a territory as yet unspoiled by looting. (At least, Social Security is as yet untouched. Medicare has Part D and Medicare Advantage, which effectively privatize certain aspects of the system. Medicare Advantage is a total disaster, while Part D is merely better than nothing.)
And who sounds the clarion call in defense of these programs? Certainly not the Democratic Party of Franklin Roosevelt. Those in Congress who leap to defend Social Security and Medicare, and even to enhance the programs, are looked at as a lunatic left-wing fringe by the serious people in Washington. Even well-meaning sympathizers see them as pie-in-the-sky idealists. The mainstream Democrat is all too willing to undermine Social Security and Medicare, albeit just a little less than the Republican.
Yet, as the National Academy of Social Insurance shows, a majority of Republican voters, as well as a supermajority of Democrats and Independents, consistently indicate that they would happily pay higher taxes to protect and enhance Social Security. Of course, they’d also like the payroll tax cap removed, so the rich pay their fair share. But that isn’t surprising. Ask people if they want to pay higher taxes, and they say no. Who would? Ask the same question but specify a good, just use for the taxes and the answer is suddenly much different.
But no American political party, as dominated by the capitalist ideology of their donor base as they are, is willing to put these options on the table even though they would be automatic winners. Thus, without support from either party, retirees emerge as the defenders of social insurance. Unlike younger people, they have plenty of time and freedom to engage in social movements. In the fight for what’s left of American socialism, grandma forms the vanguard.
And next to her, as Ai-Jen Poo of Caring Across Generations and the National Domestic Careworker has shown, marches her caregivers, which includes in particular the domestic worker. Their ultimate aims may be different, but their paths lie together.
Such a vanguard is distinctly female in a way that few others beyond definitively feminist movements like wages for housework ever have been. By sheer virtue of differing life expectancy between sexes, the elderly – and especially those of lower-income – are disproportionately female. Meanwhile, as Poo notes, caregivers in general and domestic workers more specifically are also overwhelmingly women, and particularly women of color.
Should retirement, then, be the American Left’s chosen battlefield? It combines winning politics, intersectionality, and a readymade movement whose chief foot soldiers incidentally have plenty of time on their hands. And if the Left isn’t up to the task, the Tea Party has shown that the Right is more than willing to turn this tide against it with appeals to the affectations of “culture.” To fight for socialism in America, it’s time we join our grandparents on the barricades.
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