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The underlying problem is that, aside from hoarding canned food, consumption in the future must be produced by workers in the future. How do you make claims on

The underlying problem is that, aside from hoarding canned food, consumption in the future must be produced by workers in the future. How do you make claims on the output of workers in the future? Pension funds buy up financial assets, so workers in the future will have to give money to the owners of those assets (old people) as interest payments on debt and corporate profits on the goods and service they buy. All of this is intermediated by the financial sector. Financial sector profits and executive compensation keep going up, which means less is left over for investors. The share going to the financial sector is increasing because they are winning the class struggle. One alternative is to bypass the financial sector completely, and simply give old people money and finance that with taxes. Social Security transfers a little under 5% of GDP from working people to old people, with very little overhead, independently of financial market tempests.

omegaworks 7y ago
>Social Security transfers a little under 5% of GDP from working people to old people And since it is capped at $132,900, the burden falls on working people and not on those making more. There is no reason for that cap to exist. In fact, that the ultra-wealthy aren't progressively taxed to fund Social Security ensures the burden falls entirely on people dependent on their labor for survival.
- sk5t 7y ago
  In theory, SS payouts to each individual are proportional to each individual's payments in. In that light what proper purpose is there in forcing higher wage earners to save more?
  - gshubert17 7y ago
    The relationship between average wages and SS benefits: those earning lower amounts receive a higher percentage of their wages as benefits, compared to those earning higher amounts. See [0]. Another way to view this is that there is a welfare component to Social Security. And then there is a component that is based on what you earn. This was the basic compromise when Social Security was created in the 1930s. The upper limit to FICA (Federal Insurance Contributions Act) taxes on wages, is a way to downplay the welfare aspect of Social Security. Some people think we should acknowledge the welfare aspect and go ahead and tax all wages (like the US does for Medicare), but others don't think that's fair to high wage-earners. [0] https://financialducksinarow.com/4414/social-security-income-replacement-rates/ https://financialducksinarow.com/4414/social-security-income...
BenoitEssiambre 7y ago
>aside from hoarding canned food That's not true. A lot of non financial assets can last years or even decades: Cars, houses, renovations, factories, inventory, household supplies (toilet paper, razor blades etc.), clothes, tools, durable goods, washing machines, stoves, furniture, some commodities (processed metals, wood, sand, gravel etc), building materials, public infrastructure, education, some food items (salt, sugar, rice, pasta ...). If you know that the ratio of workers to consumers is dropping, it might make sense to promote investment in these things before workers become too scarce. Incidentally, low or negative interest rates promotes investment in these things. Buying these things is a way for people to save and consume at the same time. During a recession, promoting spending in these categories is probably a good way to boost GDP without pushing people to draw down their savings too much. They can instead go from financial savings to physical savings.
- viburnum 7y ago
  Thanks, that's related to the point I was making, that it's completely normal for long-lived assets to have a negative rate of return (depreciation).
- elliekelly 7y ago
  > Buying these things is a way for people to save and consume at the same time. This is the myth that Baby Boomers have been fed. They've been told their home is worth $X but when they're ready to retire and the next generation can't afford to buy it they're going to suddenly be without the savings they've been banking on and we're all going to be in a boatload of trouble.
  - BenoitEssiambre 7y ago
    It doesn't have to have positive returns to be considered a saving. You buy a house, you get to live there rent free for decades even if you can't sell it for much at the end. That's still worth a lot.
    - elliekelly 7y ago

omegaworks 7y ago

>Social Security transfers a little under 5% of GDP from working people to old people And since it is capped at $132,900, the burden falls on working people and not on those making more. There is no reason for that cap to exist. In fact, that the ultra-wealthy aren't progressively taxed to fund Social Security ensures the burden falls entirely on people dependent on their labor for survival.

sk5t 7y ago
In theory, SS payouts to each individual are proportional to each individual's payments in. In that light what proper purpose is there in forcing higher wage earners to save more?
- gshubert17 7y ago
  The relationship between average wages and SS benefits: those earning lower amounts receive a higher percentage of their wages as benefits, compared to those earning higher amounts. See [0]. Another way to view this is that there is a welfare component to Social Security. And then there is a component that is based on what you earn. This was the basic compromise when Social Security was created in the 1930s. The upper limit to FICA (Federal Insurance Contributions Act) taxes on wages, is a way to downplay the welfare aspect of Social Security. Some people think we should acknowledge the welfare aspect and go ahead and tax all wages (like the US does for Medicare), but others don't think that's fair to high wage-earners. [0] https://financialducksinarow.com/4414/social-security-income-replacement-rates/ https://financialducksinarow.com/4414/social-security-income...

BenoitEssiambre 7y ago

>aside from hoarding canned food That's not true. A lot of non financial assets can last years or even decades: Cars, houses, renovations, factories, inventory, household supplies (toilet paper, razor blades etc.), clothes, tools, durable goods, washing machines, stoves, furniture, some commodities (processed metals, wood, sand, gravel etc), building materials, public infrastructure, education, some food items (salt, sugar, rice, pasta ...). If you know that the ratio of workers to consumers is dropping, it might make sense to promote investment in these things before workers become too scarce. Incidentally, low or negative interest rates promotes investment in these things. Buying these things is a way for people to save and consume at the same time. During a recession, promoting spending in these categories is probably a good way to boost GDP without pushing people to draw down their savings too much. They can instead go from financial savings to physical savings.

viburnum 7y ago
Thanks, that's related to the point I was making, that it's completely normal for long-lived assets to have a negative rate of return (depreciation).
elliekelly 7y ago
> Buying these things is a way for people to save and consume at the same time. This is the myth that Baby Boomers have been fed. They've been told their home is worth $X but when they're ready to retire and the next generation can't afford to buy it they're going to suddenly be without the savings they've been banking on and we're all going to be in a boatload of trouble.
- BenoitEssiambre 7y ago
  It doesn't have to have positive returns to be considered a saving. You buy a house, you get to live there rent free for decades even if you can't sell it for much at the end. That's still worth a lot.
  - elliekelly 7y ago