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The big problem we have is social programs. They redistribute wealth from young people right now to old people right now, but they are sold to young people as t

The big problem we have is social programs. They redistribute wealth from young people right now to old people right now, but they are sold to young people as though they are investing into their future. As the ratio of young people to old people shrinks our social programs end up in more and more trouble. The fiscal gap is a problem in most developed countries.

wtdata 8y ago
Well, the issue is not taking from young to old, but taking from workers to non workers. The solution is not so complicated and impossible has some people try to put it, you just have to increase the retirement age accordingly. If you live moderately healthy to 95, than it should be perfectly acceptable for you to work until you are 75.
logicchains 8y ago
This program is solvable, with something like Australia's mandatory superannuation or Singapore's Central Provident Fund, where people are forced to save a certain percentage of their income for retirement (and the money is actually saved, they're not just given IOUs for money that will be taken from future young people).
- iguy 8y ago
  But the discipline to stick to such a solution is difficult. Bending the rules just a little more to spend more money this election cycle is always going to be extremely tempting. In addition, the situation is a bit better in this regard for small countries, who can just invest elsewhere. If the whole world tried to do this, it's not clear what they could invest in, as what they want to withdraw in 30 years time is actually the services of cooks and nursing staff etc. who must be of working age at that time.
- Mirioron 8y ago
  Why force it though? Shouldn't it be up to the people whether they want to save it or not? In Eastern Europe this is a concern because many people have lived through their savings evaporating. What's to say that something similar doesn't happen in the future? Furthermore, how would you even implement it? Do young people right now have to pay for the upkeep of the old generation right now and will then have to additionally pay for their own retirement fund? It seems to me that somebody's going to get screwed here.
- chr1 8y ago
  There is no way to actually save money. You perform work for others in exchange for IOUs that you hope to exchange for someone else's work later. If at a later point there are not enough people to do new work, you can't exchange your money(==IOUs) for goods anymore.
phkahler 8y ago
>> They redistribute wealth from young people right now to old people right now, but they are sold to young people as though they are investing into their future. I want to say that's fiction in the US but it's worse than fiction. The social security system pays out about what a person puts in over their lifetime. It is not the young paying the old as you say. But that's not the whole story. The "fund" has been robbed by congress by "investing" the money in government bonds. In other words, other parts of the government "borrowed" the money and spent it. So it isn't spent on old retired people, it's spent on society at large. We're at a tipping point where the net flow of money into the fund should reverse - more paying out than going in - which means those bonds will have to be repaid without taking out new ones. Congress has gotten so used to treating it as a general revenue source that they act like SS is going to be insolvent, when the reality is they can't figure out how to pay it back - it's the government that's really on the edge here. Politicians have tried to paint this many ways to avoid the truth. One even asked the federal reserve to verify that they don't really need to pay off those bonds and the response way basically "um yes you do".
- Mirioron 8y ago
  Of course there are exceptions, but I'm talking about social programs in aggregate in developed countries. Most of them don't work like social security does in the US. For example, I'm not aware of healthcare working like that in any country.
- vageli 8y ago
  > >> They redistribute wealth from young people right now to old people right now, but they are sold to young people as though they are investing into their future. > I want to say that's fiction in the US but it's worse than fiction. The social security system pays out about what a person puts in over their lifetime. Does that payout account for inflation? Why are we forced to give up a percentage of our wealth to let the government manage for us if it's a 1:1 distribution?
  - Mirioron 8y ago
    I think the reason is that many people won't do it otherwise. Once they reach retirement age some of them will complain and others will demand that the government do something about it.

wtdata 8y ago

Well, the issue is not taking from young to old, but taking from workers to non workers. The solution is not so complicated and impossible has some people try to put it, you just have to increase the retirement age accordingly. If you live moderately healthy to 95, than it should be perfectly acceptable for you to work until you are 75.

logicchains 8y ago

This program is solvable, with something like Australia's mandatory superannuation or Singapore's Central Provident Fund, where people are forced to save a certain percentage of their income for retirement (and the money is actually saved, they're not just given IOUs for money that will be taken from future young people).

iguy 8y ago
But the discipline to stick to such a solution is difficult. Bending the rules just a little more to spend more money this election cycle is always going to be extremely tempting. In addition, the situation is a bit better in this regard for small countries, who can just invest elsewhere. If the whole world tried to do this, it's not clear what they could invest in, as what they want to withdraw in 30 years time is actually the services of cooks and nursing staff etc. who must be of working age at that time.
Mirioron 8y ago
Why force it though? Shouldn't it be up to the people whether they want to save it or not? In Eastern Europe this is a concern because many people have lived through their savings evaporating. What's to say that something similar doesn't happen in the future? Furthermore, how would you even implement it? Do young people right now have to pay for the upkeep of the old generation right now and will then have to additionally pay for their own retirement fund? It seems to me that somebody's going to get screwed here.
chr1 8y ago
There is no way to actually save money. You perform work for others in exchange for IOUs that you hope to exchange for someone else's work later. If at a later point there are not enough people to do new work, you can't exchange your money(==IOUs) for goods anymore.

phkahler 8y ago

>> They redistribute wealth from young people right now to old people right now, but they are sold to young people as though they are investing into their future. I want to say that's fiction in the US but it's worse than fiction. The social security system pays out about what a person puts in over their lifetime. It is not the young paying the old as you say. But that's not the whole story. The "fund" has been robbed by congress by "investing" the money in government bonds. In other words, other parts of the government "borrowed" the money and spent it. So it isn't spent on old retired people, it's spent on society at large. We're at a tipping point where the net flow of money into the fund should reverse - more paying out than going in - which means those bonds will have to be repaid without taking out new ones. Congress has gotten so used to treating it as a general revenue source that they act like SS is going to be insolvent, when the reality is they can't figure out how to pay it back - it's the government that's really on the edge here. Politicians have tried to paint this many ways to avoid the truth. One even asked the federal reserve to verify that they don't really need to pay off those bonds and the response way basically "um yes you do".

Mirioron 8y ago
Of course there are exceptions, but I'm talking about social programs in aggregate in developed countries. Most of them don't work like social security does in the US. For example, I'm not aware of healthcare working like that in any country.
vageli 8y ago
> >> They redistribute wealth from young people right now to old people right now, but they are sold to young people as though they are investing into their future. > I want to say that's fiction in the US but it's worse than fiction. The social security system pays out about what a person puts in over their lifetime. Does that payout account for inflation? Why are we forced to give up a percentage of our wealth to let the government manage for us if it's a 1:1 distribution?
- Mirioron 8y ago
  I think the reason is that many people won't do it otherwise. Once they reach retirement age some of them will complain and others will demand that the government do something about it.