Too Many Americans Will Never Be Able to Retire
bloomberg.com
bloomberg.com
I believe what really needs to be fixed isn't birth rates but rather income inequality/working-class wages.
Surely it would seem like grumbling to dismiss it as: "Now they can keep you alive long enough to squeeze out an extra 675 years at your desk."
This might be rather millenial of me, but I don't view retirement as some long-deferred tasty dessert for being a good compliant worker who eats their vegetables... as much as a someday-unavoidable lifestyle transition.
I wonder how this would play out economically. Most of us here could probably retire by 100 (and many by 50) and have enough accumulated wealth to live off interest. Could we have a world where that many people live off interest forever it would the extra productive years create enough inflation that it's not feasible?
Either way I'd imagine you'd be able to live a more relaxed life. With 50 years work experience you'd probably be very effective. Your probably only need to work 2 or 3 days per week.
Need to boost birth rate, increase automation, and change economic focus. Cut the welfare state down to poverty relief. Pay down the debt. Get a sovereign fund going.
Before then there were pensions which seemed more stable. Only thing I wonder about them is what would happen to the pension if the company went out of business.
Also, I don't have statistics handy but as I recall, we tend to think today that pensions were far more common in the past than they really were.
Best I could find was [1]. 60% of private sector workers covered in 1980 vs. 10% in 2006. Seems to me the reputation is appropriate.
[1]: https://economix.blogs.nytimes.com/2009/09/03/pensions-1980-...
"Seemed" is exactly the right word to use, there. At least you're asking the right questions though, so please don't feel so unhappy about it! Here's a hint which has remarkable general usefulness: if something sounds too good to be true, it usually is.
(Not that I'm saying you're wrong, but you're already dealing with vagaries such as "seemed more stable.")
I can't speak for how they're managed in the states but, in Europe, pensions can be handled in various ways[0]. Generally speaking, they're considered more secured (e.g.: FDIC insurance in the states) than bank accounts and are independent of your actual employer (and follow you, whever you go - even overseas [dependent on bilateral agreements]).
[0] - https://www.pensionsmyndigheten.se/other-languages/english-e...
One change I'd like to see is if a company goes bankrupt the pension fund is ahead of the rest of the creditors. Also underfunded pensions should be considered a liability on the books.
There is a ton of BS in the financial services industry for sure.
"The market" ( which primarily means the S&P 500 ) has only been around a few decades. Talk about "consistent returns is silly for such a short time frame. Also, if we look at other "markets", like the Nikkei for example, we know that the market doesn't have consistent returns over time.
The biggest problem with 401ks is that if you retire during a major market decline, you will be hurting immensely. Of course if you retire during market booms, everything is wonderful. Not to mention that most people don't earn enough and/or put enough in 401ks for it to really matter.
Ideally we would have government back/protected/insured pensions, just like congress has pensions for itself. But somehow they ended up with pensions and we got 401ks. We already had IRAs so if people wanted to directly be involved in the market, they had the choice. 401ks seem redundant to me. Pensions and IRAs seem complementary.
A interesting tidbit - when my company started offering 401ks in the 90s, apparently their match was 25% ( according my old co-workers who were around ). Now it's 3%. Go figure. It seems like companies dangled high matches to get national support for it and once the legislation passed, they cut their match over and over again. Another interesting note is that the old co-workers match are grandfathered in - which means they get that match til they leave. So it seems like corporate america, politicians and the older working generation threw the younger generation under the bus.
Pensions might appear safe but it's all an illusion. If the employer becomes insolvent then you'll only receive a fraction of what you're owed; PBGC insurance is very limited.
That's the problem. Companies/governments said they were stable but they were in fact not because they were based on the capitol returns which as you said "past returns do not indicate future performance". This lead to a bunch of companies/governments overpromising pension payouts and now they either get screwed if it was a company that went/is going bankrupt or the taxpayers get screwed because they are on the hook for those overly generous pension payouts.
For all the faults of 401ks and such, they aren't destabilizing state budgets around the country, and the market is in fact relatively stable if you keep it simple. They also aren't dependent on your company remaining solvent for the rest of time.
We can also relatively stabilize Social Security if we want to, but nobody is willing to make the hard choices to do so: http://conversableeconomist.blogspot.com/2019/01/a-plan-to-f...
Until then, we'll suffer the consequences of turning anti-immigrant, years of property value getting held hostage by the few, and politicians who are fiscally irredeemable at this point (another bomb that will drop on our heads eventually)
I never understand why “tax the ultra wealthy” is always deemed a hard choice, or thought of as untenable. Could they leave the country? Sure! That’s what the exit tax is for upon renouncing US citizenship.
I am not advocating for squeezing the rich to death like a python, but argue that the pendulum has swung to far towards “let them eat avacodo toast and watch Netflix”. The pendulum must swing back a bit.
I think part of the reason is some of those "ultra wealthy" have spent some of their wealth promoting ideas and policies that are favorable to them, though think tanks, etc. I suppose it's kinda like taking out an insurance policy.
Because the ultra wealthy have disproportionate control of the mechanisms of communication and propaganda and don't want to be taxed.
Of course the long arc is always up. Today's market is far above where it was, even after the crashes of 2000 and 2008.
It's an idea that probably should be revisited.
1. Supplementing housing prices or guaranteeing mortgages makes them unaffordable. People cannot afford to have kids
2. The severity of the divorce process makes people unlikely to want to marry. Marriage rates have declined. Less marriages, less kids.
3. Helicopter money keeps real wages down. Cannot afford to have kids.
You may say these are not explicitly "anti-natalist" but in effect they are.
We now have the internet available 24/7. You can have live conversation with people around the world at any time of the day or night. You can get a lot of your sexual and emotional needs met through some means other than a relationship in meat space.
Historically, the default assumption was you got married and presumably the result would be children. We had a lot of cultural norms, like shot gun weddings, to deal with the reality that birth control mostly wasn't a thing and there were consequences to getting your needs met. This was part of why we generally insisted on standards like no sex before marriage.
A lot has changed over the years. For good and for bad.
All of these changes to the tax code have increased the rent which wealthy property owners can extract from younger workers without having to work themselves, at the cost of increasing the tax burden on younger working families, so that they cannot afford to have as many children as early in life.
For US federal policies that are explicitly pro-natalist (and not merely not explicitly anti-natalist), consider the Child Tax Cred, Child and Dependent Care Tax Credit, Family and Medical Leave Act, mandatory maternity coverage in the Affordable Care Act, among others.
You are important your entire life.
The whole ponzi scheme is needed only because we have govts, Central banks, Wall Street looking for inflation and returns. Why not let Wall Street go bankrupt and let the economy deflate?
With the continuing trend of politicians and businesses attacking American retirement options, there's no incentive. Who even says to themselves and their spouse, "Oh man, we should really have more kids, because 40 years from now, social safety nets are going to be compromised if we don't."
Kids are expensive.
Given the current competence of our government - on both sides - I don't think we can count on being Sweden.
What makes people think any Swedish model can work large scale in the US?
Or, the idea may be that smaller countries are more socially cohesive (fewer degrees of separation between people), and therefore it's politically an easier sell to ask people to contribute to the welfare of others.
Sweden (and other Nordic countries to varying extents) are not socialist. They are market economies first and foremost but offer social programs similar to our own that, at least from an outside perspective, appear for more successful in their goals.
Personal views aside (I favor personal freedom and responsibility and the consequences that come of it), the only way I feel you're ever going to achieve any of that here is by addressing human nature. Some subset of the population is only interested in gaining and exerting power over others, others want everything handed to them and don't intend to provide any contribution themselves, another subset wants only to be left alone, and so on. I don't personally see how such disparate views can be reconciled under such a system to avoid the authoritarianism that has always resulted.
[0]: https://fee.org/articles/the-myth-of-scandinavian-socialism/ [1]: https://www.quora.com/Is-Sweden-socialist
Should I also bring up the USSR (Union of Soviet Socialist Republics)? (If you're going to claim "that wasn't really socialist", I will not argue, but I will point out that they at least claimed to be.)
Anyway, the point is not that one should cite Venezuela for "any social experiment". One can cite Venezuela (and Zimbabwe) for the position that having the government controlling the means of production often winds up in poverty. (Socialism is defined as "a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole", per dictionary.com.) That's relevant because mjevans not only called for the government to spend a bunch of money, but called for "full socialism".
Of course we never eliminated homelessness entirely and due to lack of investment in government housing in recent decades along with skyrocketing real estate prices we have a growing homeless problem. But overall it works out well, I'd rather by poor here than in the US.
What a poignant comment, considering right this very moment, there's a socialist collapse in Venezuela being broadcast.
And is there any particular reason, aside from partisan ideology, to point at Venezuela, which is different in many important aspects from the U.S., instead of one of the very successful Western European nations?
Don't let the marketing fool you.
It just calls socialist just like North Korea calls itself a Republic.
The USA is a good example of a socialist country. Or 'democratic socialism' is a better term.
North Korea has self declared itself to be a Republic.
Don't believe the marketing friend.
The U.S. state does control the means of production in certain industries which you see with this current govt shutdown.
Aircraft, roads and highways, and many other industries.
The key tenant of some schools of socialism is for govt to control the means of production for key areas of the public interest such as police,fire fighters, roads, health care. Etc.
What bothers me is the inability of people to differentiate between full on communism and America's/Sweden's/France's measured version of socialism.
It's all lumped under the same umbrella of 'socialism is bad reeeee'.
"Social democracy is a political, social, and economic ideology that supports economic and social interventions to promote social justice within the framework of a liberal democratic polity and capitalist economy."
"Socialism is a range of economic and social systems characterised by social ownership and workers' self-management of the means of production"
And the U.S. government generally does not own the means of production (there may be a few small exceptions). In all of the examples you cite (aircraft, roads, and highways), the government is buying something that is produced by a non-governmental corporation. That is not the same as owning the means of production, which would entails something more like the government owning the heavy equipment used to make roads and highways and employing the workers who operate those machines, or the government owning and operating airplane factories.
What exactly is the growing problem? That those services exist? That they cost money? That the government doesn't spend more on other things that it should, messing up the proportions?
From a socialist's perspective, I don't think the fact that those programs take up "over 62% of the budget" would even be considered a problem at all. However, a socialist would clearly see it as a problem if they're mismanaged or wasteful.
> there's a socialist collapse in Venezuela being broadcast.
To be honest, it seems like that collapse has more to do with authoritarianism and rampant corruption than socialism.
Are you seriously expecting things to become more efficient? That's very optimistic for a nation with so many key economic factors for its working citizens stagnant or declining since the early 70s. Very optimistic.
And, all else being equal, if you want to spend less, you have to neglect more problems (and people).
I think the critique of socialism is that it leads to authoritarianism and rampant corruption because it eliminates economically productive ways to provide for yourself.
There are critiques of capitalism that say the exact same thing.
Personally, I think the key variables that makes a successful economy are actually found outside of the details of its economic system (e.g. rule of law, strong yet uncorrupt institutions, democratic representation, cooperative social mores, etc).
Socialism does not necessarily mean central planning.
Resource allocation via the profit motive is a political consideration; it's not some neutral thing that's somehow above politics.
Socialism is a giant umbrella of political philosophy.
More accurate term would be 'regulated calitalism' or a subtype of socialism called 'democratic socialism'. Both of which coexist alongside of capitalism just fine.
It's always extremes with people on both sides because most people from either side don't understand what they're talking about.
Now, you say '[democratic socialism can] ... coexist alongside of capitalism just fine'. It seems much more likely that it is actually normal socialism with the names of things changed. The issue with socialism is that it vests decision making power with government (topically, the thing that is shut down in America at the moment, showing how reliable governments are).
Decision making power can really only be vested with one person. That person might be a capitalist, a politician, a bureaucrat, a worker or a customer. The only system we know reliably works is a capitalist/customer hybrid where major decisions are split between the two (capitalist gets the how, customers the what), with very mild influence from the rest (eg, safety and environmental regulation, wage negotiations with workers).
When the government starts making and enforcing allocation decisions like 'everyone must be paid this', 'everyone gets a house' or 'everyone should get medical attention', it doesn't matter what you call it - wealth will be destroyed. If the wealth destruction exceeds the ability of the economy to create wealth, there will be mass suffering. It doesn't matter what it is called.
Nothing you said is a fact. Everything you said is 100% opinion.
Everyone's entitled to their opinions.
Nothing much for housing besides the general housing assistance schemes.
A 400% annual tax on the market value means the expect purchase price of an empty lot will approach 3 months worth of tax payments for holding it. A percentage of the gross revenues can be prebated to citizen residents at the beginning of each year to afford taxes due at the end of the year. A large deduction can be granted for land and real estate property tax payments made to state and local governments.
The additional revenues gained from the tax can be used to abolish sales and payroll taxes which fall more heavily on younger working families so it is more affordable for future generations to have a larger number of children earlier in life.