3 ms·

Without a welfare state, sounds like good incentive to have lots of kids!

by lars512 12y ago

guard-of-terra 12y ago
Isn't it kind of hard to simultaneously care about elders and "a lot of" kids?
- latch 12y ago
  Generally, the period where your kids and parents are a handful don't overlap: 0 - 30 - 60.
yitchelle 12y ago
Good incentive indeed. Both of my parents are from Chinese families and grew up in Malaysia. Dad is one of eleven siblings and Mum is one of eight siblings. Back then, it wasn't from the government welfare, it was for the kids to look after the elderly parents. Of course, several things need to be in place for this to play out. The kids needs to be working in a relatively well paid job, the kids needs to have quite a smallish family, the kids must also subscribe to the same mindset as well. Some work out, but the majority does not work out as the mindset of the younger generation starts to shift.
- Theodores 12y ago
  "Dad is one of eleven siblings and Mum is one of eight siblings." Looks like your folks went for the "Human Pyramid Scheme" instead of expecting the government to pay for their old age. But yes, 'Human Pyramid Scheme', it is frightening!
seanmcdirmid 12y ago
It's worse than that. You are forced to save a lot for retirement and medical expenses, which leads to repressed consumer spending, which hurts the economy...in a vicious cycle. Insurance (public or private) to make these expenses predictable can help the economy substantially as consu ers have more confidence to spend (what they have left after paying premiums, of course). You can see this playing out in China right now.
- murbard2 12y ago
  Why? Those savings are lent out to companies who produce the goods that will be consumed by these retirees when they start spending their savings. A lot of savings simply means an economy oriented towards the production of future goods.
  - akgerber 12y ago
    Social Security and Medicare are also essentially longevity insurance, which is extremely valuable. Since one can't predict with any confidence how long one will live beyond 'probably 50-110 years if I don't get hit by a car', retirement savings is much easier when there is a government-provided income floor in case of mistakes in retirement planning. Otherwise, how do you choose between saving enough that you're 80% or 90% or 95% or 99% or 99.9% sure that you'll have enough income for the rest of your life? And if you wish to buy such insurance (an annuity) in the private market, how do you spread risk so that you don't face risk that the company will fail? And how do you make sure that any financial adviser you have doesn't exploit you as you decline mentally? Or do you just save single penny possible and never consume anything? Buy an apartment building and hope like hell your neighborhood doesn't decline? Buy a portfolio of widespread rental houses and try to manage them when you're 85 and have cancer? Hope your children are loyal? Or spread risk by having 6 or more children? Historical experience suggests the outcome of attempts to leave such complexities to individuals is widespread poverty amongst the elderly. And that's not even getting into the question of whether we have a global savings glut. Safe investments are getting awfully expensive, with negative interest rates on some government and corporate bonds being sighted lately.
    - murbard2 12y ago
      You probably didn't mean to reply to my post which is about the effect of savings and consumption on economic activity, but I'll address the points nonetheless. Insurance companies who sell annuities are have credit ratings, and some have been around for quite a while. Metlife was founded in 1868, Prudential 1875, or of course Lloyd's of London 1688. Mental health decline is of course a concern. If you trust your children, or a younger relative, it's a good idea to give them durable financial power of attorney ahead of time. There's no disputing that a social security scheme, or a paternalistic compulsory saving scheme can decrease poverty in the elderly, especially if people are hyperbolic discounters, but it also has downsides. 1) There's a risk that a compulsory saving scheme can be nationalized by the government, as it happened in Argentina for instance. 2) In social security schemes, the money is typically invested but rather spent directly by the government. The hope being that the future tax base can pay for the liabilities. The model has proven unsustainable and eventually requires that government resort to inflation, fiddle with the retirement age, or cut benefits. 3) The money paid into and out of social security is controlled by the government, which gives it a lot of political power. Governments often use their money for nefarious purposes such as wars, cronyism, corruption, etc. Giving them more control can be a bad thing. 4) There are moral concerns with forcing people to participate in a financial scheme against their will.

Without a welfare state, sounds like good incentive to have lots of kids!

by lars512 12y ago

Without a welfare state, sounds like good incentive to have lots of kids!

guard-of-terra 12y ago

Isn't it kind of hard to simultaneously care about elders and "a lot of" kids?

latch 12y ago
Generally, the period where your kids and parents are a handful don't overlap: 0 - 30 - 60.

yitchelle 12y ago

Good incentive indeed. Both of my parents are from Chinese families and grew up in Malaysia. Dad is one of eleven siblings and Mum is one of eight siblings. Back then, it wasn't from the government welfare, it was for the kids to look after the elderly parents. Of course, several things need to be in place for this to play out. The kids needs to be working in a relatively well paid job, the kids needs to have quite a smallish family, the kids must also subscribe to the same mindset as well. Some work out, but the majority does not work out as the mindset of the younger generation starts to shift.

Theodores 12y ago
"Dad is one of eleven siblings and Mum is one of eight siblings." Looks like your folks went for the "Human Pyramid Scheme" instead of expecting the government to pay for their old age. But yes, 'Human Pyramid Scheme', it is frightening!

seanmcdirmid 12y ago

It's worse than that. You are forced to save a lot for retirement and medical expenses, which leads to repressed consumer spending, which hurts the economy...in a vicious cycle. Insurance (public or private) to make these expenses predictable can help the economy substantially as consu ers have more confidence to spend (what they have left after paying premiums, of course). You can see this playing out in China right now.

murbard2 12y ago
Why? Those savings are lent out to companies who produce the goods that will be consumed by these retirees when they start spending their savings. A lot of savings simply means an economy oriented towards the production of future goods.
- akgerber 12y ago
  Social Security and Medicare are also essentially longevity insurance, which is extremely valuable. Since one can't predict with any confidence how long one will live beyond 'probably 50-110 years if I don't get hit by a car', retirement savings is much easier when there is a government-provided income floor in case of mistakes in retirement planning. Otherwise, how do you choose between saving enough that you're 80% or 90% or 95% or 99% or 99.9% sure that you'll have enough income for the rest of your life? And if you wish to buy such insurance (an annuity) in the private market, how do you spread risk so that you don't face risk that the company will fail? And how do you make sure that any financial adviser you have doesn't exploit you as you decline mentally? Or do you just save single penny possible and never consume anything? Buy an apartment building and hope like hell your neighborhood doesn't decline? Buy a portfolio of widespread rental houses and try to manage them when you're 85 and have cancer? Hope your children are loyal? Or spread risk by having 6 or more children? Historical experience suggests the outcome of attempts to leave such complexities to individuals is widespread poverty amongst the elderly. And that's not even getting into the question of whether we have a global savings glut. Safe investments are getting awfully expensive, with negative interest rates on some government and corporate bonds being sighted lately.
  - murbard2 12y ago
    You probably didn't mean to reply to my post which is about the effect of savings and consumption on economic activity, but I'll address the points nonetheless. Insurance companies who sell annuities are have credit ratings, and some have been around for quite a while. Metlife was founded in 1868, Prudential 1875, or of course Lloyd's of London 1688. Mental health decline is of course a concern. If you trust your children, or a younger relative, it's a good idea to give them durable financial power of attorney ahead of time. There's no disputing that a social security scheme, or a paternalistic compulsory saving scheme can decrease poverty in the elderly, especially if people are hyperbolic discounters, but it also has downsides. 1) There's a risk that a compulsory saving scheme can be nationalized by the government, as it happened in Argentina for instance. 2) In social security schemes, the money is typically invested but rather spent directly by the government. The hope being that the future tax base can pay for the liabilities. The model has proven unsustainable and eventually requires that government resort to inflation, fiddle with the retirement age, or cut benefits. 3) The money paid into and out of social security is controlled by the government, which gives it a lot of political power. Governments often use their money for nefarious purposes such as wars, cronyism, corruption, etc. Giving them more control can be a bad thing. 4) There are moral concerns with forcing people to participate in a financial scheme against their will.