The debt whiners are out in full force these days as we face the risk of default at the start of next month. We hear them complain endlessly about the burden we are imposing on future generations. If we imagine for a moment that any of these people actually care about the future (anyone hear of global warming?), we should ask why none of them ever says anything about the burden of patent and copyright monopolies?
This may be too simple for great minds, but the granting of patent and copyright monopolies is a mechanism that the government uses to pay for innovation and creative work. It is an alternative to direct government spending. The government could directly pay companies for innovating and producing movies, writing books, and performing music, but instead it gives these companies monopolies that allow them to charge far more than the free market price for the duration of a patent or copyright.
In the case of prescription drugs, pharmaceutical companies will often charge ten or even 100 times the free market price of a drug for the period in which it holds a patent monopoly. This means that a drug that might sell for $10-$20 a prescription, instead sells for hundreds or thousands of dollars per prescription. There is a similar story with a wide range of other items, like medical equipment, seed, fertilizers, and pesticide. Patent monopolies make items expensive, that would otherwise be cheap.
The same is true of copyright. We could costlessly copy and transfer books, music, movies, software and many other types of creative work over the web, if it were not for the copyright monopolies granted by the government.
We can debate the merits of patents and copyrights as government mechanisms for financing innovation and creative work, but we can’t deny that they impose a large cost. Arguably, the higher prices we pay as a result of these monopolies comes to over $1 trillion a year, close to half of all after-tax corporate profits.
In the case of prescription drugs alone, patent monopolies and related protections will likely cost us over $400 billion this year. We will spend over $550 billion for drugs that would probably cost us less than $100 billion in a free market without government granted patent monopolies (National Income and Product Accounts, Table 2.4.5U, Line 121). By contrast, we are projected to spend $663 billion in interest payments on the debt. If we added in the higher costs due to patent and copyright monopolies on other items, it would almost certainly dwarf the interest payments on the debt.
It is bizarre that people who endlessly obsess about the burden of the debt literally never talk about the burdens created by government-granted patent and copyright monopolies. This failure to address this massive burden created by government policy might cause one to question the sincerity of their concern about the burden of the debt.
The debt whiners are out in full force these days as we face the risk of default at the start of next month. We hear them complain endlessly about the burden we are imposing on future generations. If we imagine for a moment that any of these people actually care about the future (anyone hear of global warming?), we should ask why none of them ever says anything about the burden of patent and copyright monopolies?
This may be too simple for great minds, but the granting of patent and copyright monopolies is a mechanism that the government uses to pay for innovation and creative work. It is an alternative to direct government spending. The government could directly pay companies for innovating and producing movies, writing books, and performing music, but instead it gives these companies monopolies that allow them to charge far more than the free market price for the duration of a patent or copyright.
In the case of prescription drugs, pharmaceutical companies will often charge ten or even 100 times the free market price of a drug for the period in which it holds a patent monopoly. This means that a drug that might sell for $10-$20 a prescription, instead sells for hundreds or thousands of dollars per prescription. There is a similar story with a wide range of other items, like medical equipment, seed, fertilizers, and pesticide. Patent monopolies make items expensive, that would otherwise be cheap.
The same is true of copyright. We could costlessly copy and transfer books, music, movies, software and many other types of creative work over the web, if it were not for the copyright monopolies granted by the government.
We can debate the merits of patents and copyrights as government mechanisms for financing innovation and creative work, but we can’t deny that they impose a large cost. Arguably, the higher prices we pay as a result of these monopolies comes to over $1 trillion a year, close to half of all after-tax corporate profits.
In the case of prescription drugs alone, patent monopolies and related protections will likely cost us over $400 billion this year. We will spend over $550 billion for drugs that would probably cost us less than $100 billion in a free market without government granted patent monopolies (National Income and Product Accounts, Table 2.4.5U, Line 121). By contrast, we are projected to spend $663 billion in interest payments on the debt. If we added in the higher costs due to patent and copyright monopolies on other items, it would almost certainly dwarf the interest payments on the debt.
It is bizarre that people who endlessly obsess about the burden of the debt literally never talk about the burdens created by government-granted patent and copyright monopolies. This failure to address this massive burden created by government policy might cause one to question the sincerity of their concern about the burden of the debt.
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Maybe I’ve missed it, but I have seen very little mention of import prices in discussions of the current and future course of inflation. That seems a bit odd, both because the volume of imports is large relative to the economy and there seems to be quite a story here.
On the first point, imports are currently running at a bit less than 15.0 percent of GDP. That is a big deal if we think of imports as inputs into final products, like the imported steel in the cars that we manufacture here.
However, it is probably an even bigger deal in the context of competition with domestic products. While the relationship is not one to one, if the price of competing imports of clothes, appliances, or other items rises by 5.0 percent, then we can assume that U.S. producers will look to raise their prices by a comparable amount. The same story applies to falling prices.
This gets us to the interesting story. We all know about the big jump in inflation as the economy reopened following the pandemic. We saw a comparable picture with import prices.
Source: Bureau of Economic Analysis and author’s calculations.
As can be seen, year over year inflation in import prices originally fell at the start of the pandemic, going from an annual rate of around -1.0 percent to -4.8 percent in the second quarter of 2020, when the economy was largely shut down. Then import prices turned around and began to rise rapidly. The year over year rate of inflation was close to or above 9.0 percent every quarter from the second quarter of 2021 to the second quarter of 2022.
However, the quarterly change in import prices turned negative in the third quarter of last year. The year over year rate of inflation for the first quarter of 2023 was just 0.4 percent, and it is likely to be negative in the current quarter.
This doesn’t guarantee the soft landing that many of us are hoping for, but it is a big factor pushing in the right direction. Over a long period, we can expect the rate of inflation to be roughly equal to the rate of hourly wage growth, minus the rate of productivity growth. But insofar as rate of increase in import prices is less than this rate, it will pull down the rate of domestic inflation somewhat.
And, with imports close to 15 percent of GDP, the impact is large enough to matter. Just to show the simple arithmetic, if import prices rise 2.0 percentage points less than the inflation rate implied by the wages minus productivity calculation, that would knock 0.3 percentage points off the inflation rate.
The real world is of course more complicated than this arithmetic implies. Nonetheless, imports are a big enough factor in the economy that the rate of inflation in import prices will affect our domestic inflation rate. And, in 2021 and the first half of 2022, they were a big factor fueling domestic inflation. They are now a factor restraining domestic inflation.
Maybe I’ve missed it, but I have seen very little mention of import prices in discussions of the current and future course of inflation. That seems a bit odd, both because the volume of imports is large relative to the economy and there seems to be quite a story here.
On the first point, imports are currently running at a bit less than 15.0 percent of GDP. That is a big deal if we think of imports as inputs into final products, like the imported steel in the cars that we manufacture here.
However, it is probably an even bigger deal in the context of competition with domestic products. While the relationship is not one to one, if the price of competing imports of clothes, appliances, or other items rises by 5.0 percent, then we can assume that U.S. producers will look to raise their prices by a comparable amount. The same story applies to falling prices.
This gets us to the interesting story. We all know about the big jump in inflation as the economy reopened following the pandemic. We saw a comparable picture with import prices.
Source: Bureau of Economic Analysis and author’s calculations.
As can be seen, year over year inflation in import prices originally fell at the start of the pandemic, going from an annual rate of around -1.0 percent to -4.8 percent in the second quarter of 2020, when the economy was largely shut down. Then import prices turned around and began to rise rapidly. The year over year rate of inflation was close to or above 9.0 percent every quarter from the second quarter of 2021 to the second quarter of 2022.
However, the quarterly change in import prices turned negative in the third quarter of last year. The year over year rate of inflation for the first quarter of 2023 was just 0.4 percent, and it is likely to be negative in the current quarter.
This doesn’t guarantee the soft landing that many of us are hoping for, but it is a big factor pushing in the right direction. Over a long period, we can expect the rate of inflation to be roughly equal to the rate of hourly wage growth, minus the rate of productivity growth. But insofar as rate of increase in import prices is less than this rate, it will pull down the rate of domestic inflation somewhat.
And, with imports close to 15 percent of GDP, the impact is large enough to matter. Just to show the simple arithmetic, if import prices rise 2.0 percentage points less than the inflation rate implied by the wages minus productivity calculation, that would knock 0.3 percentage points off the inflation rate.
The real world is of course more complicated than this arithmetic implies. Nonetheless, imports are a big enough factor in the economy that the rate of inflation in import prices will affect our domestic inflation rate. And, in 2021 and the first half of 2022, they were a big factor fueling domestic inflation. They are now a factor restraining domestic inflation.
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• Budget and National DebtDebtEconomic Crisis and RecoveryCrisis económica y recuperaciónUnited StatesEE. UU.
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Economics famously suffers from a “which way is up?” problem. The issue is whether an economy is suffering from too much demand or too little demand. On its face, that seems like it should be a very simple question, but in fact it can be complicated and people often get it wrong, with very serious consequences.
The Great Depression was the classic too little demand story. We had millions of people out of work through the decade of the 1930s because there was not enough demand in the economy. With the benefit of hindsight, or a good Keynesian understanding of the economy, this demand problem is very clear, but it did not seem that way to many people living at the time.
Most immediately, people saw families who didn’t have food, adequate clothing, or housing. That looks a lot like a problem of having too little of the things that are necessary to meet society’s needs.
But the reality was the opposite. We know this for certain because once the government spent lots of money, the economy was able to meet these needs and considerably more.
Unfortunately, it took World War II to provide the political will to get the government to spend the money needed to get the economy back to full employment. But, if we had the political will to spend the money, we could have ended the depression in 1931 instead of 1941. The key point was the need to spend lots of money; it didn’t have to be spending on a war. (This is why all the talk of a Second Great Depression around the 2008-09 financial crisis is so silly. We know how to spend money. That’s all we need to do to avoid a Second Great Depression.)
We have had many other instances of too little demand in the last 80 years, most obviously in the Great Recession and the slow recovery that followed. If we had a larger stimulus and more government spending in the years following the Great Recession, the labor market could have recovered more quickly, bringing us back to full employment years earlier, although we did finally reach something close to full employment in the year just before the pandemic.
During the pandemic we did see the opposite problem, where we had too much demand. This was due both to the fact that support packages the government used to keep people whole (enhanced unemployment benefits, the Paycheck Protection Program, and the checks) put a lot of money in people’s pockets, and that the pandemic itself crippled supply. The strong demand, coupled with the reduction in supply, gave us the burst of inflation in 2021-22 that is now receding.
David Brooks Struggles with the Problem
Okay, so now that we know the players, let’s look at how David Brooks struggles with the problem in his column this morning. Brooks tells readers about the “second phase” of Biden’s presidency.
“Today, its main purpose is to prepare the nation for a period of accelerating and explosive change. ….
“The information age is accelerating and growing more disruptive. The first cause is artificial intelligence. A.I. will produce pervasive breakthroughs and threats that none of us can now predict. Another cause is the emerging cold war with China. This will produce a remorseless technological competition that will turbocharge developments in biotech, energy, chip manufacturing, trade flows, political alliances and many other spheres.
“We’re living in the first stages of what my colleague Thomas Friedman a few years ago called ‘the age of acceleration,’ an age of both stunning advances and horrific dislocations.”
This is all very dramatic, but the basic point here is that Brooks is telling us that we are entering an era of rapid technological change. That means rapid productivity growth. AI and other technologies will allow us to produce much more output for each hour of work. This means that the economy should be able to produce much more in the years ahead than it does today.
That raises the risk that we will have too little demand. Workers laid off as a result of AI and other technological developments may not get re-employed. The government will have to provide generous benefits and/or increase spending in other areas to keep the economy near full employment.
I’ll confess to some skepticism about these claims of a technological revolution (we’ve been hearing them for three decades now), but this is at least a clear story. Technology will revolutionize the economy and make it far more productive than it is today.
But then Brooks takes a U-turn and tells us that we have to worry about too much demand.
“We’re going to need governments that are able to pivot quickly and throw tidal waves of money at suddenly emerging problems, from technologically driven mass unemployment to war in the Pacific.
“When Covid hit, the United States successfully pivoted and threw trillions of dollars at that problem. But the United States may not be able to mobilize that kind of response in the future. That’s because we’re now manacled by debt. …..
“The United States is projected to spend roughly $640 billion this year merely paying interest on that debt, a figure that is expected to more than double by 2033. That’s about the time the Social Security Trust Fund will become insolvent, requiring even more gigantic cash infusions to keep the program going.”
Brooks is very explicitly describing an economy where we would lack the ability to produce the goods and services necessary to meet society’s needs. This is 180 degrees at odds with the story of the “age of acceleration,” where technological breakthroughs are making us hugely more productive.
If the economy is transformed in the way Brooks is predicting, there is no reason the government couldn’t spend whatever money is needed to accommodate the transition he is describing. We need not be worried about inflation if a technological revolution is causing huge reductions in production costs and there is an enormous amount of excess capacity in the economy.
Will the ratio of debt to GDP rise? It could, although it is hard to say for sure, if GDP were to rise rapidly as Brooks seems to expect. But suppose the ratio does rise; so what? Japan has a debt to GDP ratio of 250 percent. It has been trying to raise its inflation rate for two decades. The interest rate on its long-term government debt is near zero. Where’s the problem?
Keeping Our Horror Stories Straight
To be clear, I am skeptical, but hopeful, about Brooks’ technological revolution. AI and other technologies could lead to an acceleration of productivity growth. But, if we do see the revolution that he and his colleague Thomas Friedman seem to expect, then we do not have to worry about debts and deficits.
Those are concerns for an economy with slow growth, where too much demand really is the problem. If the economy’s productive capacities are going through the roof, there is no need to worry about how it will pay for my Social Security.
Economics famously suffers from a “which way is up?” problem. The issue is whether an economy is suffering from too much demand or too little demand. On its face, that seems like it should be a very simple question, but in fact it can be complicated and people often get it wrong, with very serious consequences.
The Great Depression was the classic too little demand story. We had millions of people out of work through the decade of the 1930s because there was not enough demand in the economy. With the benefit of hindsight, or a good Keynesian understanding of the economy, this demand problem is very clear, but it did not seem that way to many people living at the time.
Most immediately, people saw families who didn’t have food, adequate clothing, or housing. That looks a lot like a problem of having too little of the things that are necessary to meet society’s needs.
But the reality was the opposite. We know this for certain because once the government spent lots of money, the economy was able to meet these needs and considerably more.
Unfortunately, it took World War II to provide the political will to get the government to spend the money needed to get the economy back to full employment. But, if we had the political will to spend the money, we could have ended the depression in 1931 instead of 1941. The key point was the need to spend lots of money; it didn’t have to be spending on a war. (This is why all the talk of a Second Great Depression around the 2008-09 financial crisis is so silly. We know how to spend money. That’s all we need to do to avoid a Second Great Depression.)
We have had many other instances of too little demand in the last 80 years, most obviously in the Great Recession and the slow recovery that followed. If we had a larger stimulus and more government spending in the years following the Great Recession, the labor market could have recovered more quickly, bringing us back to full employment years earlier, although we did finally reach something close to full employment in the year just before the pandemic.
During the pandemic we did see the opposite problem, where we had too much demand. This was due both to the fact that support packages the government used to keep people whole (enhanced unemployment benefits, the Paycheck Protection Program, and the checks) put a lot of money in people’s pockets, and that the pandemic itself crippled supply. The strong demand, coupled with the reduction in supply, gave us the burst of inflation in 2021-22 that is now receding.
David Brooks Struggles with the Problem
Okay, so now that we know the players, let’s look at how David Brooks struggles with the problem in his column this morning. Brooks tells readers about the “second phase” of Biden’s presidency.
“Today, its main purpose is to prepare the nation for a period of accelerating and explosive change. ….
“The information age is accelerating and growing more disruptive. The first cause is artificial intelligence. A.I. will produce pervasive breakthroughs and threats that none of us can now predict. Another cause is the emerging cold war with China. This will produce a remorseless technological competition that will turbocharge developments in biotech, energy, chip manufacturing, trade flows, political alliances and many other spheres.
“We’re living in the first stages of what my colleague Thomas Friedman a few years ago called ‘the age of acceleration,’ an age of both stunning advances and horrific dislocations.”
This is all very dramatic, but the basic point here is that Brooks is telling us that we are entering an era of rapid technological change. That means rapid productivity growth. AI and other technologies will allow us to produce much more output for each hour of work. This means that the economy should be able to produce much more in the years ahead than it does today.
That raises the risk that we will have too little demand. Workers laid off as a result of AI and other technological developments may not get re-employed. The government will have to provide generous benefits and/or increase spending in other areas to keep the economy near full employment.
I’ll confess to some skepticism about these claims of a technological revolution (we’ve been hearing them for three decades now), but this is at least a clear story. Technology will revolutionize the economy and make it far more productive than it is today.
But then Brooks takes a U-turn and tells us that we have to worry about too much demand.
“We’re going to need governments that are able to pivot quickly and throw tidal waves of money at suddenly emerging problems, from technologically driven mass unemployment to war in the Pacific.
“When Covid hit, the United States successfully pivoted and threw trillions of dollars at that problem. But the United States may not be able to mobilize that kind of response in the future. That’s because we’re now manacled by debt. …..
“The United States is projected to spend roughly $640 billion this year merely paying interest on that debt, a figure that is expected to more than double by 2033. That’s about the time the Social Security Trust Fund will become insolvent, requiring even more gigantic cash infusions to keep the program going.”
Brooks is very explicitly describing an economy where we would lack the ability to produce the goods and services necessary to meet society’s needs. This is 180 degrees at odds with the story of the “age of acceleration,” where technological breakthroughs are making us hugely more productive.
If the economy is transformed in the way Brooks is predicting, there is no reason the government couldn’t spend whatever money is needed to accommodate the transition he is describing. We need not be worried about inflation if a technological revolution is causing huge reductions in production costs and there is an enormous amount of excess capacity in the economy.
Will the ratio of debt to GDP rise? It could, although it is hard to say for sure, if GDP were to rise rapidly as Brooks seems to expect. But suppose the ratio does rise; so what? Japan has a debt to GDP ratio of 250 percent. It has been trying to raise its inflation rate for two decades. The interest rate on its long-term government debt is near zero. Where’s the problem?
Keeping Our Horror Stories Straight
To be clear, I am skeptical, but hopeful, about Brooks’ technological revolution. AI and other technologies could lead to an acceleration of productivity growth. But, if we do see the revolution that he and his colleague Thomas Friedman seem to expect, then we do not have to worry about debts and deficits.
Those are concerns for an economy with slow growth, where too much demand really is the problem. If the economy’s productive capacities are going through the roof, there is no need to worry about how it will pay for my Social Security.
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A friend reminded me that the Treasury controls more than $500 billion in gold reserves. The President has the legal authority to direct the Treasury to sell these reserves any time he likes. This would not be enough to cover a full year, given the size of the current deficit, but it certainly could delay the X-date by several months.
Anyone have any ideas why selling gold is not in the mix of possible courses of action?
A friend reminded me that the Treasury controls more than $500 billion in gold reserves. The President has the legal authority to direct the Treasury to sell these reserves any time he likes. This would not be enough to cover a full year, given the size of the current deficit, but it certainly could delay the X-date by several months.
Anyone have any ideas why selling gold is not in the mix of possible courses of action?
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• COVID-19CoronavirusEconomic Crisis and RecoveryCrisis económica y recuperaciónEconomic GrowthEl DesarolloInflationUnited StatesEE. UU.
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• Economic GrowthEl DesarolloInequalityLa DesigualdadTechnology
We have long known that people in policy debates have difficulty with arithmetic and basic logic. We got yet another example today in the New York Times.
The NYT profiled Geoffrey Hinton, who recently resigned as head of AI technology at Google. The piece identified him as “the godfather of AI.” The piece reports on Hinton’s concerns about the risks of AI, one of which is its implications for the job market.
“He is also worried that A.I. technologies will in time upend the job market. Today, chatbots like ChatGPT tend to complement human workers, but they could replace paralegals, personal assistants, translators and others who handle rote tasks. ‘It takes away the drudge work,’ he said. ‘It might take away more than that.’”
The implication of this paragraph is that AI will lead to a massive uptick in productivity growth. That would be great news from the standpoint of the economic problems that have been featured prominently in public debates in recent years.
Most immediately, soaring productivity would hugely reduce the risks of inflation. Costs would plummet as fewer workers would be needed in large sectors of the economy, which presumably would mean downward pressure on prices as well. (Prices have generally followed costs. Most of the upward redistribution of the last four decades has been within the wage distribution, not from labor to capital.)
A massive surge in productivity would also mean that we don’t have to worry at all about the Social Security “crisis.” The drop in the ratio of workers to retirees would be hugely offset by the increased productivity of each worker. (The impact of recent and projected future productivity growth already swamps the impact of demographics, but a surge in productivity growth would make the impact of demographics laughably trivial.)
It is also worth noting that any concerns about technology leading to more inequality are wrongheaded. If AI does lead to more inequality, it will be due to how we have chosen to regulate AI, not AI itself.
People gain from technology as a result of how we set rules on intellectual products, like granting patent and copyright monopolies and allowing non-disclosure agreements to be enforceable contracts. If we had a world without these sorts of restrictions, it is almost impossible to imagine a scenario in which AI, or other recent technologies, would lead to inequality. (Imagine all Microsoft software was free. How rich is Bill Gates?)
If AI leads to more inequality, it will be because of the rules we have put in place surrounding AI, not AI itself. It is understandable that the people who gain from this inequality would like to blame the technology, not rules which can be changed, but it is not true. Unfortunately, people involved in policy debates don’t seem able to recognize this point.
We have long known that people in policy debates have difficulty with arithmetic and basic logic. We got yet another example today in the New York Times.
The NYT profiled Geoffrey Hinton, who recently resigned as head of AI technology at Google. The piece identified him as “the godfather of AI.” The piece reports on Hinton’s concerns about the risks of AI, one of which is its implications for the job market.
“He is also worried that A.I. technologies will in time upend the job market. Today, chatbots like ChatGPT tend to complement human workers, but they could replace paralegals, personal assistants, translators and others who handle rote tasks. ‘It takes away the drudge work,’ he said. ‘It might take away more than that.’”
The implication of this paragraph is that AI will lead to a massive uptick in productivity growth. That would be great news from the standpoint of the economic problems that have been featured prominently in public debates in recent years.
Most immediately, soaring productivity would hugely reduce the risks of inflation. Costs would plummet as fewer workers would be needed in large sectors of the economy, which presumably would mean downward pressure on prices as well. (Prices have generally followed costs. Most of the upward redistribution of the last four decades has been within the wage distribution, not from labor to capital.)
A massive surge in productivity would also mean that we don’t have to worry at all about the Social Security “crisis.” The drop in the ratio of workers to retirees would be hugely offset by the increased productivity of each worker. (The impact of recent and projected future productivity growth already swamps the impact of demographics, but a surge in productivity growth would make the impact of demographics laughably trivial.)
It is also worth noting that any concerns about technology leading to more inequality are wrongheaded. If AI does lead to more inequality, it will be due to how we have chosen to regulate AI, not AI itself.
People gain from technology as a result of how we set rules on intellectual products, like granting patent and copyright monopolies and allowing non-disclosure agreements to be enforceable contracts. If we had a world without these sorts of restrictions, it is almost impossible to imagine a scenario in which AI, or other recent technologies, would lead to inequality. (Imagine all Microsoft software was free. How rich is Bill Gates?)
If AI leads to more inequality, it will be because of the rules we have put in place surrounding AI, not AI itself. It is understandable that the people who gain from this inequality would like to blame the technology, not rules which can be changed, but it is not true. Unfortunately, people involved in policy debates don’t seem able to recognize this point.
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I’m impressed. Most reporters might just know what politicians say and do, but New York Times reporters can apparently know their convictions. That’s what the paper told us in a piece about protests in France over President Emmanuel Macron’s decision to raise the age for retirement benefits from 62 to 64.
“Mr. Macron’s decision to raise the legal age of retirement was based on his conviction that the pension system was unsustainable and that changing the program, with its generous benefits, was essential to France’s economic health [emphasis added].”
It’s good that the NYT could tell us Macron’s decision was based on his convictions and not say, a desire not to increase taxes on rich people to help cover the cost of the retirement system or even on working-age people. The employment rate among prime age workers (ages 25 to 54) is actually higher in France than in the U.S., so there is little reason to believe that a modest increase in taxes would lead them to stop working.
It is worth noting workers in France, unlike many workers in the U.S., actually are seeing increases in life expectancy. This means that even with this increase in the retirement age, workers retiring in future decades may still get to enjoy longer retirements than their parents.
I’m impressed. Most reporters might just know what politicians say and do, but New York Times reporters can apparently know their convictions. That’s what the paper told us in a piece about protests in France over President Emmanuel Macron’s decision to raise the age for retirement benefits from 62 to 64.
“Mr. Macron’s decision to raise the legal age of retirement was based on his conviction that the pension system was unsustainable and that changing the program, with its generous benefits, was essential to France’s economic health [emphasis added].”
It’s good that the NYT could tell us Macron’s decision was based on his convictions and not say, a desire not to increase taxes on rich people to help cover the cost of the retirement system or even on working-age people. The employment rate among prime age workers (ages 25 to 54) is actually higher in France than in the U.S., so there is little reason to believe that a modest increase in taxes would lead them to stop working.
It is worth noting workers in France, unlike many workers in the U.S., actually are seeing increases in life expectancy. This means that even with this increase in the retirement age, workers retiring in future decades may still get to enjoy longer retirements than their parents.
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