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It's important to keep in mind that current workers always are the ones supporting current retirees. It doesn't matter if it's through taxes in a pay-as-you-go

It's important to keep in mind that current workers always are the ones supporting current retirees. It doesn't matter if it's through taxes in a pay-as-you-go system like Social Security, or through the various investments a fully funded account would own. At the net macroeconomic level, workers make stuff and a portion of that gets redirected to taxes, debt repayment, and return-on-capital that non-workers then consume. In other words, GenX getting squeezed by debt payments and cost-of-living etc isn't something that comes ex nihilo. It's deeply related to the demographic situation - large number of long-lived Baby Boomers compared to the demographic makeup of prior generations.

cimmanom 7y ago
And to keep social security solvent for GenX would require squeezing Millennials even harder by increasing the taxes or reducing payouts or both.
- british_india 7y ago
  Or the entire system can be fixed by removing the social security withholding cap, currently at $137k. Remove that for all income and the problem is solved.
- ThrustVectoring 7y ago
  Reducing future payouts doesn't make Millennials worse off today from an analysis of the flows of real goods and services. At most, it means they need to save more to maintain the same expected standard of living at retirement, which ends up bidding up asset prices and thus indirectly subsidizing retirees currently selling assets.
- pmoriarty 7y ago
  Or, you know, the US could refrain from starting three trillion dollar wars, and cut the bloated military budget.
  - ThrustVectoring 7y ago
    That only buys time against the long-term trend of increasing retirees per worker. Which is great and all, but there's only so much military budget bloat to cut. Eventually you need either higher taxes or savings, more workers per retiree (eg, through raising retirement age), higher worker productivity, or lower real consumption by retirees.
treis 7y ago
> At the net macroeconomic level, workers make stuff and a portion of that gets redirected to taxes, debt repayment, and return-on-capital that non-workers then consume It's not quite that simple. "Stuff" can be divided into things we consume (spending) and things that build more stuff (investment). You can spend more on factories, infrastructure, etc. and then shift towards consumables as the number of non-workers increase. Of course we didn't do that, but it's at least theoretically possible.
- ThrustVectoring 7y ago
  The marginal factory has an expected net present value of zero - if it were positive, market forces would already be adding them. Maybe you can find some examples of over-regulated long-lived infrastructure (nuclear power comes to mind), or non-excludable goods (roads and bridges), but there's a remaining problem that these things don't typically live long enough for a 30 year old to build and then enjoy the fruits thereof in their 80s.

cimmanom 7y ago

And to keep social security solvent for GenX would require squeezing Millennials even harder by increasing the taxes or reducing payouts or both.

british_india 7y ago
Or the entire system can be fixed by removing the social security withholding cap, currently at $137k. Remove that for all income and the problem is solved.
ThrustVectoring 7y ago
Reducing future payouts doesn't make Millennials worse off today from an analysis of the flows of real goods and services. At most, it means they need to save more to maintain the same expected standard of living at retirement, which ends up bidding up asset prices and thus indirectly subsidizing retirees currently selling assets.
pmoriarty 7y ago
Or, you know, the US could refrain from starting three trillion dollar wars, and cut the bloated military budget.
- ThrustVectoring 7y ago
  That only buys time against the long-term trend of increasing retirees per worker. Which is great and all, but there's only so much military budget bloat to cut. Eventually you need either higher taxes or savings, more workers per retiree (eg, through raising retirement age), higher worker productivity, or lower real consumption by retirees.

treis 7y ago

> At the net macroeconomic level, workers make stuff and a portion of that gets redirected to taxes, debt repayment, and return-on-capital that non-workers then consume It's not quite that simple. "Stuff" can be divided into things we consume (spending) and things that build more stuff (investment). You can spend more on factories, infrastructure, etc. and then shift towards consumables as the number of non-workers increase. Of course we didn't do that, but it's at least theoretically possible.

ThrustVectoring 7y ago
The marginal factory has an expected net present value of zero - if it were positive, market forces would already be adding them. Maybe you can find some examples of over-regulated long-lived infrastructure (nuclear power comes to mind), or non-excludable goods (roads and bridges), but there's a remaining problem that these things don't typically live long enough for a 30 year old to build and then enjoy the fruits thereof in their 80s.