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Comment by munificent | Hacker News Reader

I don't think we have enough longitudinal data for a claim like this.

It's probably a short-term good to zero out your birthrate. That way you have tons of working age people who aren't busy being parents and can do economically useful labor.

But in forty years when those people get too old to work and there's no younger generation to replace them (and take care of them), you're gonna have a really bad time.

My hunch is that contraception is still new enough that countries like the US haven't quite reached the "have a really bad time" side of that curve, but we are fast approaching it. It's going to be rough in the US when all the Boomers retire and start consuming healthcare while there aren't enough young people paying into Social Security to support it.

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Paying for Social Security using payroll taxes as we are currently doing seems like national suicidal, because younger families gain a greater share of their total income from working, rather than from holding land and investments.

Payroll taxes increase the effective tax burden on younger working families in their prime reproductive years, which means they can no longer afford to have the same number of kids, or to have kids as early. When younger workers are taxed, the less affordable it is to create new generations of younger workers, and fertility rates decrease.

The best thing the United States could do to address this would be to eliminate FICA \ self-employment taxes and fund social security out of a general income tax which taxed capital gains and dividends at the same rate as labor income. An even better solution would be fund it via a national real-estate property tax or national land value tax, and not to raise it from taxes on earnings at all, as Thomas Paine originally proposed in Agrarian Justice.

Social Security is funded from payroll for the same reason 401k's are funded from payroll: because it is a retirement program that people invest in while working, and draw down when retired.

Now, I know and you probably know that it is actually run like a transfer program, where the payroll taxes from working people in 2018 are turned right around and sent out as checks to retired people in 2018.

But here's the thing: so are 401k's. The money you spend to buy investments in 2018 doesn't go into a vault; it is transferred to people who are selling investments... people like current retirees who are drawing down their 401k. And then when you're retired in 2048 (or whenever), and you're drawing down your 401k, you'll be getting your money transferred from people who are buying investments... people like younger workers building their nest egg.

Retirement programs are just collections of promises... that's all a financial asset is, a claim against future income. Social Security is a different kind of asset, but it still works fundamentally the same way; you pay into it while working, to create a claim against future payroll tax income when you're retired.

Comparative data is useful if we are examining the claim that "higher birth rates equal more economic growth," which is quite a broad claim. Looking at nation-level data, there's no correlation that I can find between recent birth rates and recent economic growth.

You're addressing a different, more specific question, which is "what will happen to a nation with a strong economy when their birth rate declines?" Answering this is more dependent on longitudinal data. It's fine if you think there's not enough data yet, although I'll point out that that should preclude you from making predictions too...

> It's going to be rough in the US when all the Boomers retire and start consuming healthcare while there aren't enough young people paying into Social Security to support it.

There is really nothing about Social Security that depends on a certain ratio of people. The only things that need to match are the intakes and outlays, in dollars. If a shrinking working population is accompanied by sufficient productivity growth, total economic output will continue to grow and Social Security will remain solvent.

I wouldn't worry about the Boomers specifically; they're already outnumbered about 2:1 by Gen X plus Millenials, and that ratio is growing as older Boomers start to pass away.

The short-term benefit of a lower birthrate is called the "demographic dividend". Think of it like a Golden Age in the Civilization video game series. If you fail to fully capitalize on it, you are storing away trouble.

Well, health care for senior citizens is paid for by Medicare, but I believe that's actually in worse shape?

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