Hacker News Reader

Comment by pannSun | Hacker News Reader

> Industrialized nations that have relied on continuous GDP growth need immigration

Correction: the industries, not the nations, need immigration to continue their pace of growth.

Well, if you want your national pension plans to support seniors so they don't have to eat dogfood, yeah, you need immigration (or new births) to support them.

So the wealthiest nations need immigration or their elderly will eat dogfood. Then presumably the elderly in other nations simply die upon retirement? Since their nations are both less wealthy and don't benefit from immigration, what other possibility is there?

In other countries? Either the government goes further into debt to support the elderly or they return to elderly moving in with their kids to support them.

Singapore is facing this. I can remember the exact numbers but there were 8 working age people for every senior in the 70’s and by 2040 it’ll 2 to 1.

So basically either younger folks face higher taxes or the elderly do without.

You mean the pensions are Ponzi schemes, where each cohort requires youngsters to feed it to survive?

How evil are we?

That is how all savings work. You understand that when you save for retirement, you are not burying food in the ground so that you can dig it up and eat it when you stop working, right? Instead, you are purchasing claims on future production. It is always the production of the next generation that feeds the current retired generation, as our time transportation technology still lacks the ability to actually save consumer goods for the future.

Not exactly.

The government pension schemes do not provide anything back to the chumps of the next generation.

Savings are put in financial institutions and earn money based upon how much money those financial institutions are able to earn by redeploying that money to help businesses grow.

There's quite a bit of difference between investing and extracting donations

They are both claims on future production, exactly as I said. If the future generation produces 50% less, then there will be 50% less for retirees to consume. It does not matter whether retirement is financed with social security or private savings, there will just be 50% less in both cases.

In neither case do claims on future production "help the business grow". Capital markets price claims, they never fund them, so at best you can say that correct pricing of claims helps allocate investment more efficiently, but that only requires marginal participation in capital markets in order to set prices.

So while capital markets play an important role in setting relative prices of investments, and thus of allocating money away from lower return and toward higher return investments, they play no role in absolute quantity of investment made. For that, just as loans create deposits, so investments create savings - not the other way around. If you are a farmer deciding to buy a new tractor, I guarantee you that you will never be waiting for someone to skip a meal and save in order for you to be able to finance the purchase of your tractor. Rather, an increase demand for consumption goods is required to increase investment and make the bank approve your tractor loan. That tractor investment is never funded by individuals choosing to "save". Rather, the purchase of the tractor is what causes aggregate savings to go up ex post, and whether pensions are funded with transfers or with capital markets has no bearing on whether it makes financial sense for you to take out the tractor loan and thus on aggregate savings.

I cannot claim to be surprised how ignorant the HN crowd is on basic economic matters. Its bizarre to think that some bizarre financial engineering produces the returns, instead of actual young people providing labor.

The downvotes to your original comment is very typical of the HN crowd.

How can you not know that this has how it has always been and this is how it can only be?! The young have to support the old people. Your index funds dont magically grow at 7% per year if there are no young people working!

The "nation" is a vague sociocultural and sociolegal construct. It's not a concrete thing that exists per se and therefore it doesn't have needs in the abstract. In the context that the GP was talking in, it's obvious they were using "nation" to refer to the economic prosperity of a country. This is what industry needs, but it's also what everyday people need.

Er, isn't the birth rate in the West well below replacement rate?

This would not be an issue if we didn’t live in an absurd system demanding constant growth.

a more diverse workforce is less likely to unionise, so ''want" might be a better word here

Reply on news.ycombinator.com