Comment on Retirement--BECKER

I am writing this from China, where the elderly are traditionally treated with enormous deference, in part because of the presumption (not always correct!) that greater wisdom comes with experience. It would greatly raise the spirits of older persons in the United States and elsewhere in the West if they could spend time in countries like China to bask in the respect accorded to people of advanced ages. Alas, that is not a practical solution. So we have to consider more conventional approaches. I believe that the main problem raised by the rapid aging of populations in developed countries is not that older persons stay at work too long, and are not competent to perform their work. Rather, the problem is just the opposite, namely, that older workers are encouraged to retire too early. Consider that the average American male retires at about age 62, women retire still earlier, and the average age of retirement in many European nations is below 60. It is something of a paradox that retirement ages in all these nations have gone down while the mental and physical health of older persons, along with their life expectancy, has risen quite sharply. Early age of retirement is to be welcomed when it is due to rising incomes, and when the incomes of retirees comes mainly from their own savings. But in fact these quite early ages of retirement have been largely induced by pay as you go social security systems that provide generous retirement benefits out of general public revenues. So under this type of social security system, early retirement both reduces the number of workers whose earnings can be taxed to finance retirement benefits, and at the same time it increases the number of retirees collecting benefits. The artificially induced nature of many retirements is why I support movements toward later retirements. But I do not believe that increased longevity per se poses a social or work "problem." Instead, it is one of the greatest achievements of the past half-century. The legislative responses to increased longevity have been the source of the main work difficulties associated with aging. The perverse government responses include not only artificially induced early retirements, but also the Age Discrimination in Employment Act of the early 1990's that prevent universities, and many other employers, from forcing employees to retire, except for extreme incapacitation. Prior to this law, universities and other organizations had fixed retirement ages, originally set at age 65. However, retirement ages of professors and some other groups were being increased over time to age 68 and frequently to age 70 in response to the growing capacities of older persons. Fixed retirement ages may seem like a rigid system that discriminates against competent and still vigorous older workers. But its implementation in the United States was flexible since special arrangements often were worked out for certain employees who were particularly valuable and productive. For example, George Stigler, a distinguished professor of economics at the University of Chicago, retired officially at age 65, but a special contract kept him teaching there until he died at age 81, when he was still very active intellectually. Although such extended employment was not the norm, it was also not rare, since universities and other organizations usually had a good feel for which older employees were still vigorous and would continue to make valuable contributions. The flexibility shown by the previous system is why I believe it is best to leave the determination of retirement ages to market forces rather than to the blunt instrument of legislation. Competition would create pressure for organizations to extend the employment of valuable employees who reached their "normal" retirement age. Actual ages of retirement did vary even among companies and other employers in the same industry, and certainly between industries and occupations. The system prior to the federal legislation on mandatory retirement was working well, and was adapting to the growing health and mental capacities of older persons. Posner agrees that it would be far better to eliminate this law than to introduce a competency test to evaluate whether professors and many others are capable of performing at a sufficiently high level. Unfortunately, competition does not operate directly for judges and senior civil servants. In an earlier posting on this blog I argued that given the absence of competitive forces, it would be better to have fixed terms for Supreme Court Justices and perhaps other federal judges rather than the lifetime tenure guaranteed by the Constitution. Of course, to implement fixed terms would require a constitutional amendment, an unlikely development in the foreseeable future. A competency test for older judges would probably be better than the present system since there is no way now to get rid of senile or otherwise incapacitated judges. But I am not confident that it would be easy to implement a satisfactory test to determine whether judges or professors or others could continue on. Such a test is technically feasible, but whatever its merits or weaknesses, it is very likely in the present litigious environment to induce an enormous number of lawsuits by judges and professors. Many of those judged to be incompetent by a test would protest that the test is unfair, and they are likely to gain a sympathetic hearing if they are forced into retirement as a result of test scores. The SAT test is subject to growing criticism, and that would be nothing compared to the objections to tests that declare professors or judges to be incompetent, even though they have successfully presided, or taught, for decades.

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