And, if you assume retirees fund their retirements through investments (which is not generally true btw, private pensions are not the only model), this holds on some level for retirees as well. If their income depends on the profits of some company, then it is not to their benefit if that company needs to pay workers more.
When you have a public pension, the difference is just that you do not take it via profit, but via some sort of tax. So for pensioners in general, they do not want to increase the real pay of workers. It is also hard to argue that a government pension is not a form of wealth, when something similar on the private market is considered that.
In a public pension, there is some sort of tax, which is taken from workers to pay the pensions. If you want to increase pensions, you need to increase those taxes, hence everything else being equal you lower the real wage of workers.
Ok, so what you’re saying, I think, is that if we increase the wages, i.e., if the companies pay the workers more, somehow, tax revenue goes down, which affects pensions. I lose the plot where I inserted “somehow”. I’m missing some kind of connection there that you seem to see but I don’t.
The production of the workers labour is basically split three ways: Wage, company profit and taxes. If the workers productivity does not change, an increasing the wage is therefore going to reduce profit and/or taxes.
When you have a public pension, the difference is just that you do not take it via profit, but via some sort of tax. So for pensioners in general, they do not want to increase the real pay of workers. It is also hard to argue that a government pension is not a form of wealth, when something similar on the private market is considered that.
I don’t understand this. Why?
Why give more to the workers, when you can take it yourself?
Yeah, so that argument makes sense when your pension is privately funded. I can’t really connect the dots for the public ones.
In a public pension, there is some sort of tax, which is taken from workers to pay the pensions. If you want to increase pensions, you need to increase those taxes, hence everything else being equal you lower the real wage of workers.
Ok, so what you’re saying, I think, is that if we increase the wages, i.e., if the companies pay the workers more, somehow, tax revenue goes down, which affects pensions. I lose the plot where I inserted “somehow”. I’m missing some kind of connection there that you seem to see but I don’t.
The production of the workers labour is basically split three ways: Wage, company profit and taxes. If the workers productivity does not change, an increasing the wage is therefore going to reduce profit and/or taxes.