1 - People should be able to retire.
2 - Their retirement should be financed by 401ks and the like.
3 - Stock Markets can go down as well as up.
You can't have all three, so the government will always ensure that the stock market goes up long term.
2 - Their retirement should be financed by 401ks and the like.
3 - Stock Markets can go down as well as up.
You can't have all three, so the government will always ensure that the stock market goes up long term.
Why? Retirement is a very recent phenomena. The idea of someone earning enough during their working life to then fund several decades of non-working life is a very modern thing, maybe only the last sixty years or so. Only a very rarified few were ever wealthy enough to actively stop working prior to becoming physically unable to work. And then, for most all of human history, those too old to work lived out their remaining few years being taken care of by their children. I'm would not casually assume any "right" to the modern concept of retirement.
I think we all deserve to make progress on things like retirement instead of making arguments like this. Sure, retirement hasn’t always been a guarantee, but can we agree that this isn’t a good thing?
We never question the desire to innovate in how to make money, but we’re often very quick to dismiss the idea that we can also dream to innovate society in a way that’s decoupled from profit, which is sad.
I agree with this, but the problem is that there is no guarantee of work being available to everyone. With the rise of AI and hyper-specialization of work, that problem is only going to get worse.
And yet, here we are with people still working many hours on average and many jobs going unfulfilled. I personally think it’s a problem with our relationship to work, rather than limited opportunity for work. Humans seem to have an insatiable apple for more, which requires continued amounts of work to be done. I think the bigger problem is getting people to have the skills to do the jobs that will still need to be done.
The key here is to make sure that automation and cost efficiencies make it through to the production of necessities, and we don't prop up artificial scarcity.
There are an effectively unlimited number of jobs that employers would pay someone $0.01/hour to do. Not as many that employers would pay $100/hour to do. So if you need to make $100/hour to afford housing and medicine, that's a problem. But if we reduce the artificial scarcity and regulatory overhead in these industries, so you only have to make $5/hour to afford them, we're in a much better place. And all the better if lower costs allow someone to make a living at $2/hour.
AI and automation can help to reduce those costs. As long as they're in the right places (i.e. production of necessities) and we don't have regulatory capture preventing it from happening there.
This doesn't get you out of zoning restrictions but could allow you to recover from their historical effects more quickly after zoning reform is achieved.
That said, some assemblies have become pretty common, I think preassembled roofing trusses are frequently used in favor of framing on site.
This gives me a different idea and I wonder if it's worthwhile.
There are industrial robots that e.g. mass produce cars. Suppose you make one to mass produce housing, but instead of putting it in the factory you put it on the truck. Put it on the construction site. It takes a pile of lumber, cuts it to length and turns it into walls, puts the pipes and wires through the walls etc. This is the kind of thing that existing industrial robots can actually do if you program them appropriately.
Then you send it across the street to put together another building. Assembly line, but the products are big so instead of moving the products to the next station you move the robots.
Houses are made out of wood and tolerances are measured in centimeters if not inches.
I'm not saying its impossible, but I think the marginal costs are too high to replace what we already have. In addition, society has been moving towards individualization since the 1980s. We aren't in the Henry Ford days where people are ok with "any color of car as long as its black." People want individualization when it comes to their homes as well, and that lack of standardization makes automation more difficult than building a modern Levittown with robots.
I'm perfectly happy pursuing my own interests, at my own pace, without having some overlord making sure I'm maximizing value for some corporation. Sure, I don't want to just sit around doing nothing, but there's a wide gulf of possibilities between that and full-time employment.
But for many retirees, they have never developed the mechanisms to continue being a productive member of society without structured work. The net result is a general drop in well being and health in their “golden” years.
Also, i made a comment where I think our relationship to work needs to change. I think that speaks to your point. I don’t think a false dichotomy between “working for the capitalist overlord” and “doing whatever I want” is what I was after.
People, if you disagree, that's fine, but make some kind of a (polite, rational) counterargument rather than abusing "downvote" to express your visceral disgust at becoming aware of an opinion that differs from your own.
I forgot which, but one of the more popular economists of the last century believed that, with productivity gains, people would be working much, much shorter work-weeks by now.
He was only sorta wrong: the productivity gains did actually happen, but we decided to use the extra time to do more work, not do the same amount of work and take the rest in leisure.
There's nothing that says that we as a civilization couldn't decide to slow down and relax more. I know that this won't happen; capitalists run the world, and they'll never accept this sort of arrangement. But it's not like this is some sort of inherent natural must-do state of existence.
Government isn't a static thing - especially one that is elected by the people (for the people). Sooner or later members within said government will also consider retirement. So even if you can elect a government that disagrees with #1, you won't be able to hold it for too long.
If that assumption is correct, this is a relatively new idea, at least in the sense that government has any active responsibility for it.
I can absolutely guarantee you that there are currently elected members of the US Republican Party, and similar political parties in other countries, who do not agree with the concept that government has any role to play in this. Don't work hard enough during your life? Your problem. Don't save/invest appropriately ? Your problem.
100 or 150 years ago, the idea that there would ever be a US government that would take notable steps to try to ensure a moderately comfortable life during retirement would have seemed like a pipe dream. It remains something upon that some political ideologies do not agree with.
You missed one: "inherit"
> borderline unaffordable
It's funded by your own income; it's a compulsory savings plan.
You might not think that's fair. I do. Even under this hypothetical regime, I know who I'd choose to be: rich and paying a ton in taxes, in a heartbeat.
I think my larger point is we have to zoom out for a systems level analysis. We shouldn't assume that the production is de-coupled from the consumption, and production can come with a host of negative externalities. I'm not convinced that wonton consumption (especially for the sake of itself) is a net positive, given human nature's tendency to be insatiable with regard to consumption.
I would include the debasement of one's moral soul for social-climbing purposes in the set of aforementioned sacrifices. :)
In any case, I did mention the dangers of overconsumption. There is something in between that and subsistence that is a net-positive for society (in this epoch, at least).
I'm relatively lucky in that I do hit the SS income cap every year. And I think it's extremely stupid that my paycheck suddenly grows 6.2% well before the end of the year every year. I can absolutely afford to continue paying my 6.2% tax, just like everyone else, and not need special treatment when withdrawal time comes in retirement.
But it's "the third rail" because there is so much money on the table. It's a program that makes transfer payments, which is zero sum, so any change will be fought hard by whoever ends up worse off than they are under the status quo.
Social Security is compulsory savings, and you get out pretty much what you put in.
(Maybe I'm focusing too much on one word.)
> it's "the third rail" because there is so much money on the table.
Also, I think because people feel an existential threat - some people rely on that money to survive.
And because, after seeing that deduction every two weeks for their entire lives, they want their payout.
It pays until you die instead of paying until you run out of savings. The risk it's insuring against is that you live longer than the average person and outlive your savings.
The private insurance companies that offer this type of insurance call it an annuity.
> Also, I think because people feel an existential threat - some people rely on that money to survive.
Nah, the more sensible of the reform proposals are the ones that convert it into a fixed payment for everyone. Those proposals are still every hard to pass because some people would get more than they do now and some would get less, and the people who would get less are the more affluent people with no existential risk, but they would still fight it.
> And because, after seeing that deduction every two weeks for their entire lives, they want their payout.
The program started by making payouts to people who never paid in. Their money is already gone, given to their own parents.
But it is like insurance in that the program is named Old-Age, Survivors, and Disability Insurance (OASDI) Program.
It's also like insurance in that the payout is related to the premium / taxes. If you pay your premiums and experience the covered risks, you (or your survivors) get paid.
It's not like savings, because if you don't experience disability, or old age, you don't get paid. Your survivors might still get something though, I don't know much about survivor benefits.
Disability insurance is available from private insurers, but with different terms. Old-age insurance is more or less an anuity, again available from private insurers, with different terms.
The biggest difference with social security is that smaller incomes (and thus, smaller payments into oasdi) get a larger payment per dollar income if they experience a covered event. Another major difference is that if one has multiple former spouses of marriages that lasted at least 10-years, they're all potentially eligible for spousal benefits and they don't have to share it: no private insurer would sign up for that. Also, the actuarial tables are rarely updated and rather out of date at this point.
The current system is mathematically unsustainable as a result of politics.
If you're going to untie benefits from payments then the first sensible thing to do is to make the same payments to everyone instead of giving more to people who made more money, but this would result in large numbers of affluent retirees voting against you.
If you're going to untie benefits from payments then the second sensible thing to do is to eliminate social security tax whatsoever and fund the program from general revenues, which would remove the need for the farce of a "social security trust fund" (the government owes itself money: it's a debit and a credit in equal amounts and nets to zero). But then people would condemn you for "bankrupting social security" or "stealing the trust fund" or similar nonsense, funded by the people the tax burden would be shifted onto.
Removing the cap while leaving the program as it is not only is worse than either of these things, it doesn't even solve the problem, because the program as-designed would then be making higher payments to all of those people when they retire which would consume more than all of the money they paid in because people who made more money tend to live longer.
Can you elaborate? It seems like the govt has a liability and the pensioners have an asset.
That fund is an asset full of assets. Those assets are government debt. Owning your debt basically nets to 0.
The point is that the "trust fund" is a NOP. It's like writing a check to yourself. When you go to deposit it into your account, your account balance doesn't change.
Every penny the Social Security Administration withdraws from the "trust fund" is either coming out of that year's general revenues or is causing the US government to sell more treasuries into the bond market. It's the same thing that would happen if the "trust fund" was empty and the money the Social Security Administration pays out in excess of what it collected that year came out of general revenues or deficit spending.
Worrying about what happens if it "runs out" is ridiculous. It's like worrying about what happens if you run out of checks you wrote to yourself. What you need to worry about is where you're actually going to get the money.
Which you can go ahead and do already because both "social security tax" and "deficit spending" aren't particularly ideal, but that's what's happening today. Social Security tax is one of the most regressive taxes we have.
This is the kind of economic theory that loses people. It’s like what economists say deficit spending doesn’t matter because a govt isn’t like a person. It certainly matters if confidence in the system matters.
The fact that you acknowledge the money comes from side other source implies there’s a tradeoff. There’s no free lunch here, regardless how creative the accounting gets.
The Social Security Administration charges tax to Bob and then uses the money to make payments to Alice. For some years it was taking in more than it was paying out, so it used the rest to buy US government bonds, which is really just giving the money to Congress to spend on something else. Then Congress spent it on something else. It's all gone. All you're left with is a piece of paper that says the government owes itself money -- and not even as much of it as Bob was promised.
Now Bob is retired and expects his money back. But most of the money went to Alice and the rest went to Congress in 1994. There's no money. If you want money to pay Bob then you need to collect more taxes or sell more government bonds into the market.
So which of those things do you want to do? And if you want to use tax revenue, do you want it to be the regressive inefficiently duplicative social security tax or general taxes that don't charge higher effective tax rates to people who make less money?
Now I will agree that this is a contrived problem because SSI is a contrived system. We could just change the rules and make it continue to work, but that will come with tradeoffs.
It’s possible that the general HN view is skewed because tech tends to pay well and this dynamic erodes at higher levels of income.
Your money is not ever saved for you. Your retirement is NOT funded by your own past taxes. Your retirement is funded by those younger people who are then working and paying taxes.
You can see the details at https://en.wikipedia.org/wiki/Social_Security_Trust_Fund
Payments to retirees are made out of _currently incoming funds_. That is, the money paid in taxes by people currently working is immediately distributed to retired people who are receiving Social Security payments.
It is, in other words, NOT a savings plan. Full stop.
This scheme sort of worked in the 1930s when life expectancies were much lower and only a few people survived to retirement age relative to the much larger number of working people paying taxes.
Since 2009, Social Security has operated at an annual loss: the amount paid out has begun to exceed the incoming taxes. The deficit is expected to increase a lot in the coming years. (See https://www.cbo.gov/sites/default/files/cbofiles/attachments...)
Whatever you may think about whether Social Security is a good idea or whether the goverment ought to provide for retirement, it's clear that the current structure is not going to do that for much longer. A large-scale reform of some kind is coming.