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World savings is a misnomer. You redeem savings by drawing on the resources of the rest of society. The world can't be a net saver. Imagine a desert island of
by graeme 7y ago
World savings is a misnomer. You redeem savings by drawing on the resources of the rest of society. The world can't be a net saver.
Imagine a desert island of two people. They have a system of savings. You can bank away a voucher that makes the other person gather coconuts for you, and do other necessary work.
One of the two people could conceivably work harder in their youth and then work less later using the vouchers. But:
1. They can't both do it
2. If the other person loses capacity to work hard in their later years, your savings voucher loses value.
How can they both save? To a limited extent, they can store resources like extra coconuts, build infrastructure and tools while young, etc. But this only goes so far: food rots, infrastructure depreciates.
On a global scale the world is no different. A savings shortfall means that global youth productivity won't be high enough to support global elderly retirement. We will need to either:
1. Get youth more productive
2. Make more youth
3. Take a greater percent of youth's income
4. Have old people live on less or not retire so early
Notice that none of these are about saving now? That's because moving 1's and 0's in a ledger isn't a provisioning of future goods. You need actual future goods production.
- akerro 7y ago>1. Get youth more productive Youth is always more productive because they use tools and strategies worked out by the older. >2. Make more youth In some wealthier, western countries many people in their 20s and 30s can't afford to have a dog. >3. Take a greater percent of youth's income That's how you divide a nation, young will hate the old, riots will start. Check out "2030: The Real Story of What Happens to America" >4. Have old people live on less or not retire so early That's how politicians lose support, Brexit happened because more old people voted than young people, now opinions of old people are being listened to, young are ignored, because they have less voting power.
- foogazi 7y ago> In some wealthier, western countries many people in their 20s and 30s can't afford to have a dog. How can anyone not afford a dog? They are free and don’t eat that much
- rinze 7y ago> They are free and don’t eat that much "Free" after veterinary costs and a bit of equipment. Plus the food. Let's say that's N dollars per month. That's the N dollars some people don't have. Or, if they have them, it can be seen as a failure of the current embodiment of capitalism: obviously someone is not extracting enough rents.
- EForEndeavour 7y agoFood is not the only cost of owning a dog. Vet bills alone can bankrupt an owner. Besides, you'll have a hard time giving a good life to a dog if you're working long hours or more than one job.
- SuoDuanDao 7y agoYour logic seems to require labour to be the primary creator of value. Returning to your desert island analogy, both castaways could spend their youth planting coconut trees close to their shelter, thereby reducing the amount of work needed to gather coconuts as their mobility decreases. It seems to me that any economic system which invests in productivity and automation could similarly replace the labour required to subsidize the 'retired' population by investing in labour replacement technologies.
- nicoburns 7y agoRight, but money sitting in a bank account isn't necessarily being invested in a meaningful way. A lot of "investment" these days is in financial instruments, which don't generate value in the way that would be realise these benefits.
- SuoDuanDao 7y agoAh, I understand the criticism now. I was thinking of these investments as buying shares in companies that make automated nurses etc.
- Fjolsvith 7y agoWrong. Money sitting in a bank account is loaned out by the bank to people who will use that money profitably. The only place that money can sit without contributing to the economy is in a piggy bank or under a mattress.
- gnosis89 7y agoFalse. Trillions of dollars are simply re-invested in financial activities (many of which are risky and borderline illegal as well as insured by your taxes) that serve only to generate more numbers with 0 physical contribution to the world. At least you can lift your mattress up with money underneath it or use your piggy bank as a paper weight.
- Fjolsvith 7y ago
- dtech 7y ago1 seems achievable by automation. We already see that farming is done by a tiny fraction of the people that were necessary 100 years ago, and it seems feasible that most manufacturing is automated in another 50 years or so. In your analogy, both people can redeem their coconut voucher if they've built a robot that gathers the cononuts.
- blaser-waffle 7y agoSo we've got the labor / actual-physical-production thing squared away... but then who is going to fund this?
- belltaco 7y agoWho funded the worldwide automation and improving yields of agriculture?
- 0x445442 7y ago>> 1. They can't both do it Yes they can. Assuming there are enough resources to sustain both their entire lives (let's say 75 years); each can work enough to accumulate those resources in 50 years so they don't have to work the final 25 years.
- throwaway925 7y agoSaving is equal to investment. More savings means more capital next period. Sounds like a good idea. Liabilities just means delegation of investment.
- perlgeek 7y ago> 1. Get youth more productive 2. Make more youth 3. Take a greater percent of youth's income 4. Have old people live on less or not retire so early 5. Automate more, and make sure the production value from the automation benefits those that need it. This is the basic idea behind Universal Basic Income. If you have a coconut harvesting robot, none of the two islanders need to work -- assuming there isn't a third person charging them for the coconuts.
- basch 7y agoWhat are they going to do with the coconuts, are they free, whats the point of cash then if they both have cash? Why would either accept cash from the other?
- kbutler 7y agoYou could just stockpile long shelf-life foods and literally save today's production for future consumption https://www.offthegridnews.com/off-grid-foods/stockpiling-101-which-foods-really-have-the-longest-shelf-life/ https://www.offthegridnews.com/off-grid-foods/stockpiling-10... > You need actual future goods production. That's the real key to "world savings", and in your terms you can think of it as "making youth more productive" (or making the elderly productive enough). In the desert island, You seem to imagine that labor is a zero-sum game (the desert island is the same tomorrow as today) rather than a positive-sum, where I improve the world by my labor, in addition to providing for today's consumption. Imagine an isolated homesteading family with no community. How would this person/family save for old age? By building up the farm, building tools, planting orchards, building irrigation systems, managing forests, so that today's labor can reduce the amount of labor required for the future. Agafia Lykova is such a person - https://www.businessinsider.com/72-year-old-hermit-lives-in-siberian-wilderness-photos-video-2017-6#and-hey-maybe-you-read-russian-22 https://www.businessinsider.com/72-year-old-hermit-lives-in-... - she lives alone, using tools saved from an earlier time, in a home her family built in previous decades. Life with this infrastructure, including maintenance, requires less effort than initial construction, which was done when there was surplus labor available. Similarly for a country or a world - the net savings exists in acquired infrastructure (capital) that enables future production (& consumption). Trees are a good example - by planting fruit trees (capital investment), I enable future fruit harvests. Managed timber forests provide future lumber (or fuel) production decades later. Similar investments in infrastructure (water systems, equipment, buildings, etc.) all represent net saved value today that enhances future production in subsequent years. Yes, labor is required in future years, both for production and maintenance (unless/until we can fully automate), but the ratio of consumption today to future consumption is not constant, even in global sum (e.g., the years 1940-1945 may have been a world-wide net loss of acquired capital, certainly for Europe). That net improvement in infrastructure is global savings (or loss).
- wait-a-minute 7y agoNote that as savings pile up in banks and brokerages, they supply the world with more loans for starting new businesses or new ventures. The money in a bank doesn't just sit there. It is a basis for economic activity throughout the country and even the rest of the world. A more appropriate example is not an island that constrains population, but a population where new people are born and make investments into new businesses and new ideas. You can certainly have people transition more towards savings over time as they enter their prime career earning potential, without it impacting the rest. This is because there will always be other people who are willing to start businesses.
- graeme 7y agoI addressed that by saying the islanders could work on infrastructure and labour saving tools while young. That's investment, deferred consumption. However, this has limits. A country with a 8:1 worker:retiree ratio is currently much more productive than a country with a 2:1 or a 1:2 ratio. Maybe savings could change this for the future, by really making something that hardly needs labour. But presently we have a real labour barrier to this kind of saving. I agree it would be better if we saved more though, as this does indeed translate to invest. I hadn't explicitly spelled this out, so thanks. The islanders are indeed better off if they defer. But, they cannot make themselves so well off as when their society was young, and they still need some labour.
- fooker 7y ago>They have a system of savings. Or they could have a system where they store food for the winter...