3 ms·

Look at the big picture: the aging of the population means that the eldery must enslave the young, or they will have nothing to eat when they are old and infirm

by DenisM 17y ago

Look at the big picture: the aging of the population means that the eldery must enslave the young, or they will have nothing to eat when they are old and infirm. Long-term savings is a fictitious concept - nothing we produce today will be of any use 40 years later so when you are old you will depend on the young to provide your food. When that happens you better have a way to compel them to part with fruits of their labor. Saddling the young with debt seems to be the current retirement plan for the old. It ain't just about bankers.

joe_the_user 17y ago
Well, San Francisco had to contract out to Korea to fix the Bay Bridge, so it's quite possible that nothing we make in America will be worth anything in forty years. But there's quite a bit of useful forty year stuff.
- DenisM 17y ago
  What are the kind of things that will retain their value after 40 years that you or I could stash away for retirement?
  - brc 17y ago
    A toll bridge, for starters, or at least a piece of one. A valuable piece of land with a durable building on it (eg capital city) A piece of a growing and profitable company (eg Google) Royalties or income streams from work you create (see Elvis, Paul Mcartney, etc) A piece of valuable farmland A piece of valuable mine A piece of a company you create and grow (see succesful startup) A hunk of precious metal (eg gold, silver - they've been valuable for, say, 5,000 years or so) Not: cash speculative stocks bubble inflated real estate suitable for a shrinking demographic managed investments consumer junk
donaldc 17y ago
nothing we produce today will be of any use 40 years later I'm living in a building that was built in the 1920's. It is definitely still useful. True, consumer goods generally don't last that long, but capital goods can last for a half-century or more.
- DenisM 17y ago
  You can't just stash a building and cash it out 40 years later. You would have to maintain it for all that time and it's a huge liability. By the end of the day the building will be much worse than the ones being built at that time, really the only value of it will be the land is stands on. Any value in the building itself will come from recent renovations, not 40 yo investment. Thus the building is not a savings mechanism. The land may be, though. Even then only if population continues to rise - if population drops as it does in almost all developed countries your land will be worth a lot less. Imagine a world where there are 1000 old people who can't work but own land, and then there are 100 young who can work and need a place to live. The first 100 buildings will sell/rent for some amount of food, the remaining 900 old people will die of starvation because there is nothing they can offer to the young in exchange for food.
  - gridspy 17y ago
    This is exactly why you invest your money into a string of growing companies or lend it temporarily to young families buying their first house. Of course, that mechanism is in trouble the minute the market starts to contract or collapse.
hga 17y ago
DenisM is talking about the principle that present consumption must come out of present production. Yeah, there are some things that are neither consumed nor depreciate quickly, like houses ... but who's going to pay grandma's property taxes? To repair or replace her furnace? Replace her hip? Etc. Note that DenisM uses food as his example and try to find his meaning instead of the few exceptions.
- DenisM 17y ago
  present consumption must come out of present production yes, that's the starting point of my argument, thank you for phrasing it clearly. The next step is that future demand for durable goods is not a good savings mechanism for a number of reasons: 1. The demand isn't large enough for a whole generation of people 2. Those goods have to be stored and maintained, which is costly and eats into the savings 3. It may unpredictably lose value due to technological innovation, and if you made a poor bet you will starve when that happens Therefore the premise of my argument is that the idea of long-term savings is fictitious. Absent that there are only so many way to defuse the demographic bomb: 1. Saddle the young with debt by enticing them to spend beyond their means. Later they are compelled to pay via social norms and coercion of the state. 2. Collude on ownership of a crucial scarce resource such as land or oxygen. Collusion is likely to kill the economy very quickly though. 3. Make more babies. Costly in the short term, especially given that anyone who is making babies is also under the opression of debt, and the more babies the more crushing that debt is.
  - hga 17y ago
    You're welcome; it's not my phrase, just something I picked up in discussions of this issue. Although I should also mention "The Last Fool" concept. Those long-term savings won't be fictitious if you aren't the last fool left with them, i.e. you find another "fool" to sell them too. But as you note that's a very iffy thing, certainly not something you should bank on, so to speak. (Hmmm, you left out the Soilent Green option ... it's already being discussed by "serious thinkers". And there are less unpleasant ways to abrogate explicit and implicit promises to older generations.)

by DenisM 17y ago

joe_the_user 17y ago

Well, San Francisco had to contract out to Korea to fix the Bay Bridge, so it's quite possible that nothing we make in America will be worth anything in forty years. But there's quite a bit of useful forty year stuff.

DenisM 17y ago
What are the kind of things that will retain their value after 40 years that you or I could stash away for retirement?
- brc 17y ago
  A toll bridge, for starters, or at least a piece of one. A valuable piece of land with a durable building on it (eg capital city) A piece of a growing and profitable company (eg Google) Royalties or income streams from work you create (see Elvis, Paul Mcartney, etc) A piece of valuable farmland A piece of valuable mine A piece of a company you create and grow (see succesful startup) A hunk of precious metal (eg gold, silver - they've been valuable for, say, 5,000 years or so) Not: cash speculative stocks bubble inflated real estate suitable for a shrinking demographic managed investments consumer junk

donaldc 17y ago

nothing we produce today will be of any use 40 years later I'm living in a building that was built in the 1920's. It is definitely still useful. True, consumer goods generally don't last that long, but capital goods can last for a half-century or more.

DenisM 17y ago
You can't just stash a building and cash it out 40 years later. You would have to maintain it for all that time and it's a huge liability. By the end of the day the building will be much worse than the ones being built at that time, really the only value of it will be the land is stands on. Any value in the building itself will come from recent renovations, not 40 yo investment. Thus the building is not a savings mechanism. The land may be, though. Even then only if population continues to rise - if population drops as it does in almost all developed countries your land will be worth a lot less. Imagine a world where there are 1000 old people who can't work but own land, and then there are 100 young who can work and need a place to live. The first 100 buildings will sell/rent for some amount of food, the remaining 900 old people will die of starvation because there is nothing they can offer to the young in exchange for food.
- gridspy 17y ago
  This is exactly why you invest your money into a string of growing companies or lend it temporarily to young families buying their first house. Of course, that mechanism is in trouble the minute the market starts to contract or collapse.

hga 17y ago

DenisM is talking about the principle that present consumption must come out of present production. Yeah, there are some things that are neither consumed nor depreciate quickly, like houses ... but who's going to pay grandma's property taxes? To repair or replace her furnace? Replace her hip? Etc. Note that DenisM uses food as his example and try to find his meaning instead of the few exceptions.

DenisM 17y ago
present consumption must come out of present production yes, that's the starting point of my argument, thank you for phrasing it clearly. The next step is that future demand for durable goods is not a good savings mechanism for a number of reasons: 1. The demand isn't large enough for a whole generation of people 2. Those goods have to be stored and maintained, which is costly and eats into the savings 3. It may unpredictably lose value due to technological innovation, and if you made a poor bet you will starve when that happens Therefore the premise of my argument is that the idea of long-term savings is fictitious. Absent that there are only so many way to defuse the demographic bomb: 1. Saddle the young with debt by enticing them to spend beyond their means. Later they are compelled to pay via social norms and coercion of the state. 2. Collude on ownership of a crucial scarce resource such as land or oxygen. Collusion is likely to kill the economy very quickly though. 3. Make more babies. Costly in the short term, especially given that anyone who is making babies is also under the opression of debt, and the more babies the more crushing that debt is.
- hga 17y ago
  You're welcome; it's not my phrase, just something I picked up in discussions of this issue. Although I should also mention "The Last Fool" concept. Those long-term savings won't be fictitious if you aren't the last fool left with them, i.e. you find another "fool" to sell them too. But as you note that's a very iffy thing, certainly not something you should bank on, so to speak. (Hmmm, you left out the Soilent Green option ... it's already being discussed by "serious thinkers". And there are less unpleasant ways to abrogate explicit and implicit promises to older generations.)