The ageing society debate is at the forefront of calls to reduce government deficits. The debate is driven by the proposition that national governments will not be able to afford to maintain the spending necessary to support the growing demands for medical care and pension support as populations age.
At some points, the argument goes, governments will run out of money and other public spending programs will become heavily compromised.
Some economists support this narrative by advancing arguments about so-called financing gaps which are attempts to extrapolate future drains on public spending in relation to the projected scale of the economy.
In this Section we will show that these estimates of spending shortfalls are in fact constructed on flawed premises, which have led to the erection of an array of complex and voluntary accounting structures that give the impression that a currency-issuing government is financially constrained.
A dominant theme used by governments, business lobbyists, and economists to justify a preference for the pursuit of budget surpluses has been the so-called aeging population or intergenerational issues. Simply put, it is claimed that a number of government programs (such as health, social security, and education) are sensitive to demographic factors, and with population ageing, the budget ‘blow out’ will be unsustainable.
For example, in the US there is constant pressure on government to privatise the US social security system as a means of keeping it solvent. Similarly, in Australia, the so-called intergenerational debate, which began in the mid-1990s and is still a powerful political force, was central to the pursuit of budget surpluses by successive federal regimes.
Chosen excerpts by Job Market Monitor. Read the whole story at