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I hate this narrative of "a pyramid scheme was set up by people who were bad at math and/or knew they would be dead before the consequences hit; now you must pr

I hate this narrative of "a pyramid scheme was set up by people who were bad at math and/or knew they would be dead before the consequences hit; now you must produce babies to feed the monster they created". There are so many other ways of stabilizing retirement systems. If by "Social Security" you specifically mean the US system, there is this interesting fact: https://en.wikipedia.org/wiki/Social_Security_(United_States)#Ways_to_eliminate_the_projected_shortfall https://en.wikipedia.org/wiki/Social_Security_(United_States... "If workers and employers each paid 7.6% (up from today's 6.2%), it would eliminate the financing gap altogether." (Also, the payroll ceiling is ridiculously low, and why does it even exist anyway?)

gruez 6y ago
>(Also, the payroll ceiling is ridiculously low, and why does it even exist anyway?) Political support. Currently social security is framed as a forced retirement plan. You pay into it while you're working and once you're retired, your payout is roughly proportional to what you've paid in. If you change it to something resembling transfer payments (ie. what you put in is unlimited but what you get back is fixed) republican support will evaporate.
RestlessMind 6y ago
Social security's solvency depends on a continuous flow of immigrants to the US, which proves my point. Also, that is one aspect. There are multiple others where US depends heavily on immigrant labor (eg. agriculture industry heavily dependent on illegal immigrants). You also need young workers for other functions of the society. If everyone decides not to have babies, then societies have a very precarious future.
- tom_mellior 6y ago
  > Social security's solvency depends on a continuous flow of immigrants to the US If social security depends on a continuous stream of new suckers who pay into the system, then by definition it is a pyramid scheme. Pyramid schemes are inherently broken. Births and immigration can prop the system up for now, but the longer we do that the more painful the inevitable crash will be. (Painful for the new suckers, of course. Not "our" problem!) The only way to fix this is to move away from a system that assumes that exponential growth forever is possible on a finite Earth. If I founded a financial services company offering a retirement fund advertised as "pay in a little, get more out, and don't worry about how that can work as long as we can get new suckers to pay out those who came first", I would be in prison in no time. Rightly so. Let's not pretend that governments can make this work. I'm about as governments friendly as they come, but math says no.
  - bobthepanda 6y ago
    I mean, this is why we’ve gone from defined benefit to defined contribution. The problem is that we kind of foisted retirement planning onto individuals without some prerequisite level of financial security, so now you have people working into their old age because their math didn’t work out in the end.
yeuxardents 6y ago
Thats _right now_ but keep increasing the payees, then the taxes keep increasing. The solution simply cannot be - raise taxes forever each year.
tablespoon 6y ago
> There are so many other ways of stabilizing retirement systems. If by "Social Security" you specifically mean the US system, there is this interesting fact: https://en.wikipedia.org/wiki/Social_Security_(United_States https://en.wikipedia.org/wiki/Social_Security_(United_States... "If workers and employers each paid 7.6% (up from today's 6.2%), it would eliminate the financing gap altogether." (Also, the payroll ceiling is ridiculously low, and why does it even exist anyway?) But the ultimate problem isn't lack of money, it's lack of labor. If you have a shrinking labor pool, increasing prices will neutralize any extra money you tuck away. Labor productivity increases may compensate for this to a degree, but that won't happen evenly, and perhaps not happen in some areas retirees particularly need. I'm reminded of this: https://acoup.blog/2020/07/24/collections-bread-how-did-they-make-it-part-i-farmers/ https://acoup.blog/2020/07/24/collections-bread-how-did-they...: > Money also has one problem that grain does not, which is bound up in the way prices work in agricultural societies. The risks the farming family most wants to insulate themselves against, whether caused by war or harvest failure, are risks that involve a contracting food supply. The thing is, as the food supply contracts, the price of food rises and the ability to buy it with money shrinks (often accelerated by food hoarding by the wealthy cities, which are often in a position to back that up with force as the administrative centers of states). Consequently, for the family, money is likely to become useless the moment it is needed most.
- imtringued 6y ago
  A lot of EU countries suffer from youth unemployment. If you can't even get them to work today you won't get them to work by the time you retire.
  - ido 6y ago
    That's exactly what I was thinking. Have you ever held a job at a moderately large corporation or government? A lot of people do very little at work a lot of the time. There are a lot of jobs we don't really need done (“The bureaucracy is expanding to meet the needs of the expanding bureaucracy” - I have a lot of relatives working in medicine and this is acutely apparent in that field). The first thing any populist politician promises to get elected is that they will create more jobs. I believe the truth is that there isn't so much work that needs to be done as to require a large % of society to work 40+ hours a week. It's mostly a fiction because of beliefs like "people need something to do" or that "welfare=handouts, we can have people freeriding".
dragonwriter 6y ago
The better fix for social security is to uncap the tax (and benefits, though at least one additional bend point would make sense) and apply it to all (not only labor) income.
rayiner 6y ago
The pyramid scheme is physics, not policy. In traditional societies, young workers took care of their elderly parents. Social Security is just an abstraction over that process. At the end of the day, old people aren’t saving cans of food to put away for retirement. People have to make the goods and services old people consume.
- tom_mellior 6y ago
  I don't understand the jump from "social security will run out of money" to the completely absurd "people will stop producing food".

gruez 6y ago

>(Also, the payroll ceiling is ridiculously low, and why does it even exist anyway?) Political support. Currently social security is framed as a forced retirement plan. You pay into it while you're working and once you're retired, your payout is roughly proportional to what you've paid in. If you change it to something resembling transfer payments (ie. what you put in is unlimited but what you get back is fixed) republican support will evaporate.

RestlessMind 6y ago

Social security's solvency depends on a continuous flow of immigrants to the US, which proves my point. Also, that is one aspect. There are multiple others where US depends heavily on immigrant labor (eg. agriculture industry heavily dependent on illegal immigrants). You also need young workers for other functions of the society. If everyone decides not to have babies, then societies have a very precarious future.

tom_mellior 6y ago
> Social security's solvency depends on a continuous flow of immigrants to the US If social security depends on a continuous stream of new suckers who pay into the system, then by definition it is a pyramid scheme. Pyramid schemes are inherently broken. Births and immigration can prop the system up for now, but the longer we do that the more painful the inevitable crash will be. (Painful for the new suckers, of course. Not "our" problem!) The only way to fix this is to move away from a system that assumes that exponential growth forever is possible on a finite Earth. If I founded a financial services company offering a retirement fund advertised as "pay in a little, get more out, and don't worry about how that can work as long as we can get new suckers to pay out those who came first", I would be in prison in no time. Rightly so. Let's not pretend that governments can make this work. I'm about as governments friendly as they come, but math says no.
- bobthepanda 6y ago
  I mean, this is why we’ve gone from defined benefit to defined contribution. The problem is that we kind of foisted retirement planning onto individuals without some prerequisite level of financial security, so now you have people working into their old age because their math didn’t work out in the end.

yeuxardents 6y ago

Thats _right now_ but keep increasing the payees, then the taxes keep increasing. The solution simply cannot be - raise taxes forever each year.

tablespoon 6y ago

> There are so many other ways of stabilizing retirement systems. If by "Social Security" you specifically mean the US system, there is this interesting fact: https://en.wikipedia.org/wiki/Social_Security_(United_States https://en.wikipedia.org/wiki/Social_Security_(United_States... "If workers and employers each paid 7.6% (up from today's 6.2%), it would eliminate the financing gap altogether." (Also, the payroll ceiling is ridiculously low, and why does it even exist anyway?) But the ultimate problem isn't lack of money, it's lack of labor. If you have a shrinking labor pool, increasing prices will neutralize any extra money you tuck away. Labor productivity increases may compensate for this to a degree, but that won't happen evenly, and perhaps not happen in some areas retirees particularly need. I'm reminded of this: https://acoup.blog/2020/07/24/collections-bread-how-did-they-make-it-part-i-farmers/ https://acoup.blog/2020/07/24/collections-bread-how-did-they...: > Money also has one problem that grain does not, which is bound up in the way prices work in agricultural societies. The risks the farming family most wants to insulate themselves against, whether caused by war or harvest failure, are risks that involve a contracting food supply. The thing is, as the food supply contracts, the price of food rises and the ability to buy it with money shrinks (often accelerated by food hoarding by the wealthy cities, which are often in a position to back that up with force as the administrative centers of states). Consequently, for the family, money is likely to become useless the moment it is needed most.

imtringued 6y ago
A lot of EU countries suffer from youth unemployment. If you can't even get them to work today you won't get them to work by the time you retire.
- ido 6y ago
  That's exactly what I was thinking. Have you ever held a job at a moderately large corporation or government? A lot of people do very little at work a lot of the time. There are a lot of jobs we don't really need done (“The bureaucracy is expanding to meet the needs of the expanding bureaucracy” - I have a lot of relatives working in medicine and this is acutely apparent in that field). The first thing any populist politician promises to get elected is that they will create more jobs. I believe the truth is that there isn't so much work that needs to be done as to require a large % of society to work 40+ hours a week. It's mostly a fiction because of beliefs like "people need something to do" or that "welfare=handouts, we can have people freeriding".

dragonwriter 6y ago

The better fix for social security is to uncap the tax (and benefits, though at least one additional bend point would make sense) and apply it to all (not only labor) income.

rayiner 6y ago

The pyramid scheme is physics, not policy. In traditional societies, young workers took care of their elderly parents. Social Security is just an abstraction over that process. At the end of the day, old people aren’t saving cans of food to put away for retirement. People have to make the goods and services old people consume.

tom_mellior 6y ago
I don't understand the jump from "social security will run out of money" to the completely absurd "people will stop producing food".