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Good god, this is an awful opinion. Every economic system and model depends on future expansion of both capital and human resources. There are no theories of a

Good god, this is an awful opinion. Every economic system and model depends on future expansion of both capital and human resources. There are no theories of at scale planning for a future has less stuff and fewer people and no growth or even shrinkage. The "can't afford" BS is the mantra of private capital, which does a great job of funding the .1% and an awful job of funding the 99.9%, which is what pensions do. The fact that expected benefits may not be fully achieved due to, I don't know, inability to predict the future has been used as a straw man to dismantle what have been in historical terms far and away the most successful at scale future funding schemes. The repeated failures of unplanned models get lost down the memory hole. We need a new term to complement "Ponzi scheme" to capture the mass reality distortion that index funds make everyone their own best investment manager.

leetcrew 7y ago
I'm curious, what would your objection be to having the government switch to defined contribution plans? as in, take the same amount of money used to fund the pensions, and use it to fund employees retirement accounts instead. if I were the employee, I would greatly prefer the second option. would you prefer the pension?
deftnerd 7y ago
I agree, but I think this highlights a structural problem with our economic system, specifically when it comes to population growth. There are plausible reasons to decrease populations in regions or entire countries. With climate change getting more serious, we'll soon start having to move populations away from flood prone areas or areas with increasing desertification. Many of those towns and cities started their own infrastructure projects paid with bonds that assume a certain population, and thus tax base, growth. Younger generations, for several reasons from despair about ecological future to high costs of living to stagnant wages, are opting to not have children. Other countries, like Japan, have struggled economically because of declining birth rates. If we (the US) had a more open borders policy with an easier path to citizenship, we could use immigrants to boulster our population and tax base. With migrating and shrinking populations, I can't think of other economic instruments to pay for local infrastructure projects that have routinely been paid with long-term municipal bonds.
- raxxorrax 7y ago
  To be honest, your plan sounds similar to a cocaine party where drugs got scarce and everybody tries to call their dealer in despair to keep the party going for a few more hours. There is zero incentive for younger people to engage in that if not for complete dependence within such a system. If that is the outlook, no economic instrument can be the solution since the way the economy is driven is the problem itself. If you generalize your strategy to a global level you will end up in the exact same spot.
barry-cotter 7y ago
> Every economic system and model depends on future expansion of both capital and human resources. Sustained economic growth is a product of the Industrial Revolution so this is only true if you ignore almost all of human history. > There are no theories of at scale planning for a future has less stuff and fewer people and no growth or even shrinkage. On at least one interpretation this is how total war usually works in industrial societies. The Roman Empire abandoned long settled territory full of Roman citizens on more than one occasion, Britain, Dacia, so dealing with economic contraction is also far from unknown historically, even for well developed states with a literate culture and bureaucracy. > The "can't afford" BS is the mantra of private capital, which does a great job of funding the .1% and an awful job of funding the 99.9%, which is what pensions do. You radically underestimate the proportion of the population who would be basically ok in a world without defined benefit pensions or one where they don’t exist at all. The professional classes would be just fine if they had to arrange their own retirements instead of having financial intermediaries do it. > The fact that expected benefits may not be fully achieved due to, I don't know, inability to predict the future has been used as a straw man to dismantle what have been in historical terms far and away the most successful at scale future funding schemes. Nothing has been dismantled yet. I’m not aware of a single developed country without a non-contributory old age pension. More generally people I respect, like Noel Maurer, have said that the US’ Social Security system can be made sound with quite feasible increases in taxation. This does not apply, to the best of my knowledge to the large public sector pensions though. They were based on assumptions of economic and population growth that just don’t hold and without politically impossible levels of taxation they’re doomed. > The repeated failures of unplanned models get lost down the memory hole. Well no one planned those unplanned models. Extremely generous public sector pensions have been known to be actuarially unsound for decades. The planners know very well a reckoning is coming. They just hope it doesn’t happen while they’re in office. > We need a new term to complement "Ponzi scheme" to capture the mass reality distortion that index funds make everyone their own best investment manager. At least investment funds don’t saddle the taxpayer with obligations run up by long gone politicians. There are well run government pension systems, or there’s one, Singapore’s.
- jonahbenton 7y ago
  We are not in disagreement about most of this except for the comment about professional classes being just fine if they have to arrange their own retirements. The overwhelming evidence is that they are not, full stop. Take away social security- a defined benefit model- and real estate and at best the professional class in the US has sufficient investments only to retire to thailand, not the US. Open the conversation to cover professionals who are younger and are subjected to education debt and there is no argument that individual self-funded "retirement" is even an option.
Mary-Jane 7y ago
> Every economic system and model depends on future expansion of both capital and human resources. This is not true. There is a negative correlation between economic growth and population growth, e.g. economic growth slows as population grows. https://www.theigc.org/blog/is-population-growth-good-or-bad-for-economic-development/ https://www.theigc.org/blog/is-population-growth-good-or-bad...
- selectodude 7y ago
  That’s kind of the cart leading the horse a little. High birth rates are correlated with poor countries. As countries become more efficient, birth rates go down. When you graph that, you can make it look like the high birth rate was causing the economic sluggishness.

leetcrew 7y ago

I'm curious, what would your objection be to having the government switch to defined contribution plans? as in, take the same amount of money used to fund the pensions, and use it to fund employees retirement accounts instead. if I were the employee, I would greatly prefer the second option. would you prefer the pension?

deftnerd 7y ago

I agree, but I think this highlights a structural problem with our economic system, specifically when it comes to population growth. There are plausible reasons to decrease populations in regions or entire countries. With climate change getting more serious, we'll soon start having to move populations away from flood prone areas or areas with increasing desertification. Many of those towns and cities started their own infrastructure projects paid with bonds that assume a certain population, and thus tax base, growth. Younger generations, for several reasons from despair about ecological future to high costs of living to stagnant wages, are opting to not have children. Other countries, like Japan, have struggled economically because of declining birth rates. If we (the US) had a more open borders policy with an easier path to citizenship, we could use immigrants to boulster our population and tax base. With migrating and shrinking populations, I can't think of other economic instruments to pay for local infrastructure projects that have routinely been paid with long-term municipal bonds.

raxxorrax 7y ago
To be honest, your plan sounds similar to a cocaine party where drugs got scarce and everybody tries to call their dealer in despair to keep the party going for a few more hours. There is zero incentive for younger people to engage in that if not for complete dependence within such a system. If that is the outlook, no economic instrument can be the solution since the way the economy is driven is the problem itself. If you generalize your strategy to a global level you will end up in the exact same spot.

barry-cotter 7y ago

> Every economic system and model depends on future expansion of both capital and human resources. Sustained economic growth is a product of the Industrial Revolution so this is only true if you ignore almost all of human history. > There are no theories of at scale planning for a future has less stuff and fewer people and no growth or even shrinkage. On at least one interpretation this is how total war usually works in industrial societies. The Roman Empire abandoned long settled territory full of Roman citizens on more than one occasion, Britain, Dacia, so dealing with economic contraction is also far from unknown historically, even for well developed states with a literate culture and bureaucracy. > The "can't afford" BS is the mantra of private capital, which does a great job of funding the .1% and an awful job of funding the 99.9%, which is what pensions do. You radically underestimate the proportion of the population who would be basically ok in a world without defined benefit pensions or one where they don’t exist at all. The professional classes would be just fine if they had to arrange their own retirements instead of having financial intermediaries do it. > The fact that expected benefits may not be fully achieved due to, I don't know, inability to predict the future has been used as a straw man to dismantle what have been in historical terms far and away the most successful at scale future funding schemes. Nothing has been dismantled yet. I’m not aware of a single developed country without a non-contributory old age pension. More generally people I respect, like Noel Maurer, have said that the US’ Social Security system can be made sound with quite feasible increases in taxation. This does not apply, to the best of my knowledge to the large public sector pensions though. They were based on assumptions of economic and population growth that just don’t hold and without politically impossible levels of taxation they’re doomed. > The repeated failures of unplanned models get lost down the memory hole. Well no one planned those unplanned models. Extremely generous public sector pensions have been known to be actuarially unsound for decades. The planners know very well a reckoning is coming. They just hope it doesn’t happen while they’re in office. > We need a new term to complement "Ponzi scheme" to capture the mass reality distortion that index funds make everyone their own best investment manager. At least investment funds don’t saddle the taxpayer with obligations run up by long gone politicians. There are well run government pension systems, or there’s one, Singapore’s.

jonahbenton 7y ago
We are not in disagreement about most of this except for the comment about professional classes being just fine if they have to arrange their own retirements. The overwhelming evidence is that they are not, full stop. Take away social security- a defined benefit model- and real estate and at best the professional class in the US has sufficient investments only to retire to thailand, not the US. Open the conversation to cover professionals who are younger and are subjected to education debt and there is no argument that individual self-funded "retirement" is even an option.

Mary-Jane 7y ago

> Every economic system and model depends on future expansion of both capital and human resources. This is not true. There is a negative correlation between economic growth and population growth, e.g. economic growth slows as population grows. https://www.theigc.org/blog/is-population-growth-good-or-bad-for-economic-development/ https://www.theigc.org/blog/is-population-growth-good-or-bad...

selectodude 7y ago
That’s kind of the cart leading the horse a little. High birth rates are correlated with poor countries. As countries become more efficient, birth rates go down. When you graph that, you can make it look like the high birth rate was causing the economic sluggishness.