It's not finance, it's your pensions
theloop.ecpr.eu
theloop.ecpr.eu
The US has pushed the burden of retirement onto individuals, hoping that the private sector will offer incentives like 401k matching and generous health care plan subsidies, but this is a fundamental difference in who qualifies, what they receive, and how it's funded. These effects compound wealth and income inequality. If, for whatever reason, you're locked out from a job that would help pay for these programs, there's no coming back. You are dependent on the government at the same time as the government is underfunding the program you rely on. It's not a great situation.
Which brings the question ... WHY did they do this?
Politicians: to spend the money (and not on retirees, on their own projects), in other words: when it comes to money, ideally you do not own, but do decide what money is spent on.
Banks (and the rich in general): to redirect a percentage of the money to themselves in 1000 different ways. They can't really get money unless there is large amounts of socially accepted debt in society, it doesn't work: can't get blood from a stone.
Now, when this leads to the problem that either the money disappears, or the social contract behind the debt disappears (ie. either pensions drop to almost nothing, and the spending/social contract (ie. if pensions aren't paid out/aren't livable the willingness of people to pay for pensions disappears, and the debt ... oh dear god the horror ... disappears, and with it the lifeblood of banks and the rich). Then of course panic sets in, and suddenly when THEY get in trouble any law change imaginable is suddenly on the table.
The scary part is the obvious solution, the only solution really. You know what would solve the pension crisis without destroying the social contract? If the elderly were to die (a lot) faster. That is the only way the politicians can keep spending and banks can keep their profits. Which is exactly what Trump's doing with the enormous increase in medical costs. For the elderly it's simple: pay ... or die. That's the new social contract here. In other words: in what I'm sure will come as a total surprise to everyone, when democrats get control again, they will see how much it costs, how much of their projects it would kill ... and then will not refund Obamacare to anywhere near the level before Trump and they will in fact vote to keep this new social contract in place.
Of course reality is simple: politicians and the rich are promising pensions to everyone, and the really obvious truth is starting to become glaringly fucking obvious: they're lying. One way or another, you're not getting the pension you paid for, you're not getting the medical care you're paying for. You paid the money, and ... you're NOT getting the service you paid for! You also, of course, don't get to stop paying, in fact they're demanding more now. You don't get to stop working. Obviously, politicians don't want to be called to account for that one.
Kill the elderly: it's either that ... or take the money from the rich. Easy choice, no?
Defined contribution plans don't have the same flaw. What you get out of it depends on how much money you put in and how much alpha your investments get. If you don't have enough to support a comfortable lifestyle in retirement, it's not the government's fault, it's user error: You didn't put enough money in, or you didn't invest it properly. The politicians set up systems to help you; "If you didn't use them properly, too bad, so sad, but it's not our fault," they say.
There are only ever too many poors in America by virtue of inequality.
It comes largely from the middle and working classes, who pay a higher tax rate than wealthy people.
> many poor people can make a country hard to live for the richest (crimes for example)
I'm not convinced that poverty causes crime. It might be lack of public services, such as health care, shelter, food, education (creating social mobility), safety net, etc.
But if you already have enough to never need to work again, you should be fine in almost any liberal and politically stable country, and there's something to be said about moving to a lower CoL place where you can afford a nicer home, etc.
Americans have worse health outcomes (including lifespan), travel far less and have less time off, and retire later. That said, you do get much more space, nicer housing stock, (arguably) better access to education, and generally more 'stuff', so it's a tradeoff.
It's a hard life in Europe. My friend owns 11 bars that are packed 24/7 on a Mediterranean shoreline. He is what anyone would call successful. But he lives in a little apartment and drives a beat up old Mercedes, not because he's modest but because that's what "rich" looks like in Europe. If you ask him, he'll tell you that taxes ensure that you can never be rich in Europe.
My friend in middle America owns one bar, multiple houses, multiple cars, kids in private school. And what's mind blowing is that no one in America would consider him "rich." That's just middle class America.
I'd love to visit wherever you're going to point to as a counter example. Let me know where I'm headed this summer.
Btw I checked about health outcomes. It's actually only true if you look at America as an average. Middle America has much better health outcomes. Look at Utah for example. Again, point was that middle America isn't like the coasts.
https://www.cdc.gov/nchs/data-visualization/state-life-expec...
Utah is 1.7 years behind the EU average. Even Hawaii with the highest life expectancy in the US is behind all but the former Eastern Block EU countries.
https://web.archive.org/web/20240324032202/https://www.ined....
(Archive link to get comparable 2022 data.)
But I bet healthcare costs are way higher there. To match with higher income, I guess.
I should add though that life expectancy is affected at least as much by social policy as by healthcare spending. Much of the difference is a result of cars/guns/drugs killing more people earlier in life in the US than in Europe.
https://www.cdc.gov/nchs/state-stats/deaths/homicide.html
https://www.cdc.gov/nchs/state-stats/deaths/suicide.html
https://www.cdc.gov/nchs/state-stats/deaths/accidents.html
More on the drivers of lower life expectancy in US here:
https://www.healthsystemtracker.org/chart-collection/what-dr...
Compared to where? What is that based on? The strong public sentiment, determining elections, is that the US is unaffordable. People work multiple jobs and can't afford health care, housing, education, or even food.
But you can look at random places like Tel Aviv, or London, or Milan. CoL is high in big cities around the world.
How about South Dakota vs the UK.
>The strong public sentiment
That's everywhere in the world. Of course, politicians are catering to what everyone complains about. But objectively, healthcare is better than it ever has been in the history of the world in every country in the world, including the US.
Right?
So you're right, it determines elections. But it shouldn't. That's really what I'm trying to say.
In fact, I pay their private health care costs myself because I don't want to wait a year for them to get shoulder surgery in the "free" health care system that's clearly not free.
If you value a big house and are content to drive for all your errands most of the US is set up for that.
From here we can then move to a lower CoL place or stay put, whatever makes sense for our families.
There’s no way you’re really this dumb.
It’s much easier to afford good schools, safe neighborhood, luxuries and travel in most of Western Europe than it is in the US. Because the first two are basically free, travel is cheap, so you have plenty left over for luxuries (unless you want like race cars or something)
In Russia $1M gives you financial independence for life
A great war means both our countries will be thoroughly nuked.
You can become financially independent in most parts of the US. You definitely do not need $10M. $1.5M is enough. If you want a lavish lifestyle or you want to have complete control over where you live, of course that will require more, but financial independence means only that you have enough to cover the bills and live a modest but comfortable lifestyle.
There are no trends of rich people thinking about moving to US from here in Switzerland for example, unless they want really to start some startup and already aim very high (but then Asia offers much more for less money, there is no US moat I could see). US as a country these days is mostly despised, thanks to your current government and its behavior.
Of course some US folks see it differently but but thats emotional view of home-is-always-best. Or literally prefer heavily class-based society based on wealth - we don't do that in Europe anymore.
The NYC metro area alone has 3x more billionaires than Switzerland and Monaco combined (although Monaco has only two.)
This isn't about politics or anything like that. The US simply offers the broadest range of services (vertically and horizontally) for ultra wealthy individuals, and extremely friendly capital environments.
https://www.fool.com/retirement/2024/05/27/heres-how-many-mi...
Yeah yeah, illiquid household wealth … but millionaires nonetheless.
Here is a measure of upward mobility. We are 27 out of 82 right below Lithuania
Top attractors are London (non-dom era), Singapore, Dubai, Miami, Austin, SF, NYC, Hong Kong (pre-[1])
Top repellers/outmigration are London (post-abolition of non-dom), Moscow, Hong Kong (post-[1]), China, high-tax zones in Europe, India, developing nations
For places that are in both lists but at different times, you can see the massive impact of public policy (non-dom tax haven, Chinese hand)
[1]https://en.wikipedia.org/wiki/2020_Hong_Kong_national_securi...
Goes to show it is possible to tax people quite a lot and still be an attractive place to live, but you do need to bring something special (which in 2026 means "be the centre of the world for either tech or finance").
If you're good at that stuff but still very much second tier (London), the tax rate seems to matter a lot
Lax immigration policies were thought a solution to that, though I think almost anyone would agree (non the least the immigrants themselves) that the implementation of this solution was bungled fairly spectacularly.
Regardless of the merits of immigration as a solution, the nordics are very much, along many other western countries, kind of stuck between a rock and a hard place with regards to the demographic distribution.
[1] https://upload.wikimedia.org/wikipedia/commons/6/6d/Sweden_p... (it's actually looking a bit better now. For a while it had a very sort of unfortunate buttplug shape)
Sorry, it's tough seeing this play out in real time.
I doubt young adults in in Seoul are skipping kids because of Swedish preschool policies.
https://www.brown.edu/news/2025-04-02/wealth-mortality-gap
In some specific cases, the mortality rates of the wealthiest Americans were roughly equivalent to the poorest individuals in countries like Germany/France/the Netherlands.
https://english.elpais.com/science-tech/2025-04-03/richest-a...
At some point the greedy rich people will realize that their well-being immediately depends on the well-being of others around them, and that at some point if you want to increase YOUR longevity (/quality-of-life, /pleasure, etc) you need to increase EVERYONE's longevity (/quality-of-life, /please, etc)
What on earth are they doing over there that's so crazily unhealthy you can have no fun and still only live as long as a beer swilling chain smoking European working class person?
That's the difference.
The shared language means we're totally submerged in US culture in a lot of ways, but equally we're quite distinctly European in others.
That cognitive dissonance explains a lot about the modern UK I think
https://web.archive.org/web/20260207195051/https://theloop.e...
If you read some of the literature out on China and their anomalous savings rate (household consumption is only 40% of national income) studies show that the lack of a social safety net exacerbates the problem and savings rates decline once you have the safety net.
One difference they noticed was the dramatic decline in savings rates as you go from rural to urban areas. In urban areas you have a different social safety net -- a government pension, but in rural areas the pension is optional and savings rates are dramatically higher. Because much social spending in China is handled at the provincial or city level and there are differences, it is a natural laboratory for these types of studies. It's also why you need a citizenship document when trying to "emigrate" into a city or different province, and there are internal controls that limit what city you can be registered in, which also affects things like car registration, real estate purchases, and access to local education in the city for people that are considered "migrants" - e.g. they physically live in the city but do not have enough points to be registered there.
It’s probably not all so drastic as that, but for me (and many other American millennials) my financial ethos has been squarely centered on saving and making hay while the sun shines. Compound that over 300M people and multiple generations and you do get overly deep and inflated capital markets.
It's an obvious propaganda post intended to demonize the financial markets, and promote unsustainable social security policies.
Only if they are. Some pensions are well managed. Some are not. Some seem well managed for years, but in fact they are not. Some have been well managed for a long time, but someone incompetent gets in power. Can you tell the difference.
Oh, and if you can tell the difference, can you convince everyone else and thus get this fixed? Or will voters be happy with the mismanagement because it is returning great results now on low investment leaving more money to spend on other things now?
I know, I know, everyone on HN is an investing genius and consistently beats the S&P 500, but we're talking average joe.
The other major problem with contribution is you don't know when you will die. If I'm going to die at 65 like some relatives I should retire at 50, but if I'm to live to 97 in great health like others I should wait a few more years. (family history says my expected lifespan is about 80, but it follows a statistical curve ranging between 65 and 95 - just like nearly everyone else in a "first world" country). I want a system that acounts for how long I will live and my health and ensures I have plenty of money - group pensions should be really good at that.
Before pension reform in the US I had some distant relative who was laid off 3 months before his planed retirement when the company went bankrupt - it then came out the pension he was counting on was entirely invested in the now worthless company stock. This is the real risk you need to worry about if you have any form of pension.
Effectively no different from a regular ponzi scheme being used to purchase votes.
Self-investment has the actual investment there.
If pensions were fully-funded you'd be right, but they aren't in almost every country. Unfunded pension liabilities are well over 300% of GDP in most european countries, but since they don't show up on debt to gdp metrics, people aren't aware of it.
>The investment dollars in scope are similar, with pensions being better managed than your average human would do.
Also that is untrue.
Pensions are no more a Ponzi scheme than a capital market predicated on growth that will not occur due to structural global demographic dynamics. People are too bought into an abstraction while the underlying crumbles, for obvious reasons.
TLDR Humanity is Pay As You Go no matter what.
You seem to have a serious misunderstanding of what the current situation is.
There is no "gains in an investment account" because social security is unfunded, and has only vestigial investments (many of which are primarily fig leaf to finance the government at lower costs/lower returns).
There won't be any "gains in an investment account that will be competing for a rapidly shrinking working age population" because there fundamentally aren't any gains.
Now, assuming that your misconception was correct, and that there was a pot of unrealized gains to be consumed when you retire... That still wouldn't cause any "competing for a rapidly shrinking working age population" because the thing about having resources is that you can spend them to get more of the things you need. Sure a large influx of capital requiring some specific goods or services would increase the price of those things... which would in turn increase the incentive to provide more of those things.
Frankly that isn't an issue if it's fully funded.
> large amounts of voters who don’t have investments but have a vote to vote for someone who will increase taxes to increase benefits.
And this is the problem.
Theft and its normalization through political power is what causes the self-funded and fully funded model to fail, not anything inherent to it.
>Pensions are no more a Ponzi scheme than a capital market predicated on growth that will not occur due to structural global demographic dynamics.
There is nothing to capital markets that requires growth. Indeed historically it is the opposite, and investors tend to overpay for growth resulting in lower returns.
You can't stockpile nurses and save them up for when you retire.
If you save money or invest in financial instruments, you're still relying on labor from subsequent generations and if there aren't enough of them, higher labor costs will eat up everything you saved.
The only way to really save up for retirement on the society-wide scale is to spend money on things that increase the productive capacity of future generations.
Indeed, and we didn’t do that. We invested in issuing debt and other non production capacity efforts.
But you can?
It's called paying nurses more to encourage greater supply...
It was a tough read. He should tighten his word choice.
Pension and healthcare are the two most obvious pieces governments can decide to "make it themselves" or "let companies solve it", and the later option creates the pieces of paper that get traded in financial markets and "frees" money to buy those papers.
And the article ends with the obvious notice that "large markets" is not something good by itself.
It's pretty obvious that pension fund managers have ulterior motives. It also seems insane that a bad pension fund or company directors can destroy people's retirement.