Chapter 1: Alternative Views of PAYG as a Social Institution
The guy that in the late Communist Party had the reputation of being a great expert in social security used to maintain that payroll taxes were not taxes but a deferred wage. For how long can this game be played? (N. Colajanni, Il Sole-24 Ore, 29 October 2003). 1.1 INTRODUCTION PAYG pensions are a subtle subject since the principles that regulate them are less well defined in economic analysis than those that, depending on the approach adopted, regulate income distribution and, in particular, define the 1 wage rate. In the latter case there is a relatively well-defined locus, the labour market, with relatively well-defined counterparts, workers and capitalists (or entrepreneurs), that facilitates the approach to the problem. Things appear much more complicated in the case of PAYG pensions, in which the process is mediated by political institutions (Myles, 1984, p. 28). From the point of view of National Accounts PAYG is a tax-transfer scheme, a transfer of income from current income-earners to the older section of the population. The social and political legitimacy and regulation of PAYG must be studied as an evolving social construct that concerns one aspect of income distribution. Retirement as a widespread social institution appeared late in the history of capitalism. Beneficiaries belong to various social classes and do not bargain by threatening industrial action; they would rather use the vote or lobbying and, in principle, they may even have interests that are opposite to those of their classes of origin. The state plays a central...
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