80. Facing the Pension Crisis

“Pensions are finished. I don’t think they have a future,” writes Michael Johnson an expert at the Centre for Policy Studies in London. Perhaps he is right, but I ask myself: what is going to replace them? There is no clear answer. All of us are experiencing a period of transition as profound as that of the Industrial Revolution two centuries ago. This time the work of human beings is being replaced by automation and robots. The full impact of this is neither understood nor accepted, but it is already deeply affecting our prospects of retirement. Half of US workers have no access to any workplace retirement plan. Only one in five enjoy the prospect of a guaranteed pension. What this means is that in coming generations most workers may end up in poverty because they did not prepare for retirement.

At present the pressures on pensions are based on the difficulties facing state and corporate bodies in Europe and the United States in meeting the gap between impending pension obligations and the resources set aside to fund them. Shifting demographics are causing retirees to live longer, birthrates are falling, and the retirement age has been rising. The politics are such that no one is willing to face up to the problem: Politicians focused on winning the next election do not want to divert taxpayer dollars toward long-term public pension funds; corporations are reluctant to take part in guaranteed pensions because they are too expensive and crimp profits; unions don’t want to draw attention to the growing deficits of their funds because benefits might be cut.1

Our perspective on pensions is still dominated by the shibboleths of 20th Century economics. Its premises no longer apply to a work force now in transition to the new digital world. Blocking reform of any kind is the private trillion “dollar” pension industry which is primarily dominated, not by concern for the popular welfare, but rather is focused on the profitability of its investments. These huge funds and trusts refuse to introduce transparency and openness into their financial operations. Governments on both sides of the Atlantic have been attempting for years to institute protection for pension investors against the hidden high fees and high risk products. However lobbying against such protective measures has been effective in blocking any such efforts.

The truth is that most of us are gambling when it comes to our own futures: We have no idea what inflation may do to our savings, how long we shall live, or how much we will need to live on. Inevitably, upon retirement, we may well be left to fend for ourselves. Trying to avoid this may lead us to take long term risks. The problem is that there is no overall planning to protect us as we head towards retirement. The piecemeal efforts to provide pensions for the electorate which were put in place over the past 100 years are now coming apart at the seams.

Pensions as a way to provide for the welfare of aging workers originally were established through makeshift social legislation in Germany towards the end of the 19th century.2 It was the statesman Otto von Bismarck who pushed through an Old Age Pension program in 1889, financed by a tax on all workers who would then benefit when they reached the age of 70. This marked the entry of the state into large scale pension funding. As the labor movement in Europe gained strength with the industrial revolution, so did the expansion of state pension programs.3 In the United States, Federal pensions were offered under the Civil Service Retirement System formed in 1920. This provided retirement, disability and survivor benefits for most civilian employees working for the Federal government. The US continued to be the driving force behind pensions during the four terms of FDR’s presidency when the Social Security system was established. Programs such as these remained popular throughout most of the 20th century.

Company pension plans in the US slowly became popular during World War II when wage freezes prohibited increases in worker’s pay. Corporations began to push for defined contribution benefit plans in the 1950s and in a period of persistent growth became the most popular type of retirement plan by the 1980s. In such defined contribution schemes, employees also were dependent on contributions from the private sector (corporations). These usually equaled employee payments which were then placed into tax-sheltered accounts. Such funds were intended to become large enough to support those entering retirement. The trouble with these paternally supported plans was that some employers surreptitiously altered the complex benefits and added on charges so that the investment returns were far lower than workers were told to expect. A large part of the work force involved in the contribution benefits managed by the employers were kept in the dark regarding the varied investment schemes. Nevertheless, public sector pension plans in the US now hold more than half of their assets in equities.

Initially defined benefit plans were more popular than defined contribution plans: Today 67 percent of unionized employees are covered by defined benefit plans as opposed to just 13 percent of non-union workers. But defined contribution plans now cover about 70 percent of all pension holdings despite the fact that the lifetime fees of the American household contributors exceed $150,000 and may erode a third of their total contributions. Significantly, researchers have pointed out that employees save more if they are enrolled in savings plans where they have the option to drop out.

From the start, the number of US Social Security program recipients has continued to grow markedly with the value of unfunded obligations rising into the low trillions of dollars. The crisis represents the gap between the amount of promised benefits and the resources set aside by the government to pay for them. As a result, millions of Americans may face a sharp decline in their living standards when they eventually do retire. For many, only Social Security will protect them from penury. Three American academics have thoroughly examined the US problem in their book, Falling Short: The Coming Retirement Crisis. In my opinion, their studious but conventional approach falls short in terms of imagination, innovation, and a more global perspective.4

The pension experience of the United Kingdom runs somewhat parallel to that of the United States. In the UK, the start of the modern state pension was the Old Age Pension Act of 1908 which provided 5 shillings a week for those over 70 whose annual income did not exceed £31.50.(To get the idea of their value in today’s money one has to multiply these figures by more than 150!) Such were the first steps in the welfare reforms of the Liberals leading to the completion of a system of social security with the National Insurance Act of 1911. Following World War II the National Assistance Act of 1948 abolished the medieval poor law and gave a minimum income to those not paying national insurance. In the early 1990s the existing framework for state pensions were strengthened by the comprehensive statues of the Pensions Act of 1995. Then, in yet another update of the state pensions, the Pensions Act of 2007 raised retirement ages.

Although the rates between providers in the private sector varies greatly, a typical UK pension pot of £100,000 will buy a married man of 65 an annual return of £4,500. With annuities, in which individuals swap their holdings, such as shares, houses, or pension pots, for regular monthly sums throughout their forthcoming retirement. Such annual returns average 7.6%. Until the Conservatives came into power in May 2015, pension plans were a form of “deferred compensation” because these were vehicles which allowed for tax free accumulation in funds for later use as retirement income. However, such benefits are being reduced by the new administration.5

I see the pension system of the Netherlands as the best role model for most European and American communities to follow. Their mix of public and private provisions guarantees that everyone aged 65 and over enjoys a decent standard of living and is assured it will continue to do so.6 In per capita terms, Holland has one of the largest pension reserves in the world. Under the Old Age Pension Act (AOW) entitlement under this Act is accumulated at the rate of 2% for each year of contribution which leads to a 100% entitlement to the relevant pension benefit upon reaching the age of 65. For the non-state pillar of this system, employees annually accrue equal pension rights for each year of service which, in most cases, amounts to about 2% of their salaries. Here there is mandatory participation, collective risk sharing and ways to transfer pension value. A clear and transparent division of responsibilities is maintained between the employer, the employee and the pension provider. By the end of this year just over 3 million people will be receiving their Dutch benefits amounting to over 40 billion Euro, but what the entire system offers, and other countries fail to provide, are clarity and transparency.

A number of other small countries are instituting “social pensions” as a way out of the varied risky schemes. These are tax funded monthly cash transfers paid at retirement age. Universal programs which provide pensions regardless of assets, employment record, or income include New Zealand’s Superannuation, and in Mauritius by the Basic Retirement Pension. Other states, such as Singapore, have instituted means-tested pension payments. Even the US has introduced a form of “social pension” with a Supplemental Security Income. This would seem like a humane direction for such pension systems around the world that may soon be unworkable.

To my amazement, no in-depth policy studies have broached the subject of taxing robots as one way to provide the state more money to pay to retired workers. As robots and automation are steadily increasing their ability to replace workers, the number of available jobs (and the taxes these produce) will decrease. The smart resolution ultimately would be to place annual taxes on each operating robot to balance the pension books of most states. Of course corporations would lobby fervently against such a tax.

This means counter-lobbies funded by unions, city and state councils, and financial investment groups would have to be established at both national and global levels. Endorsement, however, should come from prominent advocates of all political persuasions. Such an approach needs proper examination as currently many governments support the production of machines like cars and new robots, but ultimately tax only the former.7

A tax on robots also could tax industrial computers used by the insurance industry, accounting firms, and other groupings who continue to replace workers with complex new machinery. The taxes collected should be distributed (or invested) for workers being laid off by companies introducing robots or those unemployed without social security and those over 65 who have no retirement pensions nor savings.

The tax could be based on how many hands would be needed to do the job which the robot displaces. Truckers, for example, would be one for one. A percentage of the pension tax which truckers pay when working a ten hour day would probably be under 6% of their wage and over 2% of their current pension contribution. On the other side of this equation, corporations caught evading their robot tax would be heavily fined.

Capitalism was built on the back of cheap labor (not to mention slavery) and now is being supported by investment in robots to replace this historical work force. Multi-national corporations could be among the first to be challenged by a drive for the global taxation of robots. These would also present the fiercest opposition. However, the welfare of those facing retirement — that is all of us — need to have the assurance that in the years ahead there will be funds to cover our well-being. Taxing robots could help to provide such coverage.

TAX the ROBOTS! should therefore become the popular slogan for tomorrow.


1Greg Smith, “It’s time to eliminate the confusion in personal retirement accounts” Time, June 22, 2015, p.22
2Widow’s funds first appeared in Germany in 1645 and another fund for teachers in 1662.
3President Obama has observed: “It was the labor movement that helped to secure so much of what we take for granted today. The 40 hour work week, the minimum wage, family leave, health insurance, Social Security, Medicare, retirement plans. The cornerstones of middle-class security all bear the union label.”
4Charles Ellis, Alicia Munnell, and Andrew Eschtruth, Falling Short, (2014)
5John Gapper, “Politicians are intent on pillaging your pensions,” The Financial Times, April 18, 2015
6Dutch Ministry of Social Affairs and Employment (June 2008, publication number SWZ 74R610)
7Nicholas Colin and Bruno Palier, “The Next Safety Net”, Foreign Affairs, July/August 2015, p.29

79. Closing the Tribal Ways of Life

It upsets me that while the media steadily run stories about the vanishing wildlife species, ranging from rhinos to frogs, sparse coverage is given to the rapid demise of primitive tribal groupings. Perhaps it is because these human beings are too close to us and we don’t want to face up to our own precarious future. I think I expected more from the experience of descendants of immigrant Europeans who slaughtered most of the native American Indian tribes in the 19th century and then confined the remainder to vast tracts of infertile land on which their offspring live today as impoverished, second-class and largely denigrated Native Americans. Evidently we are slow to learn.

This blog, however, will not focus on them nor on the plight of similarly threatened tribal people in the upper reaches of the Amazon or the forests of New Guinea. It will focus on the tribes being threatened with extinction in the southernmost corner of Ethiopia in what is one of the last remainders of true wilderness in Africa. At a private meeting in London with a despondent visiting Hamar spokesperson, he said: “My people now live in fear. Our traditional way of life is under threat. The government in Addis thinks of us as savages. We shall soon disappear.”

Indeed, the Hamar, like other tribes living in the lower Omo Valley, are victims of an Ethiopian government development program. This is pushed by the completion of the huge Gibe III hydro-electric dam which started storing water earlier this year. The dam will completely alter the seasonal pattern of the Omo River whose waters have been the life-force of the ten principal tribes living along its banks. To the administrators in Addis Ababa, the pastoral way of life of the Hamar, Geleb, Mursi, Bodi and Kara people — to name a handful — is anathema. They are regarded as uncivilized. The Westernized technocrats in Addis want modernization in the form of electric power, paved roads, vast agricultural tracts and the introduction of small scale industries. Towards this end they are enforcing a policy of “villagization” in which the tribespeople are being evicted from their ancestral lands that have been auctioned off without consultation to make way for commercial plantations.1

Since 2008 an area the size of France has been leased or sold to giant foreign agricultural companies cultivating sugar, cotton, cereals, palm oil and biofuels. All these crops will be exported for foreign markets while some of the local inhabitants are already suffering from starvation as the river levels fall.

The Ethiopian government resettlement program known as, “The Growth and Transformation Plan,” involved “changing the life style of pastoralist communities.” No adequate environmental nor social impact assessments were carried out on the projected plantation and irrigation schemes nor were the inhabitants along the valley properly consulted nor given the opportunity of giving their informed consent. Despite an increasing number of reported human rights abuses, some 929 protesting Mursi households were forcibly resettled into a “model” village close to partially completed plantations and mills. Without their land and their cattle, their pastoral way of life simply has been destroyed.

Historically, the Omo Valley peoples made their decisions only after extensive community meetings by the adults. As few speak Amharic, the national language in Ethiopia, they had little access to information about either the planning nor the construction of the dam which was about to transform their lives. The government had published a decree in February 2009 that any charity or NGO which receives more than 10 percent of its funding from abroad (virtually every charity in the country) could not promote human or democratic rights. The aim of this decree was to limit debate on controversial policies and restrict awareness of human rights among the primitive peoples.

Environmental and human rights groups, as well as UNESCO,2 have questioned Ethiopia’s agenda or the implementation of the Constitutional guarantees of the rights of tribal peoples to “full consultation” and to their “expression of views in the planning and implementation of environmental policies and projects that affect them directly.” However, the now deceased Prime Minister, Meles Zenawi, had lashed out at the dam’s opponents asserting that even though the south Omo “is known as backward in terms of civilization, it will become an example of rapid development.”3

Survival International, the global association for the rights of tribal peoples, has received disturbing reports that one of the smallest and most vulnerable tribes of the Omo Valley, the Kwegu, have been on the edge of starvation as a result of the destruction of their forest and its beehives as well as the slow death of the river fish on which they depended. “How will we feed our children when the fish are gone?” asked an elder of one of the 1,000 remaining Kwegu people. Those tribal leaders who have opposed their removal from their homes have been brutally beaten and jailed by the military who patrol the region and guard the construction of roads and pylons for the forthcoming electricity lines from Gibe III.

Tensions between the native people and the military have been rising steadily as the result of evictions and, at the end of May, Hamar pastoralists were repeatedly attacked by soldiers with mortars and semi-automatic weapons. A news black-out by the government made it impossible to know the exact number of casualties. Survival International received reports that a “massacre” had taken place. According to an interview with Pink Bull, a tribal elder: “The soldiers said, ‘We are going to clear the Omo River area. You move out to the grasslands.’ ‘Why?’ we said. ‘This area is our land,’ said the government. ‘You are few. Now leave this land and stay in the grasslands.’”4

Part of the social tensions that have arisen are caused by the younger generation of men who no longer look to their elders for guidance. They view the elders as sell-outs to 21st century “progress” and take to the jungle with G-3 rifles and Russian Kalashnikovs — their only available modern tools. They then show their hostility to the government by acts of violence and when this occurs, the military respond by sending masses of troops to “restore order.” Where previously there had been tribal battles with sticks, killing had been strictly forbidden between tribesmen. This taboo has now been broken by the forced resettlements.

The technocrats in Addis are not so blind to the economic opportunities offered by the foreign journalists, photographers, film makers, anthropologists and rich tourists eager to visit the different existing tribal units. Its usually naked peoples were not accustomed to having themselves covered with body paint and tattoos but the government is now encouraging them to parade for photo-tourists.5 Some of the women display their remarkable lip-plates for higher fees. Little children are bribed into painting their bodies for the cameras. Susan Hack writing about her embarrassment of experiencing this, confessed: “Essentially, I am a voyeur, a gawker, and already my trip’s eleven-thousand dollar price tag and the business of intruding on people who have little control over the forces of tourism have me feeling a bit uneasy. Some of my encounters will prove so troubling that I will, at points, wish I had never come to this place… To attract the lens, the women riff on their culture, for example, by wearing old puberty belts on their heads. The resulting scrum is full of antagonism, as foreigners compete with one another for camera angles and the Mursi vie for attention from these human ATMs.”6

Many of the visitors wonder how the tribal communities would like to deal with such tourism as the elders often are divided on the issue. Some accept it as the only way to earn some money and improve their lives, others see it as an intrusion which is destroying their way of life. Exodus, one of the operating tourist groups, pulled out of Ethiopia two years ago because they no longer could provide “ethical” or “authentic” experiences for their clients. Justin Francis, the managing director of Responsible Travel, respected the decision of Exodus and admitted that the lack of regulation and the growing visitor numbers meant that the situation was becoming increasingly problematic. Pulling out entirely “would help no one,” he said, including the discriminated Omo people.7

The Bodi, Mursi and Suri who are now being pushed into resettlement camps will become dependent on government aid to survive. Services and food aid are often of poor quality and sometimes non-existent. This spells the end of an Eden-like way of life for peoples who have been part of the natural world and wedded to its beauty, its cycles and its bounty. No need for Victorian prudery or American hypocrisy in their lives. Yes, guns have replaced spears in order to prevent neighboring tribes from stealing cattle, but within each community there had been little violence. The numerous rites of passage had been crucial to the individual members of the tribes by giving them a strong sense of identity and belonging. The continued existence of their social culture had been crucial.

The Hamar or Mursi mothers who are forced to send their naked five year olds to one of the newly built school-rooms are horrified to see them return on their first day with dirty tee-shirts and shorts. To a mother it seems as if her son or daughter had taken on the role of an alien. Moreover, she has never washed any “clothes” except for the wrap-arounds which she rubbed in the Omo River. Cleaning a muddy youngster had been easy as well: you sent the little ones to wash in the river. No mother in these camps had ever heard of soap or hot water – never mind a washing machine. “Progress” has becomes an invasive force. Jane Baldwin, who has visited tribeswomen over the past decade writes that “the women were noticeably tired and thinner. The women showed less pride than was so evident in past years.” 8

Anthropologists have found hominid fossils along the Omo’s river banks and the earliest existence of mankind is believed to have started there. DNA analysis suggests that all human beings, Homo sapiens, carry African genes and testify to the origin of humankind in Africa. Based on the discovery of modern human skulls from the lower Omo Valley, dated to 200,000 years ago, suggest the possibility that humanity may have originated in this area. Perhaps these are fragments of the founder populations that gave rise to the diversity of ethnic groups living today in the Omo Valley, making this area humanity’s womb.

Among these tribes today, the Kara represent one of the smallest ethnic groups in all of Africa. For centuries the Kara have kept goats and cattle, planted sorghum and beans, and held on to their traditional rituals. They enjoy turning their entire bodies into works of art with streaks of white, red and yellow finger paint. Polka dot patterns mimic guinea fowl feathers, stripes are inspired by zebra, and larger spots are there to remind them of leopards. Photographers and writers like Carol Beckwith, Angela Fisher have been captivated by the extraordinary skill and artistry of the Kara and have remarked on the humor, the pride, the empathy and the hope manifest in their eyes.9

The Kara and their tribal neighbors along the Omo River have never focused on such material aspects of the arts as wooden sculptures, woven fabrics or carved masks. Their overwhelming preoccupation has been with the beauty and appearance of the human body. Artistic scarification of the arms and stomach have added to their attractiveness. The object of this self-decoration has been to celebrate their beauty, health, strength and sex appeal. They add vibrancy and grace to the human form. They exude an aesthetic purity with their designs and colors and there is no hint of the artificial or the vulgar. And it is to be noted that when a man ages and has lost his youthful powers, he will stop decoration altogether.

Much of the artistry of Africa’s tribal peoples people has been photographed and immortalized by the camera work of Eliot Elisofon, Sam Hastings, Leni Riefenstahl, George Rodger and Sebastião Salgado, as well as the primary work on the Omo by Beckwith and Fisher.10 As the writer and photographer Peter Beard has written, “Art is the barometer of civilization.” Alas, as Beard also points out, the arts do not enhance our chances of survival.

You may ask what the globe is losing with the extinction of the tribes of the Omo Valley? I believe it is the vision of another way of life which was natural, beautiful and viable. The loss of authenticity and identity of these tribes people is not replaceable. The material “advances” decreed by insensitive Ethiopian administrators will leave no cultural traces. The invasion of western technology, competitive capitalist economics, and increasingly globalized media and communications are destroying what were remarkably spirited social communities. With our contrived and conventionalized perspectives, our nations do not tolerate differences easily. Conformity and assimilation, disguised by words such as “progress,” and “growth,” demand similarity and uniformity. This presents us with a bleak outlook for all of mankind — a digital future which the generations of the Omo Valley people could never have contemplated.


Kara men body painting by the Omo River © Carol Beckwith & Angela Fisher/African Ceremonies.


1Megan Perry, “Ethiopia: Stealing the Omo Valley, destroying its ancient peoples,” The Ecologist, February 16, 2015

2In 1980, UNESCO declared the Lower Omo Valley a World Heritage Site in recognition of its uniqueness.

3Susan Hack, “Twilight of the Tribes: Ethiopia’s Omo River Valley,” Conde-Nast Traveller, January 2012.

4Will Hurd, “Ignoring Abuse in Ethiopia,” Oakland Institute, (July 2013)

5Matilda Temperley, “Nothing to smile about,” The Observer Magazine, May 24, 2015

6Hack, op.cit.

7Oliver Smith, “Exodus abandons Omo Valley tours,” The Telegraph(Travel), February 28, 2013

8Jane Baldwin, “Ethiopia’s changing Omo River Valley – Diary” (2005-2014)

9Carol Beckwith and Angela Fisher, Painted Bodies (2012)

10See Carol Beckwith and Angela Fisher’s comprehensive work African Ceremonies ( 1999) which won the United Nations Award for Excellence for “vision and understanding of the role of cultural traditions in the pursuit of world peace.”