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By 2075, Medicare and Social Security will reach a over 14% of GDP combined, up from around 8% today. To pay that, we'll have to raise taxes by $1.75 trillion u

By 2075, Medicare and Social Security will reach a over 14% of GDP combined, up from around 8% today. To pay that, we'll have to raise taxes by $1.75 trillion using today's GDP figures. That will require just about doubling payroll taxes from the present level. That's probably an underestimate. As population shrinks, GDP will shrink as well, unless we have large gains in productivity, which have stalled. It's not clear to me that the projections about SS/Medicare as a percentage of GDP account for the effect of GDP shrinking due to population decline. CBO assumes a stable population through 2060, using quite arbitrary assumptions about immigration: https://www.cbo.gov/publication/60875 https://www.cbo.gov/publication/60875.

toomuchtodo 1y ago
I agree with your observations. The future will not be as bright as the past, the population boom was already squeezed for the gains. Immigration at the levels needed to change this are unpalatable to most electorates, and with total fertility rate dropping across the world, it's important to be mindful that net migration to Earth is 0 (slide 39). As the economic future deteriorates due to the ever increasing drag of these obligations, I'd expect total fertility rate to continue to decline at present rates (if not slightly accelerate). This creates a self reinforcing feedback loop. A "Demographic Doom Loop" [1]. Happiness is reality minus expectations. [1] https://x.com/KenRoth/status/1753526235173450213 https://x.com/KenRoth/status/1753526235173450213 | https://archive.today/rY4WG https://archive.today/rY4WG
- variadix 1y ago
  The welfare state has to collapse before people realize children are their retirement plan, and that there’s no guarantee the government will take care of them in old age.
  - toomuchtodo 1y ago
    There is no guarantee your children will take care of you. Walk through any nursing or care home and speak with residents, ask the last time a child saw them. One quarter of adult children estranged from a parent - https://thehill.com/blogs/blog-briefing-room/4104138-one-quarter-of-adult-children-estranged-from-a-parent/ https://thehill.com/blogs/blog-briefing-room/4104138-one-qua... - July 19th, 2023
    - Qem 1y ago
      > There is no guarantee your children will take care of you On the flip side, for those childless, it's completely guaranteed none will. > One quarter of adult children estranged from a parent That sounds like a 75% success rate.
      - bryanrasmussen 1y ago
        doubtful 75% is all high quality. The one quarter is probably all really bad, then some of that 75% is bad enough that it won't make much difference. Probably 25% is so into their parents that they will actually take care of them.
- rayiner 1y ago
  All that said, I agree with your general point that the situation with the welfare state is probably fixable, if we don’t enter a doom loop. It’s just more burdensome than lifting the SS cap. I’m more optimistic about non-western countries. I suspect descendants of Puritans will be a historical curiosity in 2500 but I think Muslims and Mormons will still exist.
WalterBright 1y ago
Why does nobody ever factor in the gigantic growth in government?
- myrmidon 1y ago
  "The government" is not actually accruing wealth in pretty much any western democracy-- in fact the exact opposite is happening everywhere. To me it seems clear why government budgets have increase so much. Since the emergence of modern nation states, government responsibilities have grown tremendously, and mostly for good reason: - Infrastructure basically went from dirt roads to highways/railways/airports - Tremendously higher benchmarks for services/regulation (education, pensions, food safety, crime prevention, drinking/groundwater quality, lead pollution, mining/heavy industry regulation, healthcare/-regulation) A lot of those things are new enough that I would argue we are still stabilizing on their total costs, and current government budgets (high AND red literally everywhere) are basically humanity finding out that all those things are not free. But I would also argue that for a big majority of people, this is still a rather decent deal; I would rather pay current (or even higher) levels of taxes than to suffer from lead poisoning, have children crippled from quackery/insufficiently tested medication or needing to pay protection money to the mob. But I'm quite curious: What do you think is the problematic part of government growth? Do you think that Doge, specifically, is successful in identifying and quelling it?
  - WalterBright 1y ago
    > "The government" is not actually accruing wealth I tend to agree with that. But there's no doubt it is dissipating vast amounts of wealth. > it seems clear why government budgets have increase so much There's a vast amount of waste in government spending, and waste as a result of heavy regulation. If you're really interested, https://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/307617/ https://www.theatlantic.com/magazine/archive/2009/09/how-ame...
    - myrmidon 1y ago
      I do agree with you that there is a lot of overhead and waste in the healthcare industry and government in general. But this insight is, to me, just not really actionable. Almost every large organisation seems to end up with a good amount of bloat/overhead sooner or later, and this even includes former super-lean and super-focused enterprises (Intel, Google, AWS, ...), so I don't see how you could ever sidestep this problem completely with the government. Just cutting regulators and government responsibilities in general also seems a really bad idea to me. Reading that article, how many of its complaints would be solved by fully deregulating and letting the market take care of things? 1) Avoidable infections exacerbated by laziness/cost cutting 2) Lack of price/cost transparency 3) Healthcare costs being wasted on advertising/middlemen 4) Doctors specializing in fields that pay well instead of the ones that are most needed to improve health outcomes I'd argue that none of those would be improved by switching to unregulated private healthcare, and a bunch of them would very likely get worse. Another thing to consider when cutting regulation are huge possible negative externalities in general. Just take leaded gasoline as an easy example (because the bill for CO2 emissions is not in yet). The industry basically "self-regulated" until the 60s (and only because it became infeasible to continue hiding lead toxicity by paying or threatening scientists, which it had done for the previous decades): Total costs/damages were enormous-- probably millions of lifeyears lost, but industry/shareholders did not pay a dime after reaping the profits. How could drastic cuts in regulations avoid disastrous outcomes like that?

toomuchtodo 1y ago

I agree with your observations. The future will not be as bright as the past, the population boom was already squeezed for the gains. Immigration at the levels needed to change this are unpalatable to most electorates, and with total fertility rate dropping across the world, it's important to be mindful that net migration to Earth is 0 (slide 39). As the economic future deteriorates due to the ever increasing drag of these obligations, I'd expect total fertility rate to continue to decline at present rates (if not slightly accelerate). This creates a self reinforcing feedback loop. A "Demographic Doom Loop" [1]. Happiness is reality minus expectations. [1] https://x.com/KenRoth/status/1753526235173450213 https://x.com/KenRoth/status/1753526235173450213 | https://archive.today/rY4WG https://archive.today/rY4WG

variadix 1y ago
The welfare state has to collapse before people realize children are their retirement plan, and that there’s no guarantee the government will take care of them in old age.
- toomuchtodo 1y ago
  There is no guarantee your children will take care of you. Walk through any nursing or care home and speak with residents, ask the last time a child saw them. One quarter of adult children estranged from a parent - https://thehill.com/blogs/blog-briefing-room/4104138-one-quarter-of-adult-children-estranged-from-a-parent/ https://thehill.com/blogs/blog-briefing-room/4104138-one-qua... - July 19th, 2023
  - Qem 1y ago
    > There is no guarantee your children will take care of you On the flip side, for those childless, it's completely guaranteed none will. > One quarter of adult children estranged from a parent That sounds like a 75% success rate.
    - bryanrasmussen 1y ago
      doubtful 75% is all high quality. The one quarter is probably all really bad, then some of that 75% is bad enough that it won't make much difference. Probably 25% is so into their parents that they will actually take care of them.
rayiner 1y ago
All that said, I agree with your general point that the situation with the welfare state is probably fixable, if we don’t enter a doom loop. It’s just more burdensome than lifting the SS cap. I’m more optimistic about non-western countries. I suspect descendants of Puritans will be a historical curiosity in 2500 but I think Muslims and Mormons will still exist.

WalterBright 1y ago

Why does nobody ever factor in the gigantic growth in government?

myrmidon 1y ago
"The government" is not actually accruing wealth in pretty much any western democracy-- in fact the exact opposite is happening everywhere. To me it seems clear why government budgets have increase so much. Since the emergence of modern nation states, government responsibilities have grown tremendously, and mostly for good reason: - Infrastructure basically went from dirt roads to highways/railways/airports - Tremendously higher benchmarks for services/regulation (education, pensions, food safety, crime prevention, drinking/groundwater quality, lead pollution, mining/heavy industry regulation, healthcare/-regulation) A lot of those things are new enough that I would argue we are still stabilizing on their total costs, and current government budgets (high AND red literally everywhere) are basically humanity finding out that all those things are not free. But I would also argue that for a big majority of people, this is still a rather decent deal; I would rather pay current (or even higher) levels of taxes than to suffer from lead poisoning, have children crippled from quackery/insufficiently tested medication or needing to pay protection money to the mob. But I'm quite curious: What do you think is the problematic part of government growth? Do you think that Doge, specifically, is successful in identifying and quelling it?
- WalterBright 1y ago
  > "The government" is not actually accruing wealth I tend to agree with that. But there's no doubt it is dissipating vast amounts of wealth. > it seems clear why government budgets have increase so much There's a vast amount of waste in government spending, and waste as a result of heavy regulation. If you're really interested, https://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/307617/ https://www.theatlantic.com/magazine/archive/2009/09/how-ame...
  - myrmidon 1y ago
    I do agree with you that there is a lot of overhead and waste in the healthcare industry and government in general. But this insight is, to me, just not really actionable. Almost every large organisation seems to end up with a good amount of bloat/overhead sooner or later, and this even includes former super-lean and super-focused enterprises (Intel, Google, AWS, ...), so I don't see how you could ever sidestep this problem completely with the government. Just cutting regulators and government responsibilities in general also seems a really bad idea to me. Reading that article, how many of its complaints would be solved by fully deregulating and letting the market take care of things? 1) Avoidable infections exacerbated by laziness/cost cutting 2) Lack of price/cost transparency 3) Healthcare costs being wasted on advertising/middlemen 4) Doctors specializing in fields that pay well instead of the ones that are most needed to improve health outcomes I'd argue that none of those would be improved by switching to unregulated private healthcare, and a bunch of them would very likely get worse. Another thing to consider when cutting regulation are huge possible negative externalities in general. Just take leaded gasoline as an easy example (because the bill for CO2 emissions is not in yet). The industry basically "self-regulated" until the 60s (and only because it became infeasible to continue hiding lead toxicity by paying or threatening scientists, which it had done for the previous decades): Total costs/damages were enormous-- probably millions of lifeyears lost, but industry/shareholders did not pay a dime after reaping the profits. How could drastic cuts in regulations avoid disastrous outcomes like that?