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Note that the article makes a crucial assumption: That all those unfounded future liabilities (most of which are pensions etc. I assume) of governments are fixe

by ar0 9y ago

Note that the article makes a crucial assumption: That all those unfounded future liabilities (most of which are pensions etc. I assume) of governments are fixed and cannot be changed. This isn't true, though: By changing the law, those unfounded liabilities can be erased at the stroke of a pen. What does this mean? That these staggeringly high numbers (if true) do not necessarily mean doom but "merely" that at some point people will find out that the pensions they have been promised won't be there when they reach retirement. (I.e. what the people in Greece are currently painfully experiencing will eventually hit others, too - one pension cut after the other until little is left.) This doesn't necessarily affect "future" generations, though: Those that will pay for it is the generation that lives through the cut, i.e. which has paid into the system before the cut but was due to receive money only after the cut. This can very well be a generation that is alive today. Edit: Just to clarify - the article conflates these financial liabilities with environmental damage. Just to avoid confusion: obviously, environmental degradation cannot be erased with the stroke of a pen, the above is only talking about the financial side of things.

deleted 9y ago
[deleted]
Joe-Z 9y ago
Being born and working in a country with a strong social system, this is just another positive for my current lifestyle: Just earning enough to sustain myself and paying only minimal taxes so as not to waste anything on benefits I will never get back! Now I made myself sad...
- a_bonobo 9y ago
  If everybody behaves like you then the above comment becomes a self-fulfilling prophecy...
  - deusofnull 9y ago
    Maybe, but the blame for this situation can't only be placed on the young who see the system failures approaching. Maybe a system built to provide care to its creators is fatally flawed if it is largely dependent on the consent and participation of children and unborn people of the future? At which point I would like to point out that this world can likely provide for everyone were the economic ideology focused on sustainability and maintaining (at least) baseline human resource needs instead of demanding permanent growth, potmarked by boom-bust crises every 10-20 years.
- ruirr 9y ago
  I was also born in a country "with a strong social system". The so called social system is in shambles, and contributing to it is basically contributing to a ponzi scam.
  - taejo 9y ago
    I think that's what grandparent is getting at. Better to make use of the social system by working little or not at all, now, while it's still paying out, than to contribute now and not get any pension later.
- usuallybaffled 9y ago
  How can it have a strong social system with minimal taxes?
  - kgwgk 9y ago
    I think his point is that he avoids paying high taxes by not earning much.
    - danbolt 9y ago
      Do other people feel this way in regards to social benefits? At least in my line of work, earning more money has much higher value than earning less and having assistance.
      - markvdb 9y ago
        An example from Belgium. Imagine you're an employee and earning 38k€ a year including bonuses. Now you want to start a side activity as an independent contractor. You pay about 53.5% of taxes on this amount. On what is left after taxation, you pay 20.5% social contributions that you get literally nothing in return for. If you choose the cheapest "social contributions" provider. That means you get to keep about 36.96€ for every 100€ in pretax profit. Don't you think this steers people in different directions?
        ENGNR 9y ago
        Wouldn't the equivalent contractor wage factor those costs in though, plus a risk premium for short term work ideally
        jpttsn 9y ago
        What makes you think it would?
        RugnirViking 9y ago
- Roritharr 9y ago
  I have to agree. I see this attitude in ever increasing numbers of German developers as our High-Tax System even openly admits to all the benefits you won't receive. The amount of taxes one has to pay compared to the security one is offered feels strongly out of whack for the 60-200k/yearly family salary bracket. There is braindrain, but also Stockholm Syndrome. I oftentimes see discussions between developers where ones that have left Germany's system get attacked behind their back for being so "irresponsible" and missing out on security systems here, while enjoying, after about two to three years of saving money elsewhere a lifestyle of financial security that is leagues above everything the german social security can offer. There are lots of reasons to stay in Germany, but social security and finances aren't ones if you are a talented developer that is just looking for a good life. It's a strange tension currently, I'm unsure where this will lead in the long run.
  - tushartyagi 9y ago
    Can you please explain a little more? I always thought Germany (and Scandinavia) to be a strong economy where although you pay a lot of taxes, the returns are extremely well in terms of childcare, hospitalization, etc.
    - ido 9y ago
      I assume they compare it to upper-tier high-tech hubs like Silicon Valley, Boston & Seattle - where a software developer can earn well into 6 figures (and double or more of what they'd earn in Germany). But I suspect this is mostly limited to those and very few other cases (e.g. top tier doctors).
      - timr 9y ago
        Yes, but for how long? And what happens after you're put to pasture? You can earn a lot more in the US when you're young (or at least, mid-career), but you'd better hope and pray that you never get sick, or laid off in late-middle age. I've never lived in Germany, so I don't know the problems with their system, but the US system is (currently) a "get yours while the getting is good" approach to life.
patrickg_zill 9y ago
In the former USSR, people were still getting their promised 60 rubles per month pensions. It's just that inflation had eroded the value of each ruble to where the government had no problem paying such an amount. (Later, however, the government did increase many pension payments, from total penury level to grim survival level.)
- mseebach 9y ago
  They're on to that one. All of the "interesting" liabilities are indexed to one (or more - in the UK three) inflation measures.
  - J-dawg 9y ago
    And yet the pledge to link the student loan repayment threshold to average earnings was reversed almost immediately. https://www.theguardian.com/money/2016/nov/22/student-loans-fight-over-disgraceful-freeze-on-income-threshold https://www.theguardian.com/money/2016/nov/22/student-loans-...
    - pjc50 9y ago
      Pensioners have historically voted more than students and young people. If you don't participate in the process, you don't get fair treatment, unfortunately. This seems to have improved somewhat in the 2017 UK election.
      - DanBC 9y ago
        Only 57% of 18-19 year olds and 59% of 20-24 year olds voted. https://yougov.co.uk/news/2017/06/13/how-britain-voted-2017-general-election/ https://yougov.co.uk/news/2017/06/13/how-britain-voted-2017-...
      - crdoconnor 9y ago
        It's not like the consistent Tory voting pensioners were safe either. They tried to axe triple lock, the heating allowance and institute a new NHS tax this time around. The heavily indebted young only voted in droves this time around because for the first time there was actually a party that actually represented their interests. Both pensioners and students would be a lot more screwed right now if the left wing of the Labour party hadn't effected a successful takeover and shifted the overton window.
gnicholas 9y ago
In some jurisdictions, pension guarantees have constitutional protections that may not be erasable by simply passing a bill [1]. While an amendment to the constitution (the CA state constitution, in the case cited) at issue would fix this problem, getting such an amendment passed would not be easy — at least not while many pension recipients are still alive and voting. Senior citizens generally turn out to vote more than other groups, and when their pensions are at risk you can bet they'll show up in force. 1: http://reason.com/blog/2016/11/30/california-supreme-court-will-determine http://reason.com/blog/2016/11/30/california-supreme-court-w...
- jk2323 9y ago
  "In some jurisdictions, pension guarantees have constitutional protections that may not be erasable by simply passing a bill." You would be surprised what bills can be passed. The 3rd Reich ("Nazi Germany") was supposed to last one thousand years by the way. It didn't. And in the end laws won't enable to circumvent the laws of nature (limited resources).
pmontra 9y ago
> Note that the article makes a crucial assumption: That all those unfounded future liabilities (most of which are pensions etc. I assume) of governments are fixed and cannot be changed. This isn't true, though: By changing the law, those unfounded liabilities can be erased at the stroke of a pen. Easier: default on the debt made by previous generations. No law required. If only one country defaults it's going to be hard for them, because the future lack of trust and the inevitable retaliations. If a large enough number of countries default, it's different. The problem is that if they default and start borrowing money again then it will be in vain. Some debt is inevitable (think mortgage to buy a house) but debt for everything is too much despite being convenient: get the money now instead of with next year's taxes and possibly get as much money as the larger country next door (a competitive advantage but be wary of interest rates.)
- nostromo 9y ago
  > Easier: default on the debt made by previous generations. Previous generations didn't leave us with much debt. Half of the debt is from post-2007. 85% or so came after 1990. Previous generations were actually good stewards compared to today.
  - kingkawn 9y ago
    Not if they led us toward this
  - anth1988 9y ago
    Gee, who was in charge since the 1990s.
  - throwaway2048 9y ago
    inflation distorts these numbers pretty massively. Especially when you consider something like "quantitative easing" to actually be causing massive inflation, but not visible to consumers in anything except housing, health care and education (all three are not tracked by typical inflation indicators either). The reason that traditional indicators are not being touched is that money is being sucked out of peoples pockets by the aforementioned three factors faster than printed money can inflate them.
TuringNYC 9y ago
"at some point people will find out that the pensions they have been promised won't be there when they reach retirement." One might argue this has already happened in the US, just subtly. Inflation (mostly ZIRP driven) has been very high, and is a hidden tax on those with fixed incomes. Perhaps headline inflation indicators are not high, but just look at the largest component of spending (rent) and you realize how difficult it must be to live on fixed pension payments. As a double whammy, seniors who tediously saved money hoping to earn interest income in their later years, find that income yield is near zero. This doesn't even consider the other major component of spending (healthcare)...
- deleted 9y ago
  [deleted]
- notacoward 9y ago
  > Inflation (mostly ZIRP driven) has been very high Totally untrue. In 2013-2016 inflation was lower than at any time in the last half century. 2017 has been a bit higher, but still lower than all of 1967-1996. Sure, you can cherry-pick a particular commodity in a particular market to make it seem otherwise, but momentary or local fluctuations in supply and demand aren't really inflation. Inflation is a systemic phenomenon, and it's actually at historic lows. The fact that some people make life choices that subject them to rising costs doesn't really have anything to do with inflation. http://www.usinflationcalculator.com/inflation/historical-inflation-rates/ http://www.usinflationcalculator.com/inflation/historical-in...
  - lotsofpulp 9y ago
    Whatever inflation is being measured should be linked to the choices people are making, otherwise what is the point of measuring it? You need to get higher education, at least bachelors if not masters level, in order to secure a decent income. The cost of this higher education increases at a ridiculous rate, and it's one of the biggest purchases a young person makes. Then you need to live near a city, the bigger the better. That's where all the jobs are and since work is much more fluid, you need to be where there are many employers. Also, you the advantages of networking capabilities in cities will give you a shot at going big. Living costs near large cities have also increased at a rapid pace, whether it be a home or rental. If you're going to have kids, you want them in the best schools, so you pay high property taxes or pay for private school. Best thing you can do to increase the odds of financial success for your kids is to make sure they go to school with other rich kids and have an wealthy network. Then you get start getting sick and need medical care. This is also one of life's huge, unavoidable expenses. There is absolutely no way inflation is low for you if you depend on certain medicines, just read the headlines, the price could skyrocket anytime if the patent holder chooses to.
jk2323 9y ago
"What does this mean? That these staggeringly high numbers (if true) do not necessarily mean doom but "merely" that at some point people will find out that the pensions they have been promised won't be there when they reach retirement." This is true. And since money, debt and energy are interlinked, it is very possible that there will be a cliff that we are approaching. Only two questions remain: 1. When? 2. How deep will we fall? "There is No Steady State Economy (except at a very basic level)" http://ourfiniteworld.com/2011/02/21/there-is-no-steady-state-economy-except-at-a-very-basic-level/ http://ourfiniteworld.com/2011/02/21/there-is-no-steady-stat... Limits to Growth–At our doorstep, but not recognized http://www.resilience.org/stories/2014-02-12/limits-to-growth-at-our-doorstep-but-not-recognized http://www.resilience.org/stories/2014-02-12/limits-to-growt... Wealth And Energy Consumption Are Inseparable http://www.declineoftheempire.com/2012/01/wealth-and-energy-consumption-are-inseparable.html http://www.declineoftheempire.com/2012/01/wealth-and-energy-... Galactic-Scale Energy http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-energy/ http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...
_pmf_ 9y ago
> That these staggeringly high numbers (if true) do not necessarily mean doom but "merely" that at some point people will find out that the pensions they have been promised won't be there when they reach retirement. (I.e. what the people in Greece are currently painfully experiencing will eventually hit others, too - one pension cut after the other until little is left.) Not only Greece; it's the same in Germany. People who have worked their whole life sometimes have a lower pension than they would receive if they would apply for welfare.
TeMPOraL 9y ago
> By changing the law, those unfounded liabilities can be erased at the stroke of a pen. True. However, the problem is: doing that will land a government in a world of trouble. Firstly, the popular unrest. While in my country, it seems that most people under 30 don't believe the government pension scheme will survive to our retirement, people older than that do hope for their promised pension. After all, that's what they worked so hard and paid so many taxes for. Pull the rug out from under them, and my bet is you'll have riots in the streets[0]. Secondly, loss of trust. Kill off something as big as a pension scheme, and good luck in convincing next few generations to believe you if you want to reinstate it again. -- [0] - Related - many young people will join too. While I fully intend to support my mother in her old age, if the government decides to take away her retirement money, I'd be pissed personally too - after all, they'll be impacting my finances as well. Also related: that's why the loss of low-skill jobs by automation can't be ignored by people with high-skill jobs. Because after all, when your father, uncle, sister and closest friends will find themselves unemployed, who will they ask for help?
- Brakenshire 9y ago
  This is one of the major reasons why the UK Conservatives just lost the election, they attempted to 1) Maintain the ratio of working life to retired life by increasing retirement age in proportion to increased life expectancy. Which meant increasing retirement age to 67 by something like 2050. 2) Reduce the triple lock of pensions - which means the state pension rises by a minimum of either 2.5%, the rate of inflation or average earnings growth, whichever is largest - to a double lock, which only includes the latter two elements. 3) Means test the payment of winter fuel allowance, which is a yearly payment of about £300 made to everyone above a certain age, so that it would not be received by wealthy pensioners. 4) Put in place what was effectively an inheritance tax for payment of social care (i.e. care homes and in-home care) after death, which is currently both criminally underfunded and also massively expensive. In combination, this is something like £15bn each year of extra spending now, rising to £50-70bn each year within the next 30 years. All of these measures were opposed by Labour, and their most enthusiastic supporters are the young.
  - 9y ago
coldtea 9y ago
>What does this mean? That these staggeringly high numbers (if true) do not necessarily mean doom but "merely" that at some point people will find out that the pensions they have been promised won't be there when they reach retirement. That's enough doom. What other "doom" would there be?
- mseebach 9y ago
  > What other "doom" would there be? That what little you might have saved/your house is worthless because of inflation and/or punitive taxes. That the economy crashes so you can't take a job/stay on the labour market longer to make up, and your kids, if you have any, won't be able to help you because they have no jobs. That the heath service won't be there, so you risk adding sickness to poverty. Crime and civil unrest.
  - coldtea 9y ago
    You think that if that default happens the economy and jobs will not be impacted, but continue OK?
    - mseebach 9y ago
      No? I think that pensions getting a haircut (to save the larger economy) is significantly less doom-y than the economy at large crashing due to e.g. a default.
crdoconnor 9y ago
"Note that the article makes a crucial assumption: That all those unfounded future liabilities (most of which are pensions etc. I assume) of governments are fixed and cannot be changed. This isn't true, though: By changing the law, those unfounded liabilities can be erased at the stroke of a pen." Ultimately this becomes fight between funding the liabilities (taxing the rich once again) and eliminating the liabilities (screwing the poor pensioners). No politicians intent on slashing pensions would ever admit that it's a choice, though, just as they wouldn't admit that it was a choice to make the liabilities unfunded in the first place. That's why consent for these policies must be manufactured, which in turn is why this article exists - to foment intergenerational strife.
Shivetya 9y ago
Two future obligations are important, the social security and medicare provisions but one is worse Many public employee pensions are in trouble is the idea of pension spiking and double dipping. pension spiking comes about by saving up sick and vacation time and cashing it out at retirement or taking on extra shifts. double dipping occurs where they retire from one qualified job and get into another though this has mostly been seen on the political side. You can end up for 100k retirees which is absurd on any level. the trouble facing reform is there no set outcome in courts. some courts have allowed government to reign in costs and others have forced it back on the taxpayers to make up. California law has been towards and reduction is one category has to be made up in another. Illinois just keeps digging the hole as their State Supreme court has basically stomped on all attempts to fix. The unions representing many government employees are very strong and politically active and if they cannot stop changes in court political intimidation will be the rule. the will simply work to unseat anyone who doesn't play ball. even the threat of reform by changes in party who runs the state brings out tens of millions of dollars and all sorts of shenanigans (look at Minnesota)
usmeteora 9y ago
yeh, I work in clean energy, and I'm all about it, which is why casual conflations or assumed relationships like this are irking, because all it does it add to the pile of things parties that still want to reject climate change get to point to show how many arguments are lacking in substance, this being one of them. I guess its true just about as much as any other correlation can be made with anyone who purchases anything. The more valid and underlying issue I thought would be focused on here is the baby boomers who have paid off their houses, have nice pensions waiting for them and refuse to retire after living 30+ years at the same job, while our generation has to re-educate ourselves 3-4 times over throughout our lifetimes (the first time in college being 500% more calibrated for inflation than baby boomers paid to go to college, many of who didnt need to go to get a good job) and change jobs every 7 on average years to stay relevant and avoid being too niche to niche ourselves out of career growth, which is the opposite approach of most baby boomers, relocate to follow our industries and/or navigate around jobs where we find out there is not career progress for the next 15 years because our superiors won't retire, or require a large amount of effort to navigate around their informaiton hoarding habits to maintain job security. This along with the fact that as our generation is laden with college debt and switching jobs to stay relevant, the few who can manage to pay off loans, afford to livei nc ities where the good jobs are and set aside money for buying a home, are competing with baby boomers for starter homes as baby boomers downsize after kids graduate from college, so now many jobs, even most engineering jobs outside of software have us held back from higher positions and catalyzing change due to baby boomers, and their cash offers make it impossible for promising young couples or individuals to mortage houses. The icing on top of the cake is the passive comments I hear from baby boomers about how we are narcissistic and lazy. I know these are human beings, and they aren ot to just be thrown out as soon as it bcomes inconvenient for society, but moreso than ever I experience a bigoted increase of hatred for our generation couples with a lack of acknowledgement for our hard work, increase in adaptability and refusal and resistance to wanting to grow in any way to even slightly accomodate our generation, and justifying it all under the broad stroke that we are all wasting our lives away taking selfies, and our retirement funds away on avocado toast and urbanoutfitters clothing, most of which is untrue and irrelevant to the group in our generation that works harder and longer hours and puts more time and money in our education to earn stagnant wages, and for those less educated our age who don't have jobs, they have top struggle with being their own brand and selling themselves or personalities in the service industry because there are no factory jobs to send young men of low education into, and I'm sure the baby boomer generation would be experiencing the same issues if factory jobs were not there en masse waiting for them as well.
usmeteora 9y ago
yeh, I work in clean energy, and I'm all about it, which is why casual conflations or assumed relationships like this are irking, because all it does it add to the pile of things parties that still want to reject climate change get to point to show how many arguments are lacking in substance, this being one of them. I guess its true just about as much as any other correlation can be made with anyone who purchases anything. The more valid and underlying issue I thought would be focused on here is the baby boomers who have paid off their houses, have nice pensions waiting for them and refuse to retire after living 30+ years at the same job, while our generation has to re-educate ourselves 3-4 times over throughout our lifetimes (the first time in college being 500% more calibrated for inflation than baby boomers paid to go to college, many of who didnt need to go to get a good job) and change jobs every 7 years to stay relevant, relocate to follow our industries and/or navigate around jobs where we find out there is not career progress for the next 15 years because our superiors won't retire, or require a large amount of effort to navigate around their information hoarding habits to maintain job security. This along with the fact that as our generation is laden with college debt and switching jobs to stay relevant, the few who can manage to pay off loans, afford to live in nice cities where the good jobs are and set aside money for buying a home, are competing with baby boomers for starter homes as baby boomers downsize after kids graduate from college, so now many jobs, even most engineering jobs outside of software have us held back from higher positions and catalyzing change due to baby boomers, and their cash offers make it impossible for promising young couples or individuals to mortage houses. The icing on top of the cake is the passive comments I hear from baby boomers about how we are narcissistic and lazy.
- collyw 9y ago
  Its avocado on toast that causing all their problems. That and iPhones.
OliverJones 9y ago
Pension liabilities are, no doubt, big. But other unfunded large scale liabilities include loans, infrastructure maintenance costs, student loans, household debt, health care costs, etc. Basically all the stuff that turns into daily cash outlays in the Sim City game.
mcv 9y ago
> Those that will pay for it is the generation that lives through the cut, i.e. which has paid into the system before the cut but was due to receive money only after the cut. This can very well be a generation that is alive today. I suspect I'll retire after the cut, but I'm glad I got out of the pension funds before the cut. I have a kind of private pension fund for freelancers, which, if I understand correctly, is technically already my money, so it can't be looted to fund the retirement of someone who retires before I do. I am sad to see the solidarity of pension funds break down like this, and I feel a bit guilty that I'm leading the charge, but that solidarity has to go both ways. Expecting future generations to pay the entire bill for the greed and mismanagement of today, is not solidarity; that's exploitation.
- brazzy 9y ago
  > I have a kind of private pension fund for freelancers, which, if I understand correctly, is technically already my money, so it can't be looted to fund the retirement of someone who retires before I do. Wrong. The only difference is that your pension fund will not be "looted", it will have to cut its payouts because its investments don't yield the same returns as they did before. Inflation will do the rest. Private pension funds and investments are no more sustainable or "honest" than public pensions. The underlying problem is the same: the currently working population has to produce the goods and services for themselves as well as for pensioners. If they cannot produce enough of something, some people won't get that thing, and it doesn't matter what some numbers in accounts say.
  - mcv 9y ago
    > The only difference is that your pension fund will not be "looted", it will have to cut its payouts because its investments don't yield the same returns as they did before. Inflation will do the rest. Only if the economy goes down and inflation goes up. At the moment, inflation is low and the economy is growing. My problem is not so much that I'm exposed to the whims of the economy, because that's unavoidable. My problem is when I need to pay extra so others don't have to feel the whims of the economy while I get to feel it double.
InTempWeTrust 9y ago
Lets just vote on that. Nobody has the intention to build a anti-statistical wall. The youth would never escape the loving hug of the last generation.

by ar0 9y ago

deleted 9y ago

[deleted]

Joe-Z 9y ago

Being born and working in a country with a strong social system, this is just another positive for my current lifestyle: Just earning enough to sustain myself and paying only minimal taxes so as not to waste anything on benefits I will never get back! Now I made myself sad...

a_bonobo 9y ago
If everybody behaves like you then the above comment becomes a self-fulfilling prophecy...
- deusofnull 9y ago
  Maybe, but the blame for this situation can't only be placed on the young who see the system failures approaching. Maybe a system built to provide care to its creators is fatally flawed if it is largely dependent on the consent and participation of children and unborn people of the future? At which point I would like to point out that this world can likely provide for everyone were the economic ideology focused on sustainability and maintaining (at least) baseline human resource needs instead of demanding permanent growth, potmarked by boom-bust crises every 10-20 years.
ruirr 9y ago
I was also born in a country "with a strong social system". The so called social system is in shambles, and contributing to it is basically contributing to a ponzi scam.
- taejo 9y ago
  I think that's what grandparent is getting at. Better to make use of the social system by working little or not at all, now, while it's still paying out, than to contribute now and not get any pension later.
usuallybaffled 9y ago
How can it have a strong social system with minimal taxes?
- kgwgk 9y ago
  I think his point is that he avoids paying high taxes by not earning much.
  - danbolt 9y ago
    Do other people feel this way in regards to social benefits? At least in my line of work, earning more money has much higher value than earning less and having assistance.
    - markvdb 9y ago
      An example from Belgium. Imagine you're an employee and earning 38k€ a year including bonuses. Now you want to start a side activity as an independent contractor. You pay about 53.5% of taxes on this amount. On what is left after taxation, you pay 20.5% social contributions that you get literally nothing in return for. If you choose the cheapest "social contributions" provider. That means you get to keep about 36.96€ for every 100€ in pretax profit. Don't you think this steers people in different directions?
      - ENGNR 9y ago
        Wouldn't the equivalent contractor wage factor those costs in though, plus a risk premium for short term work ideally
        jpttsn 9y ago
        What makes you think it would?
        RugnirViking 9y ago
Roritharr 9y ago
I have to agree. I see this attitude in ever increasing numbers of German developers as our High-Tax System even openly admits to all the benefits you won't receive. The amount of taxes one has to pay compared to the security one is offered feels strongly out of whack for the 60-200k/yearly family salary bracket. There is braindrain, but also Stockholm Syndrome. I oftentimes see discussions between developers where ones that have left Germany's system get attacked behind their back for being so "irresponsible" and missing out on security systems here, while enjoying, after about two to three years of saving money elsewhere a lifestyle of financial security that is leagues above everything the german social security can offer. There are lots of reasons to stay in Germany, but social security and finances aren't ones if you are a talented developer that is just looking for a good life. It's a strange tension currently, I'm unsure where this will lead in the long run.
- tushartyagi 9y ago
  Can you please explain a little more? I always thought Germany (and Scandinavia) to be a strong economy where although you pay a lot of taxes, the returns are extremely well in terms of childcare, hospitalization, etc.
  - ido 9y ago
    I assume they compare it to upper-tier high-tech hubs like Silicon Valley, Boston & Seattle - where a software developer can earn well into 6 figures (and double or more of what they'd earn in Germany). But I suspect this is mostly limited to those and very few other cases (e.g. top tier doctors).
    - timr 9y ago
      Yes, but for how long? And what happens after you're put to pasture? You can earn a lot more in the US when you're young (or at least, mid-career), but you'd better hope and pray that you never get sick, or laid off in late-middle age. I've never lived in Germany, so I don't know the problems with their system, but the US system is (currently) a "get yours while the getting is good" approach to life.

patrickg_zill 9y ago

In the former USSR, people were still getting their promised 60 rubles per month pensions. It's just that inflation had eroded the value of each ruble to where the government had no problem paying such an amount. (Later, however, the government did increase many pension payments, from total penury level to grim survival level.)

mseebach 9y ago
They're on to that one. All of the "interesting" liabilities are indexed to one (or more - in the UK three) inflation measures.
- J-dawg 9y ago
  And yet the pledge to link the student loan repayment threshold to average earnings was reversed almost immediately. https://www.theguardian.com/money/2016/nov/22/student-loans-fight-over-disgraceful-freeze-on-income-threshold https://www.theguardian.com/money/2016/nov/22/student-loans-...
  - pjc50 9y ago
    Pensioners have historically voted more than students and young people. If you don't participate in the process, you don't get fair treatment, unfortunately. This seems to have improved somewhat in the 2017 UK election.
    - DanBC 9y ago
      Only 57% of 18-19 year olds and 59% of 20-24 year olds voted. https://yougov.co.uk/news/2017/06/13/how-britain-voted-2017-general-election/ https://yougov.co.uk/news/2017/06/13/how-britain-voted-2017-...
    - crdoconnor 9y ago
      It's not like the consistent Tory voting pensioners were safe either. They tried to axe triple lock, the heating allowance and institute a new NHS tax this time around. The heavily indebted young only voted in droves this time around because for the first time there was actually a party that actually represented their interests. Both pensioners and students would be a lot more screwed right now if the left wing of the Labour party hadn't effected a successful takeover and shifted the overton window.

gnicholas 9y ago

In some jurisdictions, pension guarantees have constitutional protections that may not be erasable by simply passing a bill [1]. While an amendment to the constitution (the CA state constitution, in the case cited) at issue would fix this problem, getting such an amendment passed would not be easy — at least not while many pension recipients are still alive and voting. Senior citizens generally turn out to vote more than other groups, and when their pensions are at risk you can bet they'll show up in force. 1: http://reason.com/blog/2016/11/30/california-supreme-court-will-determine http://reason.com/blog/2016/11/30/california-supreme-court-w...

jk2323 9y ago
"In some jurisdictions, pension guarantees have constitutional protections that may not be erasable by simply passing a bill." You would be surprised what bills can be passed. The 3rd Reich ("Nazi Germany") was supposed to last one thousand years by the way. It didn't. And in the end laws won't enable to circumvent the laws of nature (limited resources).

pmontra 9y ago

> Note that the article makes a crucial assumption: That all those unfounded future liabilities (most of which are pensions etc. I assume) of governments are fixed and cannot be changed. This isn't true, though: By changing the law, those unfounded liabilities can be erased at the stroke of a pen. Easier: default on the debt made by previous generations. No law required. If only one country defaults it's going to be hard for them, because the future lack of trust and the inevitable retaliations. If a large enough number of countries default, it's different. The problem is that if they default and start borrowing money again then it will be in vain. Some debt is inevitable (think mortgage to buy a house) but debt for everything is too much despite being convenient: get the money now instead of with next year's taxes and possibly get as much money as the larger country next door (a competitive advantage but be wary of interest rates.)

nostromo 9y ago
> Easier: default on the debt made by previous generations. Previous generations didn't leave us with much debt. Half of the debt is from post-2007. 85% or so came after 1990. Previous generations were actually good stewards compared to today.
- kingkawn 9y ago
  Not if they led us toward this
- anth1988 9y ago
  Gee, who was in charge since the 1990s.
- throwaway2048 9y ago
  inflation distorts these numbers pretty massively. Especially when you consider something like "quantitative easing" to actually be causing massive inflation, but not visible to consumers in anything except housing, health care and education (all three are not tracked by typical inflation indicators either). The reason that traditional indicators are not being touched is that money is being sucked out of peoples pockets by the aforementioned three factors faster than printed money can inflate them.

TuringNYC 9y ago

"at some point people will find out that the pensions they have been promised won't be there when they reach retirement." One might argue this has already happened in the US, just subtly. Inflation (mostly ZIRP driven) has been very high, and is a hidden tax on those with fixed incomes. Perhaps headline inflation indicators are not high, but just look at the largest component of spending (rent) and you realize how difficult it must be to live on fixed pension payments. As a double whammy, seniors who tediously saved money hoping to earn interest income in their later years, find that income yield is near zero. This doesn't even consider the other major component of spending (healthcare)...

deleted 9y ago
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notacoward 9y ago
> Inflation (mostly ZIRP driven) has been very high Totally untrue. In 2013-2016 inflation was lower than at any time in the last half century. 2017 has been a bit higher, but still lower than all of 1967-1996. Sure, you can cherry-pick a particular commodity in a particular market to make it seem otherwise, but momentary or local fluctuations in supply and demand aren't really inflation. Inflation is a systemic phenomenon, and it's actually at historic lows. The fact that some people make life choices that subject them to rising costs doesn't really have anything to do with inflation. http://www.usinflationcalculator.com/inflation/historical-inflation-rates/ http://www.usinflationcalculator.com/inflation/historical-in...
- lotsofpulp 9y ago
  Whatever inflation is being measured should be linked to the choices people are making, otherwise what is the point of measuring it? You need to get higher education, at least bachelors if not masters level, in order to secure a decent income. The cost of this higher education increases at a ridiculous rate, and it's one of the biggest purchases a young person makes. Then you need to live near a city, the bigger the better. That's where all the jobs are and since work is much more fluid, you need to be where there are many employers. Also, you the advantages of networking capabilities in cities will give you a shot at going big. Living costs near large cities have also increased at a rapid pace, whether it be a home or rental. If you're going to have kids, you want them in the best schools, so you pay high property taxes or pay for private school. Best thing you can do to increase the odds of financial success for your kids is to make sure they go to school with other rich kids and have an wealthy network. Then you get start getting sick and need medical care. This is also one of life's huge, unavoidable expenses. There is absolutely no way inflation is low for you if you depend on certain medicines, just read the headlines, the price could skyrocket anytime if the patent holder chooses to.

jk2323 9y ago

"What does this mean? That these staggeringly high numbers (if true) do not necessarily mean doom but "merely" that at some point people will find out that the pensions they have been promised won't be there when they reach retirement." This is true. And since money, debt and energy are interlinked, it is very possible that there will be a cliff that we are approaching. Only two questions remain: 1. When? 2. How deep will we fall? "There is No Steady State Economy (except at a very basic level)" http://ourfiniteworld.com/2011/02/21/there-is-no-steady-state-economy-except-at-a-very-basic-level/ http://ourfiniteworld.com/2011/02/21/there-is-no-steady-stat... Limits to Growth–At our doorstep, but not recognized http://www.resilience.org/stories/2014-02-12/limits-to-growth-at-our-doorstep-but-not-recognized http://www.resilience.org/stories/2014-02-12/limits-to-growt... Wealth And Energy Consumption Are Inseparable http://www.declineoftheempire.com/2012/01/wealth-and-energy-consumption-are-inseparable.html http://www.declineoftheempire.com/2012/01/wealth-and-energy-... Galactic-Scale Energy http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-energy/ http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-e...

_pmf_ 9y ago

> That these staggeringly high numbers (if true) do not necessarily mean doom but "merely" that at some point people will find out that the pensions they have been promised won't be there when they reach retirement. (I.e. what the people in Greece are currently painfully experiencing will eventually hit others, too - one pension cut after the other until little is left.) Not only Greece; it's the same in Germany. People who have worked their whole life sometimes have a lower pension than they would receive if they would apply for welfare.

TeMPOraL 9y ago

> By changing the law, those unfounded liabilities can be erased at the stroke of a pen. True. However, the problem is: doing that will land a government in a world of trouble. Firstly, the popular unrest. While in my country, it seems that most people under 30 don't believe the government pension scheme will survive to our retirement, people older than that do hope for their promised pension. After all, that's what they worked so hard and paid so many taxes for. Pull the rug out from under them, and my bet is you'll have riots in the streets[0]. Secondly, loss of trust. Kill off something as big as a pension scheme, and good luck in convincing next few generations to believe you if you want to reinstate it again. -- [0] - Related - many young people will join too. While I fully intend to support my mother in her old age, if the government decides to take away her retirement money, I'd be pissed personally too - after all, they'll be impacting my finances as well. Also related: that's why the loss of low-skill jobs by automation can't be ignored by people with high-skill jobs. Because after all, when your father, uncle, sister and closest friends will find themselves unemployed, who will they ask for help?

Brakenshire 9y ago
This is one of the major reasons why the UK Conservatives just lost the election, they attempted to 1) Maintain the ratio of working life to retired life by increasing retirement age in proportion to increased life expectancy. Which meant increasing retirement age to 67 by something like 2050. 2) Reduce the triple lock of pensions - which means the state pension rises by a minimum of either 2.5%, the rate of inflation or average earnings growth, whichever is largest - to a double lock, which only includes the latter two elements. 3) Means test the payment of winter fuel allowance, which is a yearly payment of about £300 made to everyone above a certain age, so that it would not be received by wealthy pensioners. 4) Put in place what was effectively an inheritance tax for payment of social care (i.e. care homes and in-home care) after death, which is currently both criminally underfunded and also massively expensive. In combination, this is something like £15bn each year of extra spending now, rising to £50-70bn each year within the next 30 years. All of these measures were opposed by Labour, and their most enthusiastic supporters are the young.
- 9y ago

coldtea 9y ago

>What does this mean? That these staggeringly high numbers (if true) do not necessarily mean doom but "merely" that at some point people will find out that the pensions they have been promised won't be there when they reach retirement. That's enough doom. What other "doom" would there be?

mseebach 9y ago
> What other "doom" would there be? That what little you might have saved/your house is worthless because of inflation and/or punitive taxes. That the economy crashes so you can't take a job/stay on the labour market longer to make up, and your kids, if you have any, won't be able to help you because they have no jobs. That the heath service won't be there, so you risk adding sickness to poverty. Crime and civil unrest.
- coldtea 9y ago
  You think that if that default happens the economy and jobs will not be impacted, but continue OK?
  - mseebach 9y ago
    No? I think that pensions getting a haircut (to save the larger economy) is significantly less doom-y than the economy at large crashing due to e.g. a default.

crdoconnor 9y ago

"Note that the article makes a crucial assumption: That all those unfounded future liabilities (most of which are pensions etc. I assume) of governments are fixed and cannot be changed. This isn't true, though: By changing the law, those unfounded liabilities can be erased at the stroke of a pen." Ultimately this becomes fight between funding the liabilities (taxing the rich once again) and eliminating the liabilities (screwing the poor pensioners). No politicians intent on slashing pensions would ever admit that it's a choice, though, just as they wouldn't admit that it was a choice to make the liabilities unfunded in the first place. That's why consent for these policies must be manufactured, which in turn is why this article exists - to foment intergenerational strife.

Shivetya 9y ago

Two future obligations are important, the social security and medicare provisions but one is worse Many public employee pensions are in trouble is the idea of pension spiking and double dipping. pension spiking comes about by saving up sick and vacation time and cashing it out at retirement or taking on extra shifts. double dipping occurs where they retire from one qualified job and get into another though this has mostly been seen on the political side. You can end up for 100k retirees which is absurd on any level. the trouble facing reform is there no set outcome in courts. some courts have allowed government to reign in costs and others have forced it back on the taxpayers to make up. California law has been towards and reduction is one category has to be made up in another. Illinois just keeps digging the hole as their State Supreme court has basically stomped on all attempts to fix. The unions representing many government employees are very strong and politically active and if they cannot stop changes in court political intimidation will be the rule. the will simply work to unseat anyone who doesn't play ball. even the threat of reform by changes in party who runs the state brings out tens of millions of dollars and all sorts of shenanigans (look at Minnesota)

usmeteora 9y ago

yeh, I work in clean energy, and I'm all about it, which is why casual conflations or assumed relationships like this are irking, because all it does it add to the pile of things parties that still want to reject climate change get to point to show how many arguments are lacking in substance, this being one of them. I guess its true just about as much as any other correlation can be made with anyone who purchases anything. The more valid and underlying issue I thought would be focused on here is the baby boomers who have paid off their houses, have nice pensions waiting for them and refuse to retire after living 30+ years at the same job, while our generation has to re-educate ourselves 3-4 times over throughout our lifetimes (the first time in college being 500% more calibrated for inflation than baby boomers paid to go to college, many of who didnt need to go to get a good job) and change jobs every 7 on average years to stay relevant and avoid being too niche to niche ourselves out of career growth, which is the opposite approach of most baby boomers, relocate to follow our industries and/or navigate around jobs where we find out there is not career progress for the next 15 years because our superiors won't retire, or require a large amount of effort to navigate around their informaiton hoarding habits to maintain job security. This along with the fact that as our generation is laden with college debt and switching jobs to stay relevant, the few who can manage to pay off loans, afford to livei nc ities where the good jobs are and set aside money for buying a home, are competing with baby boomers for starter homes as baby boomers downsize after kids graduate from college, so now many jobs, even most engineering jobs outside of software have us held back from higher positions and catalyzing change due to baby boomers, and their cash offers make it impossible for promising young couples or individuals to mortage houses. The icing on top of the cake is the passive comments I hear from baby boomers about how we are narcissistic and lazy. I know these are human beings, and they aren ot to just be thrown out as soon as it bcomes inconvenient for society, but moreso than ever I experience a bigoted increase of hatred for our generation couples with a lack of acknowledgement for our hard work, increase in adaptability and refusal and resistance to wanting to grow in any way to even slightly accomodate our generation, and justifying it all under the broad stroke that we are all wasting our lives away taking selfies, and our retirement funds away on avocado toast and urbanoutfitters clothing, most of which is untrue and irrelevant to the group in our generation that works harder and longer hours and puts more time and money in our education to earn stagnant wages, and for those less educated our age who don't have jobs, they have top struggle with being their own brand and selling themselves or personalities in the service industry because there are no factory jobs to send young men of low education into, and I'm sure the baby boomer generation would be experiencing the same issues if factory jobs were not there en masse waiting for them as well.

usmeteora 9y ago

collyw 9y ago
Its avocado on toast that causing all their problems. That and iPhones.

OliverJones 9y ago

Pension liabilities are, no doubt, big. But other unfunded large scale liabilities include loans, infrastructure maintenance costs, student loans, household debt, health care costs, etc. Basically all the stuff that turns into daily cash outlays in the Sim City game.

mcv 9y ago

> Those that will pay for it is the generation that lives through the cut, i.e. which has paid into the system before the cut but was due to receive money only after the cut. This can very well be a generation that is alive today. I suspect I'll retire after the cut, but I'm glad I got out of the pension funds before the cut. I have a kind of private pension fund for freelancers, which, if I understand correctly, is technically already my money, so it can't be looted to fund the retirement of someone who retires before I do. I am sad to see the solidarity of pension funds break down like this, and I feel a bit guilty that I'm leading the charge, but that solidarity has to go both ways. Expecting future generations to pay the entire bill for the greed and mismanagement of today, is not solidarity; that's exploitation.

brazzy 9y ago
> I have a kind of private pension fund for freelancers, which, if I understand correctly, is technically already my money, so it can't be looted to fund the retirement of someone who retires before I do. Wrong. The only difference is that your pension fund will not be "looted", it will have to cut its payouts because its investments don't yield the same returns as they did before. Inflation will do the rest. Private pension funds and investments are no more sustainable or "honest" than public pensions. The underlying problem is the same: the currently working population has to produce the goods and services for themselves as well as for pensioners. If they cannot produce enough of something, some people won't get that thing, and it doesn't matter what some numbers in accounts say.
- mcv 9y ago
  > The only difference is that your pension fund will not be "looted", it will have to cut its payouts because its investments don't yield the same returns as they did before. Inflation will do the rest. Only if the economy goes down and inflation goes up. At the moment, inflation is low and the economy is growing. My problem is not so much that I'm exposed to the whims of the economy, because that's unavoidable. My problem is when I need to pay extra so others don't have to feel the whims of the economy while I get to feel it double.

InTempWeTrust 9y ago

Lets just vote on that. Nobody has the intention to build a anti-statistical wall. The youth would never escape the loving hug of the last generation.