Mr. Dennis Fischer, age 64, an Aboriginal man living in Australia, is suing that government. His complaint? People in his community have a lower life expectancy than other members of the general population. Hence, they should begin to collect their pensions at an earlier age. This does not now occur in the Land Down Under. That government treats all of its citizens equally; this is patently unfair, alleges the lawsuit.
Beloved of mainstream economists is the concept of “market failure.” Examples include monopoly, monopsony, the business cycle, both positive and negative externalities, public goods, asymmetrical information and inequality. These are only the tip of a very large iceberg. The way to earn your chops in academic economics is to add to this list. Accordingly, we have now stumbled upon a new one: not only “inequality” but “equality,” too. That ought to make armchair dismal scientists sit up and take notice.
What all of these “failures” have in common is that government can at least theoretically supposedly solve them. Through a judicious use of business regulation, taxation and spending, the bureaucrats can presumably improve matters. For example, in the case of monopoly: anti-trust; for externalities, regulation, prohibitions, subsidies; for public goods, state ownership; for inflation and depression, the fed plus fiscal policy. In contrast, business losses and failure are not a market failure, since it is not purported that the government can solve them.
But today, viewing this Australian lawsuit, we come across a very different failure, government failure, regarding pensions. If the government treats everyone alike, no racism, no sexism, no ableism, no lookism, etc., it is presumably unfair to Aboriginals. This applies to men as well, vis a vis women, since the weaker sex outlives the supposedly stronger one by about six years on average. But this is quite alright in these woke times, except of course for black and gay men.
Why is this a government failure? This is due to the fact that the free enterprise system is set up to address this plaintiffs concern and the state apparatus is not.
Thus is because discrimination is allowed under laissez faire capitalism but not government. Indeed, this is true in any system of freedom. This falls under the rubric of free association: no one may be compelled to associate with anyone else against his will. But both heterosexuals and homosexuals discriminate against half the human race in their choice of marriage and bed partners. Bisexuality is not legally mandated in any country on the face of the earth, as it would be, if discrimination were per se illegal. (Of course, bisexuals, like all of the rest of us, discriminate on the basis of beauty, intelligence, sense of humor, etc., but that is entirely a separate matter.)
How would this work in the case of pensions? It would be simple. Those with shorter life expectancies, men, Aboriginals, for example, would be better customers for private insurance companies. They live fewer years after retirement, so the payouts to them would be smaller. Insurance firms would compete with each other to sign on such people. On what basis would they do so? They would offer these potential customers better terms than those presented to longer living folk. They would either allow them to retire earlier, the request of the plaintiff in this case, or would charge them lower premiums during their working lives, or engage in a bit of both.
