The reckless depletion of our planet’s resources is a clear-cut violation of the intergenerational contract
Because if you are counting on receiving regular retirement payments, the best thing to do is to forget this plan – quickly. The solvency of the system is anything but certain. As a matter of fact, at the moment we are squandering the moral foundation of our claim to retirement benefits.
In Germany, as well in other places such as Austria, Japan and to some extent in Switzerland and the US, government retirement systems are being financed via the so-called pay-as-you-go method. With this method, the costs for each older generation are being borne by the productivity of the following generation. In other words, young people are financing their parents’ retirement in the form of taxes deducted from their income. While this is institutionalized in some countries, in many other countries that lack a reliable government system, family-based cultural traditions are in place. In these countries, generations of children have been providing for their parents when they are no longer able to work for a living.
Given higher life expectancy and sinking birth rates, this model has been on shaky ground for some time. That’s because fewer numbers of working people have to provide for growing numbers of retirees. As a result, the belief that incomes will continue to rise still feeds the illusion, at least among some people, that a government pension will be sufficient one day, at least for them. The issue is that many people overlook the fact that a more fundamental danger, which calls the entire foundation of this system into question, is emerging in the background.
Whether the foundation is legal or cultural, every pay-as-you-go method is based on a so-called intergenerational contract*. Instead of the younger generation contributing as a way to invest in its own financial future, the pension system is based on a fictitious, implied contractual obligation between those paying into the system, and the older generation. The moral basis of the obligation to pay into the retirement system is the assumption that each preceding generation has laid the foundation for the following generation to generate income, typically by raising and educating this generation of children. This obligation, or debt, is then gradually paid off through contributions.
Even if our retirement fund statements, showing the number of points earned or total number of contribution years, suggests that we’re saving for our later years, in essence we have already morally forfeited our claim to be reimbursed for our contributions before we’ve even begun our working lives. We’re merely honoring a virtual debt to our parent’s generation.
In this kind of system, we earn our own future pension entitlement only by creating optimal conditions for the next generation, so that it in turn has a reason to honor the debt that arises. In other words, our contributions by no means form the basis for our own personal pension entitlement. Instead, they actually serve as our contribution to the creation of a future for the coming generation. This is the only way to justify the financial burden placed on the next generation through our retirement fund contributions.
What might remind some of the original sin from the Bible, and which in secular times almost automatically triggers an internal resistance, is in fact not a bad idea, as long as both parties honor their commitments, as is required in all contractual obligations. Each generation should be motivated to create to the best possible conditions for the following generation, in order to be safely provided for at later point if this is no longer possible on one’s own.
Until recently, and in light of uninterrupted economic growth, it was assumed that each generation of parents would take this type of forward-thinking approach. Regardless of the individual contribution – whether having children, taking over educational tasks or simply by being productive – for decades it appeared that the “account balance” for every generation of parents was always in the plus column (since the German system was first introduced in 1957, I’m excluding the war years timeframe).
However, it has meanwhile become obvious that this seemingly splendid balance represented only part of the picture. The full picture first becomes available when you factor in all of the costs that future generations will be required to pay for these success stories. Because the collateral damage stemming from our actions in the form of contaminated rivers, trash-filled oceans, depleted lands and man-made climate changes are visible everywhere – and it clearly demonstrates that this seemingly splendid balance was nothing more than a superficial façade.
The truth is, for decades we have been squandering our own ecological inheritance faster than we create new values for the coming generations. We already exceeded this threshold in the mid 1960s. At this point in time, we had already begun to collectively utilize more resources than we were able to renew during the same period of time. To put it another way, our “ecological footprint” began to overshoot the 1.0 mark.
This certainly has much to do with the fact that we have drastically increased the population of the planet. It has simply doubled while the planet was unable to generate any additional resources. The pace at which this has happened is tied most of all to a massive increase in our individual consumption, plus the fact that we place little or no value in decoupling this process of increasing resource consumption.
After all, no one would ask us to forgo convenience if at the same time we tried to be significantly more efficient with the use of resources at the same time.
While every long overdue, radical measure for limiting the damage is self-righteously rejected on a regular basis due to ostensibly unacceptable burdens that would be placed on industry, society or the individual, we have to ask ourselves a completely different question if we expect coming generations to continue to provide a retirement: how can we adequately satisfy our needs with considerably fewer resources and stop the spiral that began with industrialization as quickly as possible?
During the transition phase, this might place limits on the comfort zones that we are so fond of. It might also mean that we have to travel down new, unfamiliar paths. On the other hand, we cannot seriously expect our children to finance our retirement years as well if we are already unscrupulously living at their costs.
It’s high time that we began to think about whether we should continue to ignore the protesting students hitting the streets this Friday, or whether we should side with the cynical politicians who see themselves as the better “experts.” Sooner or later, this generation will call us to account if we expect them to finance our way of life in the twilight years in a couple of years. The environment is just one of many different issues…
If we continue down the same path as before, I could fully understand if our children refuse to finance the retirement system any longer.
The next time you want to check your benefits, don’t just look at the statement from your pension provider. Review your own footprint as well, beginning with CO2. If it exceeds 1.0, then from a moral standpoint, you’ve lost any claims from the intergenerational contract.
Seriously honoring the commitment to the next generation is also the reason why Sympatex has positioned “sustainability” at the heart of its strategy – in every detailed aspect. Curing a couple of hand-picked symptoms (or downplaying the issues) is no longer enough. We have to completely change our economic mindset.
For the textile industry, the experts all agree that it means we have to drive ecological issues such as water and energy consumption, use of chemicals, climate change and recycling/circularity down new paths as soon as possible.
You can already impact your personal footprint with your apparel selection. With each purchase, ask whether your favorite brand has a credible sustainability agenda that it actually implemented. The more that consumers demand sustainability, the faster we can make the transformation happen, because in many aspects, it’s been technologically possible for a long time already.
*1957 retirement reform: The German government implemented a pure pay-as-you-go method to finance the retirement system. That means the current retirement system is financed by current contributions. For the first time, there was a talk of an intergenerational contract that emphasizes the responsibility that generations have for one another.