The Waterbury Democrat., 1938-12-16
Problem Of Old Age
Fallacy of Pension Plans Is Assumption They h. crease Purchasing Power, Raise Demand
 for Goods, Increase Production.
CONNECTICUT ECONOMIC COUNCIL

The problem of dependency in old age has always been a bitter one and now the fierce competition for jobs, forcing more older people out of employment, has two new fac tors behind it-one temporary and the other permanent.
 The temporary factor relates to the depression itself. We must not consider this emergency as perma- nent. Past experience gives no evil dence that the volume of unemploy- ment in this country will always run from 10 to 12 million people.
 The permanent factor lies in the increased ratio of those over 65 years of age. As the standard of living has advanced and some of the heavier burdens of labor light ened, science has heightened hu- man life. Four and one tenth percent of the population were over 65 years of age in 1900. At the same rate of increase as in the last three decades, 9.1 per cent of the population will be over 65 years of age by 1850.
 Cost of Pensions
 In 1930 there were 6,631 0O0 indi- viduals over 65 years of age, and one-third of these were gainfully employed. In 1850, allowing for the natural rate of increase, there will be population of 138,300,000 in the U. s. 12,656,00 will be over 65, and if one-third of these are gainfully employed, as in 1880, 8,310,0O0 will be without work and eligible for pensions. If federal pensions were available, almost certainly an even larger number would be idle, bring ing the total to approximately g. 100000.
 If granted pensions of $50 a month (one-fourth of the Townsend Plan) the cost would be approximate 1-2 billion dollars year. This is nearly two-thirds of the total amount of our present federal expenses and about double what they were in 1882. If the age were dropped to 60 and the amount of pension in- creased to $130 a month, as pro- posed in California ham and eggs" plan, the cost would be more than trebled and would exceed IT billion dollars year. One-fourth of our national income would go to 6 per cent of the population.
 These figures are purely specula- tive. We do nos know how many would remain at work if pensions of $130 a month were available. In any event, national liquidation would have overtaken US before we reached such a point, and the bur- den on those at work would have become intolerable.
 California and Colorado Plans
 Though the proposal of such a plan may seem an absurdity, we would remind you that the grant, ing of pensions of $50 every Thurs day, to those over 60 years of age and in residence of years, was the predominant issue in the last com paign in California. While a pro- posed constitutional amendment this plan possible in Cal ifornia was defeated, one proponent was elected U. s. Senator and an- other Governor of the State. Some very marked increase in the pen- sions available is likely to be un- dertaken.
 The State of Colorado, which two years ago embarked upon a plan on the basis of pensions of $45 per week at age 60-65, has not been able to meet pension payments out of tax es collected for this purpose. Now pensions must be reduced or great ly increased taxes imposed to meet the cost. In the meantime, other re- lief plans and services have been cut drastically.
 Sources of Pensions
 Economists are agreed that still higher income taxes on persons and will affect prices and output only as they reduce the of new capital flowing in- to business and industry, thus af- fecting the efficiency of capital and equipment and the amount of goods produced.
 On the other hand economists agree that sales taxes, as proposed in the Townsend, California, and Colorado pension plans, are passed on to the consumer. From a prac- tical point of view 1t appears certain that most of the tax burden to sup port increased pensions would be levied on industry, but collected