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I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a

I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a problem. What I don't get is how both can be a problem at the same time.

treerock 9y ago
Pensioners are also "people without a job".
- RobertoG 9y ago
  But I though that the problem with pensioners was that there was not enough young workers for maintain them, am I wrong? excess of pensioners => not enough workers unemployed people => excess of workers
  - fivestar 9y ago
    The calculus is all broken. The Boomers voted themselves lavish benefits and decided (as always) to screw everyone else. Now we're finding out that "everyone else" can't hardly pay their own bills much less keep all the asinine promises. Something has to give, someone has to end up being the bagholder. Usually that's the younger generation. However, this time, the younger generation has already been fleeced down to the clothes on their back--there is nothing left to skim there. What is going on now is the search for bagholders. I suspect it will be the Chinese, but we'll see.
  - arjie 9y ago
    Yeah, but the number of jobs is independent of either of these numbers. You could have no jobs and lots of pensioners. Then everyone wants to work but can't and those who once were working have retired.
    - RobertoG 9y ago
      OK, so, there are not jobs because the economy doesn't need them. So, the economy is producing the same with less jobs. So, where is the problem for covering the needs of the pensioners?
      - arjie 9y ago
        Haha no. There's too much wrong with your understanding for me to help. Good luck but you're on your own.
        RobertoG 9y ago
        Oh come on, while you are bothering to answer, instead of a condescending remark, you could point me to a link or something.
mac01021 9y ago
Imagine a desert island with three inhabitants: W, P, & U. W climbs trees every day to fetch coconuts and then swims them across the channel to a neighboring island where she barters them away for drinking water and then swims back with jugs full of water. P used to help W with the tree climbing, but is now too old to do the work. However, he long ago made a deal with W, and she's a man of her word, so she keeps him supplied with enough fresh water to get by every day. Still, when the yield of coconuts becomes bad, or when there's a glut of coconuts on the neighboring island, she is liable to feel that there is an excess of pensioners on the island. U is in desperate need of water and would do almost anything, but he doesn't know how to swim or climb trees. Now, tell me: How does the existence of U help get the fresh water that P needs? How does the existence of P help U find a way to earn his water?
- RobertoG 9y ago
  Imagine a desert island with three inhabitants: W, P, & U. They are primates descending from groups inhabiting the savannah. As all the groups of this kind, they take care of the group whenever there are enough resources. If they are not forced by harsh circumstances, they don't leave to die of hungry the old. In the improbable case that one member of the group doesn't know how to do almost anything, somebody (maybe the older and experimented P predicting that he will be too old for working someday), will teach him how to do it so the economic welfare of the group improve. In the other hand, imagine now that the group is made of Homo Economicus. Wait, why are we imagining this? Such creature doesn't exist.
  - _benedict 9y ago
    You're responding to a totally different point to the one made by the parent. Their point only shows that it is possible to have unemployment and an excess of pensioners. It would have been easier to point out that an excess of pensioners != not enough workers. They're clearly different statements. But the illustration also served the purpose. It did not, as far as I can tell, in any way suggest W should let U and P die, only demonstrated their simultaneous lack of utility for the workforce.
slv77 9y ago
Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when: - Inadequate savings for the median retiree - High levels of wealth inequality - High levels of foreign debt In that case the wealth transfer mechanism is broken. Those that are old are reducing consumption while those that are young can't generate income to replace it while those holding all the wealth (savings) scramble to avoid defaults (and risk) in a rapidly slowing economy.
- RobertoG 9y ago
  "[..] a structured transfer of wealth from the old to the young" Do you mean from the young to the old? How "inadequate savings for the median retiree" create unemployment? I can't think of the mechanism. Do you mean a deficit of investment in the economy from the savings?
  - slv77 9y ago
    "Do you mean from the young to the old?" I'm thinking of wealth as the claim on productive assets such as stocks, bonds and property. Pensions are a structured transfer of wealth from the old to the young and of labor from the young to the old. "I can't think of the mechanism..." Inadequate savings can create structural problems that result in temporary mismatches between the desire to work and the desire to consume. For example if retirees are worried that savings or pensions are inadequate they may delay consumption which can create temporary high unemployment.
tbihl 9y ago
I think you're simplifying the relationships too much. First of all, you can't very easily make more qualified workers because you promised too much to too many pensioners. Those pensioners are counting on promises from their too-big-to-fail governments. Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions. Once you're in the trap, it's not as simple as pensioners employing more unemployed people to make sure they get their pensions.
- RobertoG 9y ago
  It seems to me that if a government can make good its promises to pensioners it's only related with the productive capacity of the economy at the moment of paying. So, related to investment in infrastructure and education now, not so much to saving schemes. "Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions." My understanding was that pensioners would spend the money in the economy, so they are not funneling away from nothing.
- Noseshine 9y ago
  > the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions That is too simplistic for me. Income for one also is income for somebody else down the line. All those "economic" considerations I read about - not just on this topic - remind me of my extremely lousy chess play: Never think more than a single step ahead. But the economy is a circle. All those views are form the PoV of an individual entity - income and expenses, and where it comes from and where it goes "does not matter". But to look at the economy is completely different! Here you have to look at the entire circle, not at just a single piece of the chain. For example, giving old people money, directly or indirectly, leads to an increased flow of money through systems of the economy that are utilized by old people. That would be the health sector most of all, not a lot of change in housing or food (they already had a roof to live under before they retired and they won't eat more food than before). Maybe tourism benefits too. What happens if they get less money? What sector(s) benefit(s), who loses? The purely financial considerations don't make sense to me on the greater economic level. Is the economy suddenly unable to maintain the housing and produce sufficient food because some numbers in some balance sheets are off? That happened a lot in history. My own grand parents lived with at least five different currencies within their lifetime without moving (Germany). We found that "finance" can easily be reset provided people are willing to do so (that's the important part) - what matters is factories, knowledge, culture, trade, etc. There certainly are a lot of problems of high pensions (compared to non-pensioners), for example if the old people end up with a larger share of the available housing, which includes not just housing they themselves use but also housing they control (investments) because that funnels even more of the money flow through the economy through the control of (some relatively few) old people. that may no lead to a housing shortage, after all who owns housing does not seem so important as long as there is enough, but a consequence is that young(er) people feel insecure in their outlook and are more reluctant to have a family. Also, the kinds of housing being built is probably different when done purely as an investment. As for the health sector, I'm not sure how bad it is to have it deal (even more) with old people's problems. After all, aging is everybody's problem at some point and if that leads to progress, be it symptom control or some day even more direct control of aging I don't see why getting more of the economy's money flow to go through that sector would be bad. After all if "cost control" was the overwhelming argument then collective suicide would be the best solution. Since we are alive and like it that way we may as well "waste" our resources on just that. We have that wonderful tool "money" and "finance", but I think too many people have forgotten that it is a tool and treat it like a natural law and the be-all and end-all. We actually have much greater control - and much more arbitrary control than a lot of people think - over how we use the tool. Unfortunately only severe crisis opens the minds of people enough to wield the power we actually have over our own creation.
pixl97 9y ago
Because you're ignoring problem 3. Not enough work. Modern economies run into issues with lots of investment in bubbles that don't increase productivity. Housing booms that rapidly increase the cost of housing don't increase productivity. Investing in ever riskier twisted financial exploitations does not increase productivity. Having huge amounts of taxable income filtered out of the country robs a country from future infrastructure investment, which does not increase productivity.
- RobertoG 9y ago
  OK, but now I don't get how 'not enough work' (I suppose you mean jobs) is a problem. I get how not enough real resources (not enough food, not enough housing, not enough infrastructure, not enough knowledge) is a problem but 'not enough work' doesn't sound like a hard problem.
  - pixl97 9y ago
    Distribution is the hard problem. Capitalism has operated in such a manner that labor has been the means of income redistribution. After you work some time you can invest your income in a market that will provide and even more productive future. When labor becomes disconnected from gaining capital things become problematic in countries that do not believe in wealth redistribution. If you don't have a job "It's your fault for not working hard enough", if you are getting money from the government "you're a welfare queen". You can run into a system that deadlocks. There is plenty of production. There is lots of need. But there is no means of wealth transfer between those two groups and you can run into a state of consumption collapse.
SilasX 9y ago
By being unable to find productive work for the workers. You can't produce anything for the retirees, and you can't find out how to make the workers produce.
- RobertoG 9y ago
  So, we have enough of everything? It sounds like good news for the pensioners.
  - SilasX 9y ago
    That doesn't follow at all and isn't implied by the above model.
    - RobertoG 9y ago
      Ok, why are we unable to find productive work for the workers?
      - SilasX 9y ago
        Lack of ability to find good, regular matches between demand for specific labor services and workers capable of providing such services (sometimes called "sustainable patterns of specialization and trade"). The point is, it's logically and economically possible. You seemed to be under the impression that this situation is inherently contradictory, when it is not.
PaulHoule 9y ago
Disability is an increasing issue, particularly mental health related disability. A very intelligent and agreeable but severely depressed man came out to my farm and I tried to get him to move rocks from one pile to another. He could do it as long as I supervised him, but could not sustain the effort when I was away. Any employee takes a certain amount of time to manage, and that sets it's own floor on the "minimum cost" of hiring an employee. The opiate epidemic is related to a syndrome of chronic pain which is very much a mind-body phenomenon from the viewpoint of biological psychiatry. People get back pain, neck pain, headaches, etc. and there is really no safe and effective treatment -- contacts with the medical system usually make it worse, but often the problem clears up when the patient gets a new job.

treerock 9y ago

Pensioners are also "people without a job".

RobertoG 9y ago
But I though that the problem with pensioners was that there was not enough young workers for maintain them, am I wrong? excess of pensioners => not enough workers unemployed people => excess of workers
- fivestar 9y ago
  The calculus is all broken. The Boomers voted themselves lavish benefits and decided (as always) to screw everyone else. Now we're finding out that "everyone else" can't hardly pay their own bills much less keep all the asinine promises. Something has to give, someone has to end up being the bagholder. Usually that's the younger generation. However, this time, the younger generation has already been fleeced down to the clothes on their back--there is nothing left to skim there. What is going on now is the search for bagholders. I suspect it will be the Chinese, but we'll see.
- arjie 9y ago
  Yeah, but the number of jobs is independent of either of these numbers. You could have no jobs and lots of pensioners. Then everyone wants to work but can't and those who once were working have retired.
  - RobertoG 9y ago
    OK, so, there are not jobs because the economy doesn't need them. So, the economy is producing the same with less jobs. So, where is the problem for covering the needs of the pensioners?
    - arjie 9y ago
      Haha no. There's too much wrong with your understanding for me to help. Good luck but you're on your own.
      - RobertoG 9y ago
        Oh come on, while you are bothering to answer, instead of a condescending remark, you could point me to a link or something.

mac01021 9y ago

Imagine a desert island with three inhabitants: W, P, & U. W climbs trees every day to fetch coconuts and then swims them across the channel to a neighboring island where she barters them away for drinking water and then swims back with jugs full of water. P used to help W with the tree climbing, but is now too old to do the work. However, he long ago made a deal with W, and she's a man of her word, so she keeps him supplied with enough fresh water to get by every day. Still, when the yield of coconuts becomes bad, or when there's a glut of coconuts on the neighboring island, she is liable to feel that there is an excess of pensioners on the island. U is in desperate need of water and would do almost anything, but he doesn't know how to swim or climb trees. Now, tell me: How does the existence of U help get the fresh water that P needs? How does the existence of P help U find a way to earn his water?

RobertoG 9y ago
Imagine a desert island with three inhabitants: W, P, & U. They are primates descending from groups inhabiting the savannah. As all the groups of this kind, they take care of the group whenever there are enough resources. If they are not forced by harsh circumstances, they don't leave to die of hungry the old. In the improbable case that one member of the group doesn't know how to do almost anything, somebody (maybe the older and experimented P predicting that he will be too old for working someday), will teach him how to do it so the economic welfare of the group improve. In the other hand, imagine now that the group is made of Homo Economicus. Wait, why are we imagining this? Such creature doesn't exist.
- _benedict 9y ago
  You're responding to a totally different point to the one made by the parent. Their point only shows that it is possible to have unemployment and an excess of pensioners. It would have been easier to point out that an excess of pensioners != not enough workers. They're clearly different statements. But the illustration also served the purpose. It did not, as far as I can tell, in any way suggest W should let U and P die, only demonstrated their simultaneous lack of utility for the workforce.

slv77 9y ago

Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when: - Inadequate savings for the median retiree - High levels of wealth inequality - High levels of foreign debt In that case the wealth transfer mechanism is broken. Those that are old are reducing consumption while those that are young can't generate income to replace it while those holding all the wealth (savings) scramble to avoid defaults (and risk) in a rapidly slowing economy.

RobertoG 9y ago
"[..] a structured transfer of wealth from the old to the young" Do you mean from the young to the old? How "inadequate savings for the median retiree" create unemployment? I can't think of the mechanism. Do you mean a deficit of investment in the economy from the savings?
- slv77 9y ago
  "Do you mean from the young to the old?" I'm thinking of wealth as the claim on productive assets such as stocks, bonds and property. Pensions are a structured transfer of wealth from the old to the young and of labor from the young to the old. "I can't think of the mechanism..." Inadequate savings can create structural problems that result in temporary mismatches between the desire to work and the desire to consume. For example if retirees are worried that savings or pensions are inadequate they may delay consumption which can create temporary high unemployment.

tbihl 9y ago

I think you're simplifying the relationships too much. First of all, you can't very easily make more qualified workers because you promised too much to too many pensioners. Those pensioners are counting on promises from their too-big-to-fail governments. Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions. Once you're in the trap, it's not as simple as pensioners employing more unemployed people to make sure they get their pensions.

RobertoG 9y ago
It seems to me that if a government can make good its promises to pensioners it's only related with the productive capacity of the economy at the moment of paying. So, related to investment in infrastructure and education now, not so much to saving schemes. "Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions." My understanding was that pensioners would spend the money in the economy, so they are not funneling away from nothing.
Noseshine 9y ago
> the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions That is too simplistic for me. Income for one also is income for somebody else down the line. All those "economic" considerations I read about - not just on this topic - remind me of my extremely lousy chess play: Never think more than a single step ahead. But the economy is a circle. All those views are form the PoV of an individual entity - income and expenses, and where it comes from and where it goes "does not matter". But to look at the economy is completely different! Here you have to look at the entire circle, not at just a single piece of the chain. For example, giving old people money, directly or indirectly, leads to an increased flow of money through systems of the economy that are utilized by old people. That would be the health sector most of all, not a lot of change in housing or food (they already had a roof to live under before they retired and they won't eat more food than before). Maybe tourism benefits too. What happens if they get less money? What sector(s) benefit(s), who loses? The purely financial considerations don't make sense to me on the greater economic level. Is the economy suddenly unable to maintain the housing and produce sufficient food because some numbers in some balance sheets are off? That happened a lot in history. My own grand parents lived with at least five different currencies within their lifetime without moving (Germany). We found that "finance" can easily be reset provided people are willing to do so (that's the important part) - what matters is factories, knowledge, culture, trade, etc. There certainly are a lot of problems of high pensions (compared to non-pensioners), for example if the old people end up with a larger share of the available housing, which includes not just housing they themselves use but also housing they control (investments) because that funnels even more of the money flow through the economy through the control of (some relatively few) old people. that may no lead to a housing shortage, after all who owns housing does not seem so important as long as there is enough, but a consequence is that young(er) people feel insecure in their outlook and are more reluctant to have a family. Also, the kinds of housing being built is probably different when done purely as an investment. As for the health sector, I'm not sure how bad it is to have it deal (even more) with old people's problems. After all, aging is everybody's problem at some point and if that leads to progress, be it symptom control or some day even more direct control of aging I don't see why getting more of the economy's money flow to go through that sector would be bad. After all if "cost control" was the overwhelming argument then collective suicide would be the best solution. Since we are alive and like it that way we may as well "waste" our resources on just that. We have that wonderful tool "money" and "finance", but I think too many people have forgotten that it is a tool and treat it like a natural law and the be-all and end-all. We actually have much greater control - and much more arbitrary control than a lot of people think - over how we use the tool. Unfortunately only severe crisis opens the minds of people enough to wield the power we actually have over our own creation.

pixl97 9y ago

Because you're ignoring problem 3. Not enough work. Modern economies run into issues with lots of investment in bubbles that don't increase productivity. Housing booms that rapidly increase the cost of housing don't increase productivity. Investing in ever riskier twisted financial exploitations does not increase productivity. Having huge amounts of taxable income filtered out of the country robs a country from future infrastructure investment, which does not increase productivity.

RobertoG 9y ago
OK, but now I don't get how 'not enough work' (I suppose you mean jobs) is a problem. I get how not enough real resources (not enough food, not enough housing, not enough infrastructure, not enough knowledge) is a problem but 'not enough work' doesn't sound like a hard problem.
- pixl97 9y ago
  Distribution is the hard problem. Capitalism has operated in such a manner that labor has been the means of income redistribution. After you work some time you can invest your income in a market that will provide and even more productive future. When labor becomes disconnected from gaining capital things become problematic in countries that do not believe in wealth redistribution. If you don't have a job "It's your fault for not working hard enough", if you are getting money from the government "you're a welfare queen". You can run into a system that deadlocks. There is plenty of production. There is lots of need. But there is no means of wealth transfer between those two groups and you can run into a state of consumption collapse.

SilasX 9y ago

By being unable to find productive work for the workers. You can't produce anything for the retirees, and you can't find out how to make the workers produce.

RobertoG 9y ago
So, we have enough of everything? It sounds like good news for the pensioners.
- SilasX 9y ago
  That doesn't follow at all and isn't implied by the above model.
  - RobertoG 9y ago
    Ok, why are we unable to find productive work for the workers?
    - SilasX 9y ago
      Lack of ability to find good, regular matches between demand for specific labor services and workers capable of providing such services (sometimes called "sustainable patterns of specialization and trade"). The point is, it's logically and economically possible. You seemed to be under the impression that this situation is inherently contradictory, when it is not.

PaulHoule 9y ago

Disability is an increasing issue, particularly mental health related disability. A very intelligent and agreeable but severely depressed man came out to my farm and I tried to get him to move rocks from one pile to another. He could do it as long as I supervised him, but could not sustain the effort when I was away. Any employee takes a certain amount of time to manage, and that sets it's own floor on the "minimum cost" of hiring an employee. The opiate epidemic is related to a syndrome of chronic pain which is very much a mind-body phenomenon from the viewpoint of biological psychiatry. People get back pain, neck pain, headaches, etc. and there is really no safe and effective treatment -- contacts with the medical system usually make it worse, but often the problem clears up when the patient gets a new job.