This week I would like to discuss the choice between two kinds of policy response to population ageing. Population ageing has a number of dramatic social effects. The effect that I will focus on is the increasing old-age dependency ratio now being witnessed in more developed states – i.e. the ratio of elderly persons to younger persons. As this ratio increases, intergenerational transfer programs – i.e. programs that involve transfers from younger persons to the elderly, such as pensions and healthcare - become unsustainable.
I want to discuss a choice between two demographic policy responses to the increasing age-old dependency. A demographic policy seeks to reverse the old-age dependency ratio by increasing the proportion of younger persons in the population. A non-demographic policy, by contrast, seeks to adapt the unaltered age-structure of the population to the increasing old-age dependency ratio. Examples of non-demographic policies include policies aimed at increasing the number of workers in the economy by encouraging a larger proportion of younger persons to enter the labour market or by raising the retirement age.
We could call the two demographic policies I want to compare, replacement fertility and replacement migration. Replacement fertility policy aims to increase the birthrate in a society. Various measures might be taken with this aim in mind. For example, the state might provide cash allowances to families with many children. Alternatively, it might seek to diminish the so-called “child penalty” that women might face in seeking to combine work and family life. Key measures, here, include subsidising good quality childcare and obliging employers to guarantee women the right to return to their jobs after childbirth and maternity leave. Replacement migration aims to increase the working-age population by encouraging a higher number of (working-age) immigrants to enter the population. States can relax immigration restrictions – for example, by adjusting their points-based immigration rules (if they use such rules) or by loosening the constraints that employers face in hiring immigrants.
It would be mistaken to think that either replacement fertility or replacement migration can provide a full “solution” to the problem of a rising old-age dependency. Given the extent of the problem, developed states will need to pursue both types of policy. But there is a question to be asked about how exactly they should strike the balance between these two kinds of policy. Should states increase their working-age population as much as possible through one policy, and then supplement whatever deficit remains with the other policy? In other words, should they give priority to one policy over the other?
Before tackling this question, it is important to draw a distinction between two possible sources of the rising old-age dependency ratio in developed states. Both have to do, more specifically, with the declining birthrate. One source of the declining birthrate is that women are being denied rights that protect their equal opportunity to combine work and family life (let’s call this source of the declining birthrate – the non-fulfilment of gender-equality). The other source of the declining birthrate is the basket of casual factors that are independent of the non-fulfilment of gender-equality. For example, it might be the case that the birthrate is declining in part due to an evolution in preferences around child-bearing that is not influenced by non-fulfilment of rights.
Now the relevant deficit in the birthrate that I think states should seek to correct through replacement fertility or replacement migration is not the deficit that arises due to the non-fulfilment of gender equality. That deficit contains a portion of deficit that should be corrected through the fulfilment of gender equality. In other words, before pursuing policies that aim at increasing either the birthrate or migration, states should first fulfil gender equality. Notice that the latter policy – fulfilling gender equality – is not the same as aiming to increasing the birthrate, though an increase in the birthrate may well be an effect of fulfilling gender equality. There is a difference, for example, between labour market regulations that require employers to guarantee women a right to return to their jobs after childbirth and cash allowances for large families. The former aims at gender equality, the latter at increasing the birthrate. My point is that the state is required, as a preliminary matter, to put the former types of policies in place. The relevance birthrate deficit it should seek to correct is the one that would arise thereafter.
How, then, should state aim to correct the ex post deficit – i.e. the deficit in the birthrate that exists after the fulfilment of gender equality? In my view, there is a strong case for prioritising replacement migration. The main reason for this is that migrants have strong claims to inclusion. I find it difficult to see how a state can justify excluding a migrant who can contribute to its economy in favour of incentivising more of its “own” children. There are other relevant reasons to consider as well, including the presumably worse impact of replacement fertility on climate change. On the other side argument, however, is the familiar claim that replacement migration introduces greater ethnic diversity in a population and hence threatens to undermine social trust. This latter claim has been frequently discussed, and, as far as I can tell, the empirical evidence for it is inconclusive. My provisional conclusion, therefore, is that states should prioritise as follows: fulfil gender equality, pursue replacement migration, and, only thereafter, consider pursuing replacement fertility bearing in mind the climactic consequences of doing so.
In my last post I considered the proposal that ageing societies should raise the retirement age. Raising the retirement age simultaneously increases the number of proportion of people in the economy who work, while decreasing the proportion of elderly persons who receive publically funded services. So it is a potentially very effective solution to increasing old age dependency ratio.
My main concern about raising the retirement age is that it seems to disproportionately burden people with shorter post-retirement life expectancy. If the retirement age is raised, they will enjoy fewer years of retirement than others, and this may not be fair, especially if they face a shorter period of retirement because they have more difficult lives. I considered the idea that we should avoid adopting a uniform retirement age and instead adjust retirement age according to the sector of the economy in which the worker works. However, I wasn’t entirely comfortable with that idea: I thought it might stigmatise people with shorter life expectancy by making their disadvantage so manifest.
It may be, however, that that is a risk worth taking: that is, that it is better to risk stigmatising a group of people than to deny them the enjoyment of a retirement that they are entitled to.
In this post, I want to discuss a relate policy proposal as a response to the old age dependency ratio. This policy focuses on increasing the contributions, during their working lives, of people who face longer life expectancy than others. The social science is pretty clear that there is a close link between income and life expectancy, so policy makers are likely to “capture” contributions of individuals with higher life expectancy by taxing income at higher rates. This idea has the appeal that it will raise money to pay for the increasing proportion of elderly people in our society, and furthermore, it seems fair. It is, after all, in large part due to increased life expectancy that the old age dependency ratio is increasing.
Now, it might be said that higher income people already contribute more towards public services for the elderly. The tax systems of most states are, after all, progressive tax systems. But the proposal I have in mind would involve a reform of those systems in the following respect: it would link the progressivity of the tax system to life expectancy. In other words, the policy proposal is that the progressivity of the tax system should increase automatically as the life expectancy of higher income people increases.
Would higher income people have a legitimate complaint against this proposal? Consider the following possible complaint. Not all higher income people who are expected to live longer than average lives actually do live longer than average lives. Those who don’t will have paid more towards public services for the elderly without reaping the benefit of a longer life. That seems unfair to them.
That may well be true, but in the current system, in which people do not pay tax in proportion to life expectancy, there may well be even more unfairness. In that system many people with shorter lives will have paid as much towards public services for the elderly as people with longer lives. The instances of unfairness in the current system may be greater than in the reformed system.
It seems, then, that higher income individuals may not have a strong complaint at being taxed in proportion to their higher life expectancy. That doesn’t mean other objections can’t be raised against the idea. For example, it may be that adjusting the tax system affects the economic incentives of individuals in ways that are detrimental to the economy as a whole, a fact that may have an impact on lower income individuals as well as higher income individuals. That would be a reason to refrain from adopting the reform. Still, there may be other ways in which we can adjust our public policies to the different life expectancies of individuals – other than by adjusting tax contributions, that is. So the underlying idea may be worth pursuing through some other reform.
I have been shifting my focus in the last few weeks from policies that encourage skilled immigration to another set of policies that respond to the problem of population ageing. Unlike policies aimed at encouraging skilled immigration, which aim to adjust the dependency ratio by increasing the number of workers in the economy, this other set of policies adjusts the dependency ratio by encouraging the same number of people to do more work on aggregate. There are several ways in which this can be done. One way is by encouraging higher rates of participation in the labour market – especially amongst women. But the suggestion I am currently interested in focuses on the different idea that we should raise the retirement age. Raising the retirement age simultaneously reduces the number of dependent elderly and increases the amount of work that is done in the economy. So it is a potentially very effective response to population ageing.
A key ethical question we need to address in considering the retirement age is whether it is should be uniform across all sectors of industry (or income levels) or whether it is more reasonable to allow some variation in the retirement age. In the next couple of weeks, I will be considering this question in some detail. In particular, I want to determine whether the following argument (or kind of argument) for variation in retirement age is promising. Differences between individuals in the number of funded post-retirement years they can enjoy are morally significant and raise concerns of justice when they result from factors beyond the control of these individuals. Depending on their social and class background some individuals have shorter life expectancy than others. A uniform retirement age would therefore have the consequence that some individuals would enjoy fewer post-retirement years than others. Assuming that social and class differences between individuals aren’t attributable to factors for which they are themselves entirely responsible, this inequality in post-retirement year may well be unjust. We should therefore reject a uniform retirement age and instead adjust the retirement according to social and class background.
While this argument has some appeal, I am not entirely comfortable with it. One concern one might have with it is that it may be stigmatising to base retirement age on social and class background. Do we really want a retirement system that sends the following message to (some) citizens: "You have had a harsher life than others due to your social and class background, and you are likely to die sooner than others: you therefore deserve to retire earlier than them." I am not so sure about that. But on the other hand, I do think that it is unfair that some people have to work for larger proportions of their lives than others due factors beyond their control. So I need to think about whether there is a non-stigmatising way of introducing variation in the retirement age.
One of the topics I’ve been thinking about over the last few weeks is whether a developed state might reasonably be accused of exploited a developing state when it admits its skilled immigrants, allows them to work in its economy and then benefits from their tax contributions. We can make progress on this question if we think about the nature of exploitation in general and then try to apply that concept to this case. In my last post, I suggested that we follow Alan Wertheimer’s proposal and regard exploitation as involving an interaction between parties in which one gains at the other’s expense through an illegitimate process. One party gains at another’s expense if he gains “in a way that makes another worse off relative to a standard of fair division. So to explain the concept of exploitation in more detail we need to say more about “fair division” and “illegitimate process”.
In this post I want to focus on the notion of “illegitimate process”. I want to understand whether the benefits that the receiving state acquires from skilled immigration – in particular, the tax contributions it acquires from the skilled immigrant – are benefits acquired through the kind of illegitimate process that occurs in exploitation. So, how, in general, should we understand that process?
One possibility is to understand it as a process of forced transfer from one party to another. Now the kind of “forced transfer” that might occur in cases of exploitation isn’t that of one party’s being coerced by another. If one person coerces another to give him some money – i.e. by physically grabbing the money from him, or by issuing a threat – he commits a wrong, of course. But the kind of wrong he commits isn’t the wrong of exploitation. Exploitation is different from theft.
The more plausible kind of “forced transfer” that exploitation might consist in is a transfer forced by circumstance. We might say, for example, that the impoverished worker is exploited when he is forced by his economic circumstances to accept an extremely low wage offer. This is how I implicitly understood exploitation in my last post when I said that developing sending states might be in a situation in which they are forced to contribute benefits to receiving states: they must bring into existence another generation of citizens, and they are unable to retain some of the skilled members of that generation, because of their difficult economic circumstances.
I now think that this way of explicating the illegitimate process that exploitation consists of cannot be quite right. One problem is that it allows that the exploiting party can be entirely passive, and yet exploitation seems to involve some sort of active involvement of the exploiting party in the process of transfer. Another problem is that people can seem to be exploited even if they are not forced to transfer benefits to others. Suppose a group of workers are unjustly poor but not so poor that they are desperate. They can refuse a low wage offer and still manage to live decently. However suppose they accept the low wage offer nevertheless because they have certain goals that they can only achieve if they earn (low) wages. We might think that they are exploited in these circumstances even though they weren’t forced to transfer their labour at a low wage.
These two points suggest a different way in which we should explicate the “illegitimate process” that occurs in exploitation. First, we should focus on the fact that the exploited party is a victim of background injustice. Secondly, we should say that the exploiting party is somehow making use of that injustice in in order to gain a benefit from the exploited party. Exploitation, in other words, involves one party using the fact that another party is a victim of injustice in order to gain a benefit at the other party’s expense.
The question is whether, on this this more plausible construal of the “illegitimate process” that occurs in exploitation, receiving states can be said to be exploiting developing sending states when they benefit from their skilled immigrants.
In my last post, I discussed skilled immigration as one part of a broad policy-response to the increasing dependency ratio we are witnessing in developed democracies today. I was interested, in particular, in whether skilled immigration raises moral concerns in the case in which it has positive effects on the states from which the skilled immigrants originate. Initially, one might think that it doesn’t: if skilled immigration is a “win-win” policy for sending and receiving states, what is the problem with it? But I said that skilled immigration may turn out to be an instance of exploitation – or, more precisely, of what Alan Wertheimer calls “mutually advantageous exploitation” (see his excellent book, Exploitation). If so, skilled immigration may be deeply problematic from a moral point of view, even if it is a “win-win” policy.
In this post, I want to explore that possibility further. The place to begin is with a general account of the conditions that need to be fulfilled in order for a relationship between two parties to count as exploitative. I won't be able to discuss that in much detail here, but if we take the example of exploitative sweatshop labour as paradigmatic, then two conditions naturally suggest themselves (both of these conditions are discussed at length in Wertheimer’s book). First, an exploitative relationship is one in which one party gains at another’s expense. Now, by “at another’s expense” I don’t mean "gains in a way that makes another worse off than he would have been." That condition may not be met in the sweatshop example, because the workers may well be better off than they would have been as a result of working in the sweatshop. What I mean is “in a way that makes another worse off relative to a standard of fair division of benefits.” This fits better with the sweatshop example: the benefits that the sweatshop worker helps produce are not fairly divided between the employer and the worker. The worker gets far too small a share of those benefits.
Secondly, the gain for one at the other’s expense must arise from an illegitimate process. We can imagine people working in organizations for free – i.e. as volunteers – for example, in charitable organisations. We would not necessarily say that they are being exploited even if they are forgoing a standard hourly wage. That is because they volunteered. Now, of course, if they volunteered in a problematic way, for example, if they were brainwashed into believing that they would attain eternal salvation as a result of working for the organization, then maybe the process by which they have come to produce benefits for others becomes illegitimate. But fully informed volunteers who are in full possession of their mental faculties are not exploited when they work for free. The “illegitimate process” condition also fits well with the sweatshop example because it is usually the case that sweatshop workers consent to work in the sweatshop against a background of unjust economic circumstances – circumstances that effectively force them into a contract with their employers. So it is plausible to construe their coming to produce benefits for others as an outcome that has resulted from an illegitimate process.
In sum, an exploitative relationship is one in which (a) one party gains a greater than fair share of benefits to which others have contributed, and, in which (b) this unfair division has arisen as a result of an illegitimate process.
The next part of the analysis involves determining whether these two conditions actually apply in the skilled immigration scenario. A first question we face is that of identifying who exactly is the exploiting and exploited party in that scenario. One way to do that is to say that the exploiting and the exploited party are, respectively, (a) the employer and (b) the skilled immigrant, respectively. This makes the skilled immigration scenario fit the sweatshop example quite closely. And, indeed, there may be many examples of employers paying skilled immigrants too low a wage, which the latter are forced by their economic circumstances to accept.
However, I think that we should consider the less obvious possibility that the skilled immigration scenario also involves exploitation between two other parties, namely, (c) the citizens of the receiving state and (d) the citizens of the sending state. In the next few weeks, I'll be trying to figure out whether it is conceivable that © could be exploiting (d).
I have just started a Marie Curie Fellowship at Universitat Pompeu Fabra, where I will be working with Andrew Williams on the ethical status of policy-responses to the increasing “dependency ratio” in developed democracies (the ratio of “dependents”, i.e. people who don’t work, to those who do). As the dependency ratio increases, the collective challenge we face in providing adequate support for dependents intensifies. This raises questions, for example, about the kind of support dependents have a right to, and the ways in which the working population must share the burden of providing it.
My aim over the next two years is to explore the ethics of three kinds of policy responses to the increasing dependency ratio: increasing skilled immigration, increasing fertility, and increasing labour participation. All three responses aim to reduce the dependency ratio by “boosting the denominator”, i.e. increasing the number of working people relative to dependents. But each policy-response does this in a different way and each encounters its own distinctive problems.
I will be posting regular reflections on each of these policy-responses. In this post, I want to make a general observation about one of the ethical challenges raised by encouraging skilled skills immigration.
Before I do so, however, it's worth pointing out that a consensus exists amongst demographers that a policy of encouraging skilled immigration can’t solve the problems of population ageing on its own. The amount of immigration needed to reduce the dependency ratio in the United Kingdom, for example, far exceeds the amount that the British electorate is likely to tolerate. As one study reports:
“in order to keep constant its old-age dependency ratio until 2050 the UK would need to receive on average more than one million ‘net migrants’ per year (UN 2000: 72), i.e. nearly six times more than the current levels. In terms of population size, the outcome of this exercise would imply a total UK population of 136 million in 2050 – undoubtedly a problematic scenario for a country that is already widely regarded as ‘overcrowded’.”
(Alessio Cangiano, “Policy Primer: Demographic Objectives in Migration Policy-Making,” Migration Observatory, University of Oxford (2011). The UN report is, “Replacement Migration: Is it a Solution to Declining and Ageing Populations?” UN Population Division, New York, 2000.)
Still, encouraging skilled immigration can, at least, contribute to reversing the dependency ratio. So it is worth examining whether, and if so, how developed democracies should adopt this kind of response to populating ageing.
Now, as many have pointed out, the main ethical challenge encouraging skilled immigration gives rise to is the fact that it can give rise to negative effects in the skilled immigrants’ home states. This is particularly troubling when their home states are developing states. We should not, however, confine our attention to the possibility that encouraging skilled immigration might have negative effects on developing states. Indeed, skilled immigration may have positive effects on many developing states. The results of research by Frédéric Docquier and Hillel Rapoport, “indicate that most developing countries experience a net gain from skilled emigration. Adverse overall impacts are found to be limited to a subset of countries exhibiting very high skilled emigration rates.” (Tito Boeri, Herbert Brücker, Frédéric Docquier, and Hillel Rapoport, Brain Drain and Brain Gain: The Global Competition to Attract High-Skilled Migrants (OUP, 2012), p 11). The question we need to ask, therefore, is whether ethical problems might remain with encouraging skilled immigration even when it has positive effects on sending states?
The answer, I think, is “yes”. There are many examples of deeply troubling behaviour that has positive effects on others. Think of cases in which some people exploit others. In hiring people to work in his sweatshop for extremely low wages, for example, an employer may behave in a way that has a positive effect on his workers. After all, extremely low wages may be an all things considered improvement on no wages. Nevertheless, the employer’s behaviour is ethically unacceptable because he exploits his workers; he takes advantage of their deep poverty in order to acquire cheap labour from them. The fact that admitting skilled immigrants may have positive effects on developing states, does not, then, automatically imply that developed democracies are in the clear, ethically speaking.
What we need to figure out is whether encouraging skilled immigration could constitute a form of exploitation. That’s a difficult question that I’ll be exploring in the next few weeks.