When a government’s finances for social welfare are limited, should they be directed towards the young or the old?
This question requires students to understand that all governments have limited funds for social spending and there is a need for governments to decide if more funds should be directed towards the young or the old. This question assumes that governments are not saddling themselves with extra burden to borrow money to fund both segments of the society. A stand has to be made whether this money is directed towards the young or the old. This of course will depend on the context of the society- is the society facing a rapidly aging society or a society that is rapidly replacing itself? Is the society a mature one or an emerging economy? Also, the question requires students to assess the costs and benefits of just directing funds towards one segment of the society-either the young or the old and why.
Government should spend on the young
1.The young holds the key to economic development for any society, and it makes pragmatic sense for the government to invest in them, as they are the next building blocks of society. The young are likely to be more innovative, energetic and ambitious compared to the older workers, and it is a more efficient allocation of the government’s capital.
E.g. Europe is currently facing very high youth unemployment, and with such high levels of unemployment, it spells disaster for the economy and leads to social unrest.
- The young are the ones that are going to change the social culture of the nation and set the direction for the nation. It only makes sense for the government to spend on them. It may sound very callous but the time has come to pass for the older workers, and soon it is no longer their society.
Government should spend on the old
1.In rapidly aging society, the government should spend on the old so as to reduce the tax burden that the young will face. If the tax burden is too high on the youths, it may lead to a brain drain in the society, which will impact economic growth in the long run.
E.g. Japan and Germany are facing aging population- where governments are looking for an effective means to deal with their healthcare needs and retirement issues.
- The aged who have contributed to the development of the economy should be rewarded accordingly during their golden age. They have ample experience and when valued, they are likely to contribute even more back to society in the long run. It is a common misbelief to think that the aged is a social burden. In fact, in many developed nations, government starts to think that they are an important economic resource to tap on as they have the financial resources to spend after many decades of work. They are known as the “silver economy”.
Eg. Singapore has been considering building retirement style homes for the aged. These homes cater to the higher socio-economic classes, and the facilities include golf courses, medical clinics, and other recreational activities.