The french pension reform attempts have been going on for decades. I remember in the mid-90s a huge, weeks- (months-?) long public transit strike which, funnily enough, kick-started Parisian's interest in roller-blading (and led to the awesome weekly Friday-night roller-blading tour [1]. If it's your thing, I highly recommend it! But be prepared to have to go over some cobblestone sections)
France's system has the working population pay for the pension on the retirees, as a social security tax. With the retirement age around 62-65, with the lifespan increasing, and with the Baby Boomers retiring, it isn't a sustainable system.
Every president, be they socialist or liberal, have attempted to tackle the issue, only to get country-paralyzing backlash. People will nitpick the details of whatever current plan proposes, but the fundamental problem remains.
the system IS sustained. the main white collar one even generates profits. increase the salaries that will increase money being sent to retirement funds and it won’t be a problem anymore. france income per capita has been the same for the past 20 years. they are stealing our wages to make us slaves and they blame us for not working enough.
christine lagarde pushed for blocking wage rise in the EU, european commission non elected leaders are pushing for it too. salaries for blue collar in france are becoming those of much poorer countries and in a globalised world where most of the goods are made in countries where salaries are rising as well as inflation, blocking our wages is only sending us to the third world .
it is nothing else than a betrayal at the highest level of the state
By increasing everybody's salaries, it seems likely to me the cost of goods and services would go up by virtue of inflation. There is no free lunch. At the same time, prosperity is not a zero sum game. The rise of China has coincided with increased living standards in nearly every country. I'm not sure who would be "stealing" your wages. If I were to say, it's French labor policies that are stifling innovation and productivity, and it's manifesting in a decrease in living standards. I once met a couple French businessmen in a bar, both in the tech space. They bemoaned how difficult it was to fire anybody in France, meaning they worked very hard to not hire people to begin with. They were also in the US specifically to look for investment opportunities. This is the kind of thing that's choking France.
>But then everybody's salary stagnating hasn't made the cost of goods stagnate
Because Apple, Tesla and the international market for fungible goods like gas or grain, doesn't care about the stagnating salary in your country. They'll still want X USD for their products.
It has, partly. But a part of the inflation at least in France/Europe is also due to big corp choosing to increase prices because they can (since "there is inflation"). For example Unilever has distributed very high dividends (€19B, for a total turnover of €80B, that's almost a quarter of their total revenue going directly towards to their shareholders while their workers and consumers see nothing), while the numerous products the company sells (which are mostly daily usage food and sanitary products) have seen their prices skyrocket "because of the inflation".
Then France should not have allowed Unilever to merge so much, or at least guaranteed competition in France. If this works, they must have had either state support or a monopoly position.
Example: supermarkets where I live co-ordinate their prices. There are 5 big chains and they all increased prices in tandem (and margins, so nothing to do with increased costs). They get slapped with a 100 miliion euro fine every year or two, but what do they care? It's a drop compared to the amount they profit from the cartelisation.
Time and time again it’s the same bullshit argument. I’ve grown tired of it. The price of goods and services has decoupled from the cost for a while now, and prices are rising at a staggering rate without salary increases.
>The price of goods and services has decoupled from the cost for a while now, and prices are rising at a staggering rate without salary increases.
Almost as if there's multiple supply chain disruptions (from pandemic to ukraine) causing goods to be more scarce, causing consumers to bid up the prices for the goods that remain.
No. This has been the stated reason, but profits are at a record level. Inflation may be the reason for an initial rising of prices, but they do not return to old levels when costs go back down.
> the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices.
Average business loans in the euro area are around 4% as of December 2022, though governments are still raising rates. As long as these unreasonable profit margins are higher, it would make sense to get one, and I'm not sure anything under 15% profit (much higher than current govt bond rates) could be considered unreasonable. I started manufacturing candles during the pandemic with only a few thousand dollars up front and those things can get 50% margins which is insane.
I understand that monopolies and barriers to entry can exist. The government should be much more focused on eliminating those rather than central planning through things like pensions that are shockingly complex and have a penchant for unintended consequences. I believe in a social safety net but markets with a little guidance can do most of the government's work for it and avoid be better at avoiding a ton of pitfalls like runaway inflation.
In case that's not sarcasm, I'm in the lumber business. Lumber prices have collapsed in the last six months with massive losses and curtailments throughout the industry. I assure you there is no less greed today than there was a year ago when the market was at the top -- and no more greed then than now. We always at all times charge precisely as much as the market will bear. We do that by always selling to the highest bidder, and I have no idea how else we'd do it.
yeah most of our goods and food are now imported so it is not even local salaries that will increase the price of goods. container shipping price however…
> and in a globalised world where most of the goods are made in countries where salaries are rising as well as inflation, blocking our wages is only sending us to the third world .
Just throwing this out here, but in a globalized world, by what mechanism would one expect Europeans and Americans will be able to enjoy a greater standard of living than people in, say, Asia?
Are they somehow smarter? More productive? In control of more natural resources? If not, why would you expect that the first-third world gap to not continue to normalize?
its normalizing but for the worst in developed economies. housing is now out of reach while decades ago a blue collar salary was enough,to own a house.(in the USA you can still get six digits blue collar jobs that lift you out of poverty and give you access to housing. in france that is merely a dream or a netflix show)
today already for many qualified workers (tech for instance) staying in india vs coming to france is better (there are other factors like healthcare or other that are at play but in pure economic power it would just be better to have a good it job in india vs europe) that was definitly not the case 20 even 10 years ago.
Definitely one of those "it depends" situations. For instance, you could be illiterate middle school drop-out and pretty easily make very close if not six figures if you worked near minimum wage canning work all year in Alaska or something by working the season of every available catch (16 hours a day lots of OT). And you'd bank all your post-tax earnings as they provide the housing/food normally too.
You may work yourself to the bone but pretty much anybody in the US can make a killing.
when I did it they paid for my flight, my housing, and my food... qualifications were homeless off the streets of seattle and I-9 (but lol, e-verify is not mandatory in alaska so as you can imagine such requirement was easily bypassed by anyone who wished). There is no real 'moving' process other than getting on the plane, everything is there.
when you're working 16 hours a day 7 days a week you don't really notice much outside of the factory floor anyway. Whether it was remote or in Manhattan you wouldn't feel the difference as you do nothing but work. I was working ~112 hours a week when I was in Alaska.
It was also a big, dangerous wilderness when Europeans first arrived. It wasn't a place you could just go travel to, get a nice cushy job, buy a nice house, and live a comfortable life.
And in pre-industrial times, when 70% of the population were farmers, land was a direct, and immediate proxy for wealth. Wealth that stayed with you and your family. You were the owner, instead of some shitty sharecropper for a landlord.
From the European point-of-view, the presence of the natives was yet another big danger and obstacle, in addition to the harsh weather (the winters in the northeast where the first colonies were established are much worse than in most of Europe), lack of infrastructure, etc.
As for land being a proxy for wealth that stayed with you, that worked out OK as long as there was lots of land for people to grab up and claim as their own (or take from some natives who don't have the weapons technology to fight back well). And it's the reason people colonized North America: because all the land in Europe had been claimed by some shitty landlord. These days, that's all gone: now you're stuck living with a shitty landlord again, and there's no new continents left to colonize, so we need to come up with a better economic system.
Knowing a few plumbers, I'm sure it can be, but it can be a very feast or famine trade. And most that make that own their own business, so still blue collar, but not exactly an everyman kind of job.
I've been pondering this exact point for a while. I think we are seeing Western economies regressing to the mean, it's a long term trend. I'm not happy about it, but I can't claim it's not fair.
Fair to whom? Why should middle class in the West vote to allow outsourcing to cheaper countries? That will just destroy their well-paying jobs in exchange for some cheap Chinese goods and Indian call centers.
I also feel the same way about current "remote first" trend - American software engineers are shooting themselves in the foot by embracing remote work. Wait until your salaries get normalized to Brazil or Indian levels. Anecdotally, my company had multiple rounds of layoffs and has started hiring all the backfills in the third world now.
> Why should middle class in the West vote to allow outsourcing to cheaper countries?
Because you can run but you can't hide. If you institute protectionist policies, you will in turn become less competitive. Hence, you will require even more protectionist policies, that in turn will make you even more uncompetitive. In the end, you will have higher prices for lower quality domestic products.
I don't like gravity, but it doesn't mean I can ignore it and jump from tall buildings. While economics is not an exact science (probably not even a science), you cannot ignore its principles.
If protectionist policies worked, we would have figured out by now. The truth is that limited protectionist policies might work to give a push to a nascent industry in the short to medium term. But it does hurt the country as a whole in the long term.
> If you institute protectionist policies, you will in turn become less competitive
less competitive against whom? If West had not shipped its factories to China, I am sure West would have still stayed competitive against China by miles. In fact, by shipping its technical know-how for manufacturing, West has allowed China to become more competitive.
> I don't like gravity, but it doesn't mean I can ignore it and jump from tall buildings.
Sure, but outsourcing is nothing like gravity. It is a mixture of greed on part of corporations to reduce labor costs, naivete on behalf of politicians who thought China and others would welcome Western values along with Western jobs and stupidity on part of voters who traded short term cheap junk for long term stable jobs.
In the 1960s, US auto-makers appeared content to make crappy, unreliable cars until Japanese imports (also crappy at first) came in and improved quickly, putting pressure on the domestics to also improve.
Consumers have vastly benefited from that competition, far in excess of any losses from the domestic automaker labor group.
It’s not entirely voluntary, but if you want to see what protectionism and economic isolation will bring, go visit Cuba. Then hop over to Grand Cayman, Grand Bahama, or Puerto Rico to see what being more integrated but competitive has to offer.
If Japan had completely decimated Western car markets, had conflicting values with the US and posed a geopolitical rivalry, I would still have preferred crappy cars for the Western societies. After all, West didn't strengthen USSR via trade when there was a cold war.
Also, if the long term cost is "Western lifestyle regressing to mean" (original context I replied to), I'd still prefer crappy cars to preserve well-paying jobs.
My belief is that "isolationist economies fall well below the mean" in the long-term. If you want a comfortable Western lifestyle, you don't want to isolate yourself from global trade, but global trade means you aren't isolated from global competitive pressures.
> if you want to see what protectionism and economic isolation will bring, go visit Cuba
Hasn't its neighbour and biggest economy in the world been levying an embargo on Cuba for over half a century? Doesn't seem like the appropriate example for your argument.
It's exactly a (forced as a political matter) economic isolation situation. North Korea is another politically isolated economy. I don't think they're doing very well either.
Trade helps poorer nations more than it helps richer nations, but it helps both.
There are billions of people living under worse regimes than Cuba, yet only it and a handful of other nations have been on the receiving end of US sanctions. This was devastating to its economy (prior to the revolution it was of course Cuba's biggest trading partner).
There is no justification for the embargo. It was Cold War aggression, pure and simple, now sustained for the last decades purely because of electoral reasons.
I completely agree politically, assuming Cuba is no longer willing to host missiles or other non-defensive military apparatus from an adversarial nation.
>Sure, but outsourcing is nothing like gravity. It is a mixture of greed on part of corporations to reduce labor costs, naivete on behalf of politicians who thought China and others would welcome Western values along with Western jobs and stupidity on part of voters who traded short term cheap junk for long term stable jobs.
Agreed. Fundamentally, if you want to institute protectionist policies for labour, you also need capital controls to prevent all your businesses from exporting their operations to avoid these policies.
The Western standard of living has only been possible through currency/sage suppression of the non-Western world. Why do you think relocating everything to the West would be feasible or solve anything?
I don’t understand why this isn’t common sense.
> some cheap Chinese goods and Indian call centers
Then again, if you have such a naive view of globalisation, you probably need to read more.
> Why do you think relocating everything to the West would be feasible or solve anything?
> a naive view of globalisation
I am talking about jobs in Western societies which were relocated elsewhere. And I admit that my views might be naive. But it is on you to convince Western middle class that shipping their jobs overseas, without an equally good job or social safety net lined up, is actually better for them. If you are just going to move jobs in the name of efficiency and let the Western labor rot and fend for itself, you are going to get Trump, Le Pen, AfD and Brexit.
In this whole thread, I still haven't seen a compelling case about how getting some goods cheaper / better is a worthy tradeoff to moving my stable job overseas.
I’m not trying to convince you or anyone, nor do I have any reason to.
I’m just talking about reality - where Western governments, companies, and manufacturers decided that profit trumps employment. At the same time, without cheaper goods, given wage stagnation, consumers couldn’t have afforded local goods anyways.
It’s quite complicated really, and I don’t see a solution in capitalism.
Most Westerners never think about why exactly their standard of living is much higher than the global average. The implicit assumption is that that's just the way things are and will always be.
It’s really eye opening how big the gap is not just in labor costs but also perishable goods.
When I was in morocco 10 years ago one of the buckles for my motorcycle pants suspenders broke. I was able to get a local leather worker to create a pattern from the broken piece, craft the replacement, and integrate it into my suspenders overnight for under 5 USD. This was arranged by the hotel I was staying at, and wasn’t some special inside knowledge on my part.
The mass manufactured replacement were more than 10x that cost, and made of lower quality materials.
Morocco is not a rich country, but a lot of the world is even less wealthy.
You're only looking at that from a consumer perspective. On the other side of that transaction is a person earning only $5 for several hours of labor minus the cost of materials.
Such “normalization” would then also, presumably, apply to the rich. Unless one thinks that a billionaire who makes ten million USD a day is ten thousand times more productive than even a very high-earning wage worker.
But are the ten thousand people he employs getting good wages because of his actions? Would they be making comparable salaries if he had not started his companies? He is not paid for productivity, he is rewarded for taking the initial risk and investing his own money.
I think this story/abstraction of "owning money" has to break at some level.
I mean if you believe, as I do, that money (especially at trillion level) is direct substitution for power over people and even whole societies
then what happens if we let this global game of Monopoly to play to its seemingly inevitable conclusion ?
Isn't this somehow antidemocratic in nature?
And if you notice that inheritance is not unlike inheriting stance in aristocratic societies this capitalistic abstraction of ownership through money seems to crack.
Most billionaires don't really have access to the cash that is included in their net worth, they are shares in their company. If they want to be liquid they have to sell the shares, sacrificing their control of their companies.
Regarding the rich having an outsized influence in politics, I do agree, but I think the solution is to get rid of PAC's. Give the rich the same donation limits as everyone else. Strict legal enforcement should be put in place.
I believe if you set a limit on an individuals net worth, the economy will lose one of its major drivers and job creators will potentially just hit that net worth, shrug and shut their companies down or pass them on to less capable people costing millions of jobs. Depending on the net worth cap, this could happen relatively early in a companies growth.
I do strongly agree with a strong inheritance tax for individuals over an arbitrary net worth, something in the hundred millions range.
>> I believe if you set a limit on an individuals net worth, the economy will lose one of its major drivers and job creators
This is a really intresting intuition. My off the cuff resposne would be something like this:
So what? This does not mean anything without understanding what is the social impact of the jobs that were created - I have a bit of doubt that all 80000+ jobs at Facebook is really a net benefit for a world as a whole.
I'm from former Eastern Block country which went through full blown comunism era and we really did not need billioners to help create unlimited amount of bullshit jobs.
And what is more important for me, as I'm in the process of going through Shirer The Rise and Fall of Third Reich, and it had a real impact on my understanding of democracy - I believe at this point that it is paramount to create system in which no single individual or party has the ability to accumulate infinite power, no matter what cost it bears for economy.
If anyone have some reservations - find the part where the infamous German "leader" explains to his generals why the war with west is inevitable and why it has to happen now and not in next few years.
I hear what you are saying but who in the US from the private sector is close to seizing power? Elon Musk is the richest man in the world and a political pariah. There is a big difference between 80k jobs created by the government and 80k jobs created by the free market.
Those 80,000 jobs may not have a social impact as far as moving the world in the a desired direction but what jobs do?
Does a plumber? A teacher? What if they are not teaching what the party in charge wants taught?
Are we going to put someone in charge of determining if a job has meaning and eradicate the job if they don't? What happens when a different political party wins election and starts eliminating positions that the prior party thought had meaning? Can we say certain political parties have no net world benefit and remove them from contention?
That much power in government hands is a slow march back to the communism from which your country escaped.
Hitler was able to do what he did because the government had so much power. Less power in the hands of the government prevents that, not giving the government more power to police who can earn how much money and what jobs are worthy of existing.
I understand what you are saying especially when taken in the context of your childhood but I just disagree with giving anyone the power to enforce it.
>> There is a big difference between 80k jobs created by the government and 80k jobs created by the free market.
So let's start with the obvious - I was not trying to propose "big government" as a solution here, sorry if this was not clear enough - I completly agree that using government as a substitution for private ownership mostly does not work.
My main point was "power accumulation" in hands of few or even one. Elon Musk is good example here - his accumulated wealth give him real power to decide what life of thouseds of people will look like (for better or worse). You may claim that this is not politcal power, but it still is power nontheless. And thus lifes of thousends wages on his mental state which at any moment can go full Caligula.
I know this will sound idealistic .. but I do not like to live in a society where we leave so much power in hands of one individual. This also applies to politicians.
I know trying to solve this problem will probably throttle economic development but as lord Farquaad said "it's a Sacrifice I am Willing to Make" :).
>>Those 80,000 jobs may not have a social impact as far as moving the world in the a desired direction but what jobs do?
>>Does a plumber? A teacher? What if they are not teaching what the party in charge wants taught?
This sounds a bit nihilistic - extrapolating this line of though leads quite easyly to conclusion that nothing matters (and as Camus has written we are then only left with one important question to answer).
>> Are we going to put someone in charge of determining if a job has meaning and eradicate the job if they don't?
Aren't we already doing it with capitalism and statism? :) Or did I missed ChatGPT-XXX taking over the world already (I swear I was trying to pay attention :))?
But in all seriousness - I only propose limiting power of individualsm institutions and corporatios, not giving it to government.
>> What happens when a different political party wins election and starts eliminating positions that the prior party thought had meaning?
And what do you think happes when new CEO takes over company? Because I have seen far worse cleanings done through corporations that were taken over by competition than the biggest governments cleanigs of institutions done by new party taking over government (I happen to have some inside access to local govermants organizational data and know some people that worked for big companies that were raided).
>> Hitler was able to do what he did because the government had so much power.
Still the underling problem is power accumulation - governmant from my point of view was only means to obtaining it. I believe that we are living in times when new doors opened for power accumulation that will grant some individuals almost comparable power. And I would gladly sacrifice parts of economic development potential to do that.
The idea of joint-stock companies is antidemocratic in nature. If you were to propose that people could buy votes in parliament, everybody would (rightly) be outraged. But this is how joint-stock companies work: workers have 0 say in how things are run and how resources are allocated, owners can buy and sell voting rights and dividend rights.
Just throwing this out here, but in a globalized world, by what mechanism would one expect Europeans and Americans will be able to enjoy a greater standard of living than people in, say, Asia?
The world standard of living should be equalized globally but it should be the present first world standard, not the present third world standard.
This is certainly possible given increasing world productive capacities.
Yes. Capital let's you be more productive. Rest of the world is building up capital to increase productivity, but is also increasing demand. Resource limits are blips on the market.
I mean… yeah. That's not really related to the thread's topic, though.
> why would you expect that the first-third world gap to not continue to normalize?
I don't think that's the criticism. "Blocking our wages" probably isn't increasing the wealth of the people in Cold War non-aligned countries: is the money going to them, somehow? The direct effect is that employers (= the people who would be paying the extra wages) don't have to spend as much money paying their employees. What knock-on effects would lead to that improving things for people?
Lots of Asian countries have a high standard of living too.
One of the biggest differences is functioning institutions. As bad as some first world governments can seem from our perspective, they’re way better than the kleptocrats and warlords who rule some parts of the world. And yeah, when you have functioning institutions, you do end up with smarter and more productive populations because children can go to school instead of slaving away in the cobalt mines.
> why would you expect that the first-third world gap to not continue to normalize?
If the third world raises to the first world standards, then great. If that process involves first world standards falling to meet third world ones in the middle at the cost of first-world middle class, then there is a big problem. See where Trump and Sanders got most of their votes and you will start to see a pattern here.
I'll admit that I don't understand French social security well at all, but based on what I've read online it seems like increasing salaries would actually reduce the amount of money going to social security because that would mean lower profits for employers (who contribute a higher percentage of their income). Obviously, in terms of wealth redistribution, it's better to have higher wages. But increasing them would actually hurt the social security system.
"that would mean lower profits for employers (who contribute a higher percentage of their income)"
No, for equivalent 'net money on your wallet after tax' a company pay more tax for employees than for company owner.
Without detailling too much (and by choosing an 'arbitrary but realistic situation') the are two ways of getting money from your company to your personal bank account :
- a specialy taxed "company owner" salary (you can make simulation here : https://mon-entreprise.urssaf.fr/simulateurs/eurl , yes I choose a specific company category, but it's a common one, you can compare with a the 'standard' employee tax numbers : https://entreprise.pole-emploi.fr/cout-salarie/ ) which give you benefit from the social security system and which cost a bit less (for a standard company owner range of pay) than an employee salary.
- A 'company profit share' at the end of each year. You 'decide' how much you company profit was this year and that you want to give to owner, you pay a "less important tax than on salaries" give it to the owner, and then they pay their personnal income tax on it.
The optimisation game is to ensure yourself a sufficient salary to have a good social protection (and other perk like being abble to rent/buy/loan money easily) but also benefit from company income share wich is less taxed.
I dont even talk about legal trick to avoid parts of the company income tax, wich is way more complex to handle than a salary.
basically you pay a % of your salary to the pension fund. the higher the salary the more money you pour into. yes it will reduce profits for employers but even that is only short term. if salary rise you are more competitive on the global talent pool and you can do like america where a big chunk of today s giant were built by highly educated immigrants that came mostly because of the high salaries
no. inflation is really good in an economy where salaries rise.
its good to borrow money, its good for the working population (the one that makes the country thrive) and it is less good for retired people (that already own wealth and lived through better economic times)
In France think about it, the majority of the working population voted for Marine LePen, the majority of retired people voted for Macron, Young non working people voted for Melenchon. Hence why macron needs to satisfy his base, old people that retired early and now wants us to work more so that they can enjoy more their stress free life while everything is more expensive for the rest of us.
I think you'll find French pensions do not rise to keep pace with inflation. And especially not "promised" pensions, you know yours or mine, the pension for people still working.
As I said they did not rise to keep pace with inflation. Which means they got closer to the minimum. The minimum, btw, also dropped, expressed in real goods.
The COR (Conseil d'orientation des retraites) has 4 working scenarios and only a single one of them has the retirement system going temporarily into the negatives. The situation is not alarming at all. In addition, there are a lot of solutions that have been on the table to help the retirement system do even better and allow people to retire earlier (for example paying women the same as men: the salary resulting increase will mechanically make more money go towards contributing to retirement funds).
If the GDP portion dedicated to the elderly is maintained at around 14% the system has nothing to worry about, the goal of Macron's reform is to lower this number because he prefers to use public money to fund private companies that are already making profits (through tax mechanism such as the CICE or the CIR for example).
Also, low salaries actually means less money "funneled to the retirement system", since this money is a percentage of salaries. Also, low retirements income means people still working have to financially support their parents. The elderly have to be supported one way or another. The question is whether you choose to do it collectively as a society, or go with the individualistic solution that won't work for everyone.
Every single scenario in the COR is negative for a long time, people should stop lying about it to comfort their political leanings. And it's not like it's for short time either, the worst scenario has a negative forecast for the next 45 years. The figures are terrible, regardless of your opinion.
Secondly, 14% of GDP is massive, workers have been paying more and more towards the retirement system, salaries did increase a lot already, it's just that all of the increase went towards retirement
> The elderly have to be supported one way or another.
Nice way to avoid the fact that France spends a lot of money towards high retirement salaries which don't need it. Additionally low salaries live less longer, making the system even more injust.
The way to fix it and transform it into a social system is to tax the high retirements for the benefit of the workers. In a social system the money should go towards the people who need it the most and not the opposite, France's retirement system isn't a social system anymore.
That's very subjective, and even someone agreeing to call it "massive" could not necessarily see a problem with that, if we can afford it (which it seems, we can).
> Additionally low salaries live less longer, making the system even more injust.
That's a good point. And the reform Macron is trying to pass will make this even worse: low salaries live less longer and are already dead or in very bad health by the time they can retire (and a big part cannot even work up to that age). Making the minimum retirement age two years later will greatly increase this injustice: most low salaries will contribute their whole life to pay for the pensions of the richer who actually still have living time in good health after they retire.
Concerning the high retirement salaries and the necessity to tax them more, I mostly agree. But that's not at all what Macron's reform is about.
No, they do agree with me, read it yourself again, in the most optimistic scenario, France needs to wait until 2045 (!!) for the deficit to be reduced. That's terrible in itself, and that's the most optimistic scenario as well... What I would consider reasonable is a few years of deficit, not from 20 up to 50 years.
> That's very subjective, and even someone agreeing to call it "massive" could not necessarily see a problem with that, if we can afford it (which it seems, we can).
You can't complain of stagnating salaries if you are okay with increasing the share of workers salaries going towards retirement. "we can afford it" doesn't seem to be the opinion of the people concerned paying it.
> Concerning the high retirement salaries and the necessity to tax them more, I mostly agree. But that's not at all what Macron's reform is about.
Let's not pretend like anybody else is proposing this solution either.
> "we can afford it" doesn't seem to be the opinion of the people concerned paying it.
Then how do you explains the massive strikes and demonstration? Do you think these millions of people and the millions more that support them are all dumb?
> Let's not pretend like anybody else is proposing this solution either.
Politics don't for obvious electoralistic reasons, but the idea is at least discussed in some unions.
> Then how do you explains the massive strikes and demonstration? Do you think these millions of people and the millions more that support them are all dumb?
Not many people understand how the retirement system works in France and its direct impact on salaries. It's not the simplest retirement model either and people don't take the time understand it.
> Politics don't for obvious electoralistic reasons, but the idea is at least discussed in some unions.
Sure but then what's the point? There's much more people retired than people working, the democratic system is broken.
> Not many people understand how the retirement system works in France and its direct impact on salaries. It's not the simplest retirement model either and people don't take the time understand it.
Why would you bother to understand it? It will have changed, and be much worse, by the time you retire. The state is, of course, counting on people misunderstanding the fact that there is not a single guarantee you get paying into this system, as nothing stops politicians from changing it.
And, as you point out, plenty of factors force, to a lesser or greater extent politicians into making the system worse.
So why bother understanding it? France is like most European nations: either you own a comfortable home + some supplemental income by the time you retire or you're f*cked.
(source: my dad was a teacher (in a neighboring country with a very similar system), and is now on the pensioner side of this system. He is single-digit percentage points above the minimum, despite his ability to show a contract, with the government, stating explicitly, in 3 languages, that he's guaranteed at least 40% above minimum. But, you see, "a decree goes above contracts". The state cannot, and will not uphold it's promises made under this system, so it doesn't matter. They just want you to work your ass of, and pay taxes correctly to extract maximum work from you while not upholding their end)
why not? we have 98% of GDP debt and we kept funneling money into this debt.
why suddenly the pension funds are the problem?
it states that in 10 years there will be 20 billion deficit , that doesn’t include the raise of salaries to match inflation (it was removed in france in 1983) I ll wonder what would be the numbers if we do this simulation but pretty sure it will be positive.
Finally, 20 billions is nothing for france, we spend 40 billions on immigration so by your logic we should just stop pouring money and lock our country?
Isn't there other priorities in France than funneling more and more money in the retirement system so that wealthy old people can enjoy their boat cruise? Is that really the top priority right now?
You have to realize that debt and GDP spending are competing with each other.
regardless of whether this is correct or not (difficult to predict the future, even the COR only has "scenarios" to talk about, but nobody knows really what will happen), the current system is unjust in many ways (some "special regimes" are super favorable, with little justification other than legacy, and some workers should have more favorable regimes because of their work conditions, yet they do not and the reform does nothing for these people).
>it is nothing else than a betrayal at the highest level of the state
Agreed.
Still, this is less worse (I can't really say "better") than the first attempt at reform during Macron's first mandate: that first attempt included a contribution rate falling from 28% to 2.8% above 120Keuro/year (if I recall correctly), which was effectively a tax cut for the wealthy.. If anything above this threshold, the contribution rate should increase (i.e. be progressive instead of regressive).
The main issue is that the whole thing is un-reformable because so many consistuencies have vested interest in the status quo.
They sure do, but that's not the point I'm trying to make. We tend to call someone that is elected by the people 'elected'. Someone who gets decided on by these elected representatives we call appointed, they don't inherit the 'elected' attribute. If they did, essentially all political officers (e.g. high level workers in a government department) would be elected, because they were chosen by elected officials.
US supreme court judges get nominated and confirmed. The president is elected (well, kind of, but most agree that he/she is elected by the people even though the electoral college is mixed in there) and then nominates a judge and the Senate confirms the nomination. I don't think it's common to call the supreme court judges 'elected' though, despite their selection by two elected parties.
Indeed. The Commission is appointed by the Council (member state govt heads of state) and appointments are ratified by the European Parliament. Same as with the executive in the US. Not complicated.
Euhm. Sort-of. The commission is appointed by country governments (specifically by the minister of foreign affairs). That minister is appointed by a government, which tends to be a coalition government, chosen by the head of the executive, that then has to be ratified by a majority of the national parliament of the country. An appointment to the commission remains valid until their term runs out, no matter what happens to the government that placed them there.
So it's EU commissar (appointed) -> Foreign Minister of member country (appointed) -> Coalition government (appointed) -> Head of the executive of member country (ie. the king, in most cases) -> Parliament of member country (elected)
Certain member countries don't have very stable coalitions, which means there's always a few EU commissars that don't have the support of their host governments. This is especially true now that Christian parties are in the process of being voted into irrelevancy in a lot of countries (unfortunately to be replaced by rightist and in some cases extreme-right parties)
So, what you said. With one very important difference: there isn't one level of indirection, there's at least 4 or 5 levels of indirection. It isn't very democratic, especially since EU law means these people have law-giving power, power to override the parliaments of member countries (that would be why Christine Lagarde proposed using that power to freeze wages)
Every single pension system has the working population pay for the retirees. Where do you think the money comes from? Thin air? Any increase in the value of pension funds (for example) is coming from the workers.
> Every single pension system has the working population pay for the retirees.
Which is just a socialized form of the previous social security system which had children or grandchildren look after their parents. Of course, the glaring difference is that social security schemes have motivated many millions, who otherwise might have, to not have children at all or an inadequate number and so contribute very little to nothing towards the future maintenance of the system while still cashing the checks once they retire. Of course this system does help the minority who can't have children for whatever reason but it does look like we've swapped looking after that cohort for a few decades for effectively no social security system for anyone once this ponzi scheme collapses.
>Of course, the glaring difference is that social security schemes have motivated many millions, who otherwise might have, to not have children at all or an inadequate number
This implied link between public pensions and demographic collapse paints a picture that social security was destined to fail because people wouldn't have children for the purpose of taking care of them in old age. The millennial generation, the largest American generational cohort, were born almost 50 years after the founding of social security. How does it make sense that public pensions motivated millennials to not have children, but not their parents?
Across all developed countries where you have demographic collapse you have societies where it becomes more and more expensive to raise children. The public pension system requires that the economy grows year after year and that becomes hard when your population shrinks. As to why the population is shrinking you have to look at why people aren't having children. And when you ask that question you get way more "I can't even afford to buy a house" and not "the government is going to take care of me when I'm old".
That’s a pretty crazy position. In the US, there’s lots of material out there on the conditions that led to the creation of Social Security and subsequent legislation like Medicare and Medicaid. Hopefully you are simply ignorant of that history and not demonstrating a blase tolerance of human suffering.
These systems are very sustainable, and the solution to the funding issues would be best served by indexing the cutoff for contributions to inflation.
As to birth rates, how do you expect people earning less than their parents to absorb the exponentially higher costs? My son was born over a decade ago. Thanks to a moderate, common complication, his birth cost $85k. His childcare at age 3 cost as much as our mortgage.
I think the parent comment is being overly reductive for rhetorical effect, but not necessarily wrong. At the end of the day, social security programs are an abstraction across the demographics of working people vs non-working people. And you only get more working people by giving birth to them.
All the retirement savings won't make a difference if there is no one to spend them on. If the population is expected to decline, then you better hope your retirement investments are going into technology that can yield sufficient future productivity gains.
It's apparent if you just think about the farm labor required to produce food, which can't be stored as easily and long term as money. (On that note, maybe the best retirement strategy is a whole bunch of kerosene and shelf stable foods...)
Edit: As said elsewhere in the thread, I fully agree that the problem is due to children being too expensive, not that people just expect the government to take care of them.
Even if so, that money was paid by the premiums of all the other people in the plan. The point is that having children is simply too expensive, partly due to cost disease in healthcare.
Your insurance most certainly didn't pay out 85K. They have negotiated lower rates which are not transparent to us. Source - my own kids deliveries were billed 40-50K. We paid at most a few hundred.
I'm not sure where this thought comes from - on our explanation of benefits there's always a line item for how much they negotiated down and it usually never amounts to much.
Insurance profit margins are pretty tiny. We (or our employers) pay a ton for insurance because healthcare costs are beyond ridiculous in our country.
> Are you trying to say US healthcare isn't expensive?
I am only arguing with "The point is that having children is simply too expensive, partly due to cost disease in healthcare." Typically, the main cost of having children involves preschool childcare and good colleges.
> What is the financial risk of having a child who needs insulin?
How many children need insulin? Again, I only contend with the broad generalization that having children is expensive due to healthcare costs.
The money is just an entry in the accounting ledger allocating society's labor. The pension fund can increase to trillions and quadrillions, and it will not make a difference if there is not enough people willing to change bedpans for as low of a price as was originally expected.
Yes, they can play with inflation and debt, but at the end of the day, it's just a question of people resource and time allocation. Money is just a proxy.
There will be a market clearing price for that work, and these accounting mechanizations are simply sussing out what that price is (in comparison to other broad societal work to be done).
If caring for the elderly is made more valuable than say, slinging JavaScript, that’s where some of the labor will go.
Sure, but the fact that your savings or pension plan contributions "should have" been enough for a certain amount of care can't guarantee that it will be enough for all or even half of it when the time comes; it's perfectly plausible (and with certain worker/retiree ratios even inevitable) that the market clearing prices will have to be higher than what would be enough for most people.
And the key factor is that if everyone (or their government) saved twice as much, that wouldn't help because if the worker/retiree ratios are the same, then twice as much retirement savings should simply lead to a twice higher market clearing price for that work due to "these accounting mechanizations".
>then twice as much retirement savings should simply lead to a twice higher market clearing price for that work due to "these accounting mechanizations".
You assume:
* The labor market isn't flexible, that higher pay won't attract new workers
* There isn't a wage at which workers would be satisfied meeting their basic needs.
And this makes your conclusion that the labor would simply absorb additional funding too rigid.
> * The labor market isn't flexible, that higher pay won't attract new workers
Why yes, looking from a whole market macroeconomic perspective, we should assume that the labor market won't magically generate an arbitrary number of new workers just because the pay is higher - the total number of potential workers is set by demographics and cannot rapidly adjust due to market pressure. The pay rate does affect the labor participation rate, but there isn't that much room for maneuver there, the changes in proportion of workers-to-retirees are much larger than what you can fill with non-working potential workers.
Well, one way that does get new workers is massive immigration of working-age people (which is the strategy used, perhaps unintentionally, by some countries), but if their birth rate and life expectancy is similar, that only postpones the issue until those immigrants themselves reach non-working age.
> Every single pension system has the working population pay for the retirees.
Nope. At least not completely. Canada switched away from a pure pay-as-you-go (PAYG) system in the 1990s:
> Move towards a hybrid structure to take advantage of investment earnings on accumulated assets. Instead of a "pay-as-you-go" structure, the CPP is expected to be 20 per cent funded by 2014, such funding ratio to constantly increase thereafter towards 30 per cent by 2075 (that is, the CPP Reserve Fund will equal 30 per cent of the "liabilities" - or accrued pension obligations).
PAYGO vs investment earnings is purely a financial construct.
The central issue is that physical goods and services need to be produced around the time that they're consumed, and at a given point in time, an economy has a fixed capacity to generate these goods and services.
If you have a non-producing population, and a producing population, then the only way for the non-producing population to consume a given quantity of goods and services is for the producing population to not consume those goods and services. Whether you call the reduction in consumption ability of the working population "taxes" or "investments" doesn't change this fundamental fact, except insofar as it alters certain behavioral incentives around deferring consumption and legal frameworks around property rights.
(This isn't 100% of the story, since you can "lay claim" to production of working people overseas via international investment, but is accurate in broad strokes.)
Since you said capacity is fixed _at a given point in time_, this is technically true but not really useful.
Populating aging happens over time, not all at once. Overall production also changes over time. It’s not inherently true that for “non-producing” (not sure exactly how you’d define that) people to consume goods the “producing” people must consume less, at least not relative to past levels of consumption.
You're right, it's not necessarily true relative to past levels of consumption. But there's a limit to economic growth, and the choice of "paygo" vs "investment" probably only has marginal effects on the rate of economic growth, so the point stands.
"Non-producing" people are retirees (as well as children). People who don't produce market goods/services that make up the vast bulk of our material needs.
On a macroeconomic scale it is still the workers paying for the retirees. Doesn't matter how many millions you have in the bank if there aren't working people you can trade your money for goods and services with.
I think a lot of people assume that pension systems ought to or actually do work as savings/investment systems, like private 401(k)s do. So you pay into the system when you're working age, your money is saved, then it is paid out to you later.
I'm not sure about every pension system, but there are many that invest in government bonds. The problem what that approach is the sustainability of the system depends entirely upon interest rates, which have been at all time lows for the past 15 years. Some private pensions invest in the broader market.
All investment systems suffer from this exact problem: returns aren't guaranteed. Even people with 401ks might experience this same issue if investment returns fall below the conventional wisdom rate of ~7% (or 4% real). But even if that rate holds up over the long-term, there's still to risk of a "lost decade" of no-returns or losses for and extended period, followed by a sudden market pop.
After seeing the pensioners in my home country living in poverty because of economic crisis destroying their pensions, the government using pension money as if it was its own, and being actively hostile to pensioners by delaying trials to pay the pension money fairly waiting for them to die, I will take a 401(k) over that always, my money is mine and no one else's.
I have some bad news for you then: many of the companies that provide 401(k) were on the verge of collapse in 2008. The only reason people didn't lose their pensions entirely was because the government bailed them out...
You can always lose your money. Best to accept that and not worry too much.
> many of the companies that provide 401(k) were on the verge of collapse in 2008.
The stock market went to shit, not the providers.
The 401k appeal is that it's an account you *own* and the government can't touch for money, it would be the same as expropriating a bank account, which to be fair, the Argentinian goverment kind of did in 2001, hence why since then, people there save money in usd cash or in a foreign account, not in the local financial system.
If the US government has to expropriate or do weird stuff in general with 401k accounts, we are in a situation where shit hit the fan long ago.
No, 401k admins do not own the securities, the employees do. The comment is incorrect in implying the government bailed out the administrators, but the government did backstop the price the securities (the stock market) itself.
Hence why I think an SP500 investment is risk free on a >3 year timeline.
Whose labor is giving those investments value? Who's doing the labor that gives those IOUs (dollars) value even if you just stick them in a savings account and don't invest them? It's not retirees.
All financial savings are an illusion. They are just claims on productivity of other people in the future.
Boomer generation globally accumulated a lot of claims and considered them their "wealth" but forgot to produce enough people that are going to be willing to put an effort to satisfy these claims.
Now is the time when boomers will want to use their savings and discover their error.
And it wasn't a problem when the working age population was always increasing... but when it no longer is (as is the case in much of Europe) it becomes problematic.
> when it no longer is (as is the case in much of Europe) it becomes problematic.
Not necessarily. What matters here is whether production matches demand. If the proportion of people in the workforce declines, but their productivity increases by the same amount (which isn't far from being the case in Europe) you don't have a problem.
And even that is too simple. As the population ages, demand changes. It increases im certain domains (health) so productivity increase might not suffice.
...but then of course the productivity of older people declines too, together with their health (higher unemployment, more sick leaves), so there is a lower and lower ROI as you put these people in the workforce. And then making people work longer accelerates the health decline, and so increases the demand. Except those people die younger on average, lowering the demand.
So it's a supply and demand issue, but not quite a supply and demand of workers. It's a complicated economic problem. All of this is talked about in the French debate, which is a lot more subtle than the loud vociferations reported in the news make it out to be.
In Australia, it is a mix. Most people should have a self-funded retirement as a result of mandatory superannuation during their working life. Those who haven't accrued enough can fall back on the aged pension, but this should become less and less common (mandatory super was only introduced in the 90s).
China's building massive amounts of underused housing. US boomers could have built long-lived buildings and infrastructure (high-speed trains) which provide usefulness to people later in exchange for them paying some money for retirees.
Instead, they built ever-decaying roads and rotting ticky-tacky boxes and left nothing durable for future generations. Hell, they even ripped out trains in cities across the country. (Seattle interurban among so many examples).
China is what the US used to be. Even Charlie Munger said that they are displaying more mercantile behaviour whereas the US is being protectionist and enforcing non-trade based policies across the globe.
Ok but indirectly it's still the same. Once you reach the retirement age, interest/dividend and capital increase are "paid" by younger generation. If at retirement age you were to have no interest/dividend/capital increase you are going to have a very small pension, especially if inflation kick-in.
it is a common misconception that how the retirement is funded makes a huge difference in how much you need to save. In most situations, it does not matter nearly as much as people believe. Dependency ratio will determine in large part how much people will need to save to get a given level of retirement income.
For example, your 401k ability to pay for your retirement will depend on productivity gains , growth, saving, investments happen in the future. Those will look very different if you have 4 working age people for one non working person, vs 2 working age people for one non working one. In the extreme case, if nobody is working anymore when you retire, your 401k will likely worth almost nothing.
The problem in France is not how it s funded, but the fact that retirement incomes are way above the funding level. France, with Italy, are the only two OECD countries where retirees have a higher income that working people, which is insane. However, since retirees vote much more than other demographics, their too large income will not be touched.
In Italy, the retirement age was raised to 67 in 2011. However, in some cases, it is still possible to retire earlier, but the amount you receive will be proportionally adjusted based on your remaining life expectancy.
This change in retirement age only partially applies to those who started working before 1995. Therefore, it is still in a transition phase, and it will take some time before it takes full effect.
but these are pensions, more specifically they are supplemental pensions on top of the basic one like US social security, or France's basic pension from SS (which is supplemented by "complementary pension" from other regimes like AGIRC/ARRCO).
You utterly missed my point. You say people invest money. Aren't they expecting a return? Where does that return come from? If there is no return on investment, are we really talking about a pension, or just saving up for late age unemployment?
It is (so is the US). But ultimately productive value from workers must be transferred to retired people. How exactly that happens, whether through deferred spending power (ie savings/investments) or through direct payments, it has to happen.
Although I admit that there being other countries in the world does change the calculus a bit; it would be possible (albeit weird and unsustainable) for everyone in France to be retired, so long as say the Philippines was young and working and French retirees owned all the shares in Philippine companies.
"From workers to retired people" implies at a casual reading that the worker and the retiree are not the same person, when in many systems the majority of what the worker pays goes directly to their own retirement.
It's debatable whether paying into your own account is a transfer of wealth at all, even if you're not able to withdraw your money until retirement.
You're still relying on money being worth something in future.
Imagine a future where there are half as many the workers as retirees. It doesn't matter how much money retirees have in their pensions if they cannot hire workers to look after them (do their healthcare, produce the food they eat etc). You'd just get rampant inflation as the richer retirees competed to get workers, and everyone else goes without. In other words, in that scenario the value of the saved money would be eroded by inflation.
Now I will admit that this is complicated by there being other countries, or if we invent humanoid healthcare robots or whatever. But there's a principle involved that someone (/ thing) has to do the work.
>You're still relying on money being worth something in future.
Yes, and that's why this basic pension can only be something guaranteed by the state. In case of war or massive devaluation or change or currency, the state (maybe not even the same one under which "rights" were acquired) can guarantee these things (and will want to guarantee them, in order to preserve the pensioners from poverty).
It's still all a clever scheme around the young looking after the old, numbers in an account wouldn't help us if everyone stopped having children today.
> it would be possible (albeit weird and unsustainable) for everyone in France to be retired, so long as say the Philippines was young and working and French retirees owned all the shares in Philippine companies
That is basically the same situation, but you are replacing local people that see the retired ones with remote people that can refuse to send any money and won't even see old people starving.
A strong military can make the situation more sustainable, in a highly immoral way. But that again isn't new, you can enslave people near you too.
The main difference is that in the pension fund model, you (at least in theory) don't need the next generation to pay: you save now so you get money later.
In the more common model, you pay for the previous generation hoping that the next one will pay for you, and you need intergenerational agreement on what's a fair amount. You don't need that with the fund model, as you (usually) agree & know beforehand how much you'll pay and how much you'll get.
I'm fortunate to not be part of it, but I'm pretty sure German employees are looking at France where rents are higher and retirement age is lower and think "hey, you can do that?". I guess we'll see whether you can (though, fair enough, Germany is a special case, the reunification cost a lot of money).
How do you save labor for later? Current retirees need young folks to do the work they cannot do, and thus those young folks are paying in today.
When those young folks retire they will be relying on even younger folks to do the work for them. If there are not enough younger folks to do that work, the money saved between generations will become relatively worthless.
Thought another way: The same amount of labor needs doing. If the current generation of workers stops paying in (read: working), then the entire system stops. One generation saving more (or being larger) than the next doesn't change much other than that saved wealth chases a decreasing amount of available labor once that generation retires. Quality of living will be predicated on the amount of available labor - not saved capital.
It gets a little more wishy washy when you can plow capital into long-lasting infrastructure, international wage arbitrage, etc. but in the end you simply cannot run retirement systems if you have less labor available while keeping the same quality of life for all parties. Someone is going to lose.
How exactly does the same amount of labor need doing when there will fewer people who need anything in the near future? You seem to be saying more labor per person is necessary to satisfy this “need.”
That doesn’t seem beneficial to workers as a whole. I thought innovation was supposed to benefit everyone? Where’s the hole in this logic?
When the current crop of retirees were in peak earning periods, there were something around 6-8 workers per retiree. Data on France isn't super easy to come by.
By 2030 this is expected to be about 2, which is better than I expected. You would need massive productivity gains inside the span of the past 40 years to make up 4-6 workers per retiree in labor.
The fact I have 4-6 less cousins my age to sell my labor to to help take care of grandma doesn't seem to offset that huge amount of labor now needed to be expended on largely unproductive tasks. We went from 4-6 people pitching in to help out grandma each day to just myself. If you look at that in hours vs. dollars, the problem starts to become quite apparent to me. I don't feel I'm 500% more efficient at what I do than my elders.
Perhaps we've innovated so well that we can now support old folks with a fraction of the labor, but I'm skeptical. Fixed costs seem rather fixed, and from where I'm sitting I think a whole lot of that "innovation budget" has been spent already on rising expectations of minimum quality of living.
Compared to productive workers, retirees will need less of some things and more of others. In particular demand for healthcare is increasing. Expect most countries to increasingly ration healthcare, especially for elderly people.
One of the biggest changes in coming decades culturally might be how long are we ready to prolong life of average person. Rich can afford it on their own, but same doesn't apply to you normal pensioner.
I think you missed the finer point that GP made: At the end of the day, somebody has to change that bedsheet.
Consider this extreme edge case:
If everybody is retired and no is is working, inflation goes to infinity and all those savings and stocks become worthless.
For sure, but there's a difference between a promise that someone will do it for you, and you having currency to exchange for doing so.
In the "having money" case, you have more options, but if you're given options, you also have more opportunity to make terrible decisions. And if it's a lump sum (or private investment of some kind), you can pass it on to your children - you can't do that with pensions in the other type.
What is currency if not an implied promise that someone will provide future services or goods in exchange for it? In a situation where workers can't/won't keep a promise to maintain retirees, the currency value will reflect exactly that, it will devalue so that the total amount of currency retirees have won't be enough to buy these services.
Yes, but we'll quickly spiral into infinity if we take it too far. For our intents and purposes, currency is a placeholder for value. If you have that value (whether actually material or represented by currency), you'll have a much better chance to find someone who will exchange it for services. Their incentive is getting something from you in exchange.
On the other hand, in the current system as it's used in France, Germany etc, their incentive is that hopefully someone else will do it for them in 40 years. But from what I gather, very few members of GenZ believe that our pension system will survive in its current form until it's their turn to benefit from it. They expect it to collapse, so everything they'd now put in would be wasted, much like if you invest in something after it has signaled that it will default soon.
The french pension reform attempts have been going on for decades ... Every president, be they socialist or liberal, have attempted to tackle the issue, only to get country-paralyzing backlash.... it isn't a sustainable system.
Good For them?
They've been trying to change this forty years? So they were trying to change this back when it ipso facto was sustainable, since it's survived 'till now. How credible does that make the current effort.
Certainly, America has changed a bunch of supposedly "unsustainable" things into ... utter misery for the average person.
> Every president, be they socialist or liberal, have attempted to tackle the issue, only to get country-paralyzing backlash. People will nitpick the details of whatever current plan proposes, but the fundamental problem remains.
The Touraine Law in 2014 raised the number of worked years from 36 to 43, which is a big deal. So it's not like nothing happened. Also there are good reasons to dispute the current proposal, it's not just nitpicking details, it will impact very negatively some people and perhaps there are other ways to fix the system.
Indeed even here in the comments everybody gets heated about the details, so on the streets it will be even worse. What everybody (how conveniently for them) ignores is why, when this pension was invented, did they choose a certain age when to benefit from it. They chosen it by age expectation, that not everybody gets to reach it so the survivors will benefit. Nowadays this very principle is broken and we all get hung on 63 or 65 while the average/median/whatever live over 70. So basically everybody requests and expects a pension which wasn't even thought for everybody. It's not the system's fault here - it wasn't designed for today's pyramid - but I also recognize you cannot expect people to accept that, so here we are.
> The Touraine Law in 2014 raised the number of worked years from 36 to 43, which is a big deal.
that's right, and what's so surprising (to me) today is that the Touraine law got enacted without much protest, while what's happening today is taking the same terms for retirement and extending them to younger generations (i.e. those born between 1960 and 1973) is causing protests. The current proposed reform looks like a big deal, but the bigger deal happened in 2014 and was barely noticed (because the lawmakers were careful enough to put it far enough in the future...).
Though the problem is well known (at least for 40 years),
No french governments has considered diversifying the source of the revenue funding the pension system. Actually its worse as the only capitalisation existing are in a process to be nationalised.
Moreover, this reform is purely the outcome of political game. Macron electorat is mainly the 'boomers' who fully beneficiated of th situation ( in fact their pension are impacted despite having higher wealth than the majority of the workers).
I personally would consider a reform only if there an effort requested for everyone.
Yes, that's what I've done for about a decade now, and apparently more and more people do as well (abstention is record high).
The thing is I distrust big corporations almost as much as I distrust big government, but at least, it's easier to move to a different company when one of them really sucks, provided there's a bit of competition.
With governments, there's no such thing, you're stuck with them for 5 years, and their power only keeps growing.
The French gov, like most others, basically only seeks more money and power over society. Whatever the ruling party.
The current system requires more workers ( with decent salary) than number of retirers...
Given the population if getting older this creates an a very prévisible imbalance...
there are enough. there are using statistical models to predict that we wont have enough in the coming decades.
a biased model that is financed by private pension funds and led by mckinsey…
I have a very simple way to make enough funds to maintain current retirement age : increase our salaries. france income per capita is the same for the past 20 years, if you raise salaries it will raise how much money goes to pension funds. problem solved
your made in china tv or your fruits or even cars made in morroco will be greatly impacted by a raise in french salaries. butter in france rised 50% thanks to energy war. one can argue raising salaries will never reach that level of crazy.
Same reason as most other countries - reversal or population age pyramid because they’re of baby boomers generation being more populous than younger ones. Soon there will be more retired baby boomers than gen X and millennials working so there will be less money going in to pension funds than going out.
Well the irony is that our french government is precisely relying on one cherry picked scenario of this organization to justify it's reform...
So it's why polls quite unanimously report that 70% of the population is opposed of this reform on a quite developer friendly axiom : "When it ain't broken don't try fix it!"
Bonus fun fact 1 : Even with the cherry picked scenario of our gov the system might be in slight imbalance starting 2027 while it's currently balanced. To put this in perspective 10 years ago the same organisation predicted a great imbalance for today.
Bonus fun fact 2 : The 70% rejection poll is an average. One of the only group that is less rejecting the reform consist of already retired people. There is a growing resentment against baby boomers in the xyz generation.
In other news, lawyers say you need a lawyer, plumbers say you need a plumber, etc.
Not a single pension program on earth is sustainable - including the US' Social Security System. All of them are political 3rd rails and kill careers of anyone seeking to do meaningful reform.
Why did we get to a situation where the government is in charge of safeguarding your retirement and wellbeing? It's insane... we should compel people to have IRA's or some sort of retirement account, but the money needs to be under the control of the person it belongs to.
Parent comment is just wrong. The COR (Conseil d'Orientation des Retraites, meaning advisory board on retirement to the French Prime Minister) says this clearly: the current system is sustainable and does not need to be reformed. https://www.cor-retraites.fr/node/595. Or in video here: https://www.youtube.com/watch?v=GsL1wT8jxVU (subs auto-translated to English are available).
> France's system has the working population pay for the pension on the retirees, as a social security tax. With the retirement age around 62-65, with the lifespan increasing, and with the Baby Boomers retiring, it isn't a sustainable system.
It can be sustainable, even at comprable rates, especially with fewer younger workers if wages are allowed to increase to meet labor demand.
baby boomers aren't retiring, they're dying.
The pension system has already been through its worst period and managed to not get too badly hurt.
I really don't understand this reform. However for me to understand it, one would need an 8 hour video stream full of spreadsheet with an actual expert working on that reform.
If you both are not understanding the issue, and not interested in learning about the details, then maybe you shouldn't take a strong opinion on the matter.
baby boomers are people born between 1945 and 1960. Meaning people between 63 and 78 yo. All of them are already retired, and the oldest ones are starting to die.
https://www.populationpyramid.net/france/2022/ doesn't look like it. The bulk of population just started going through the retirement age. Click -5 6 times, then start clicking +5 and watch how it moves.
the bump between 2017 and 2022 is mostly around the 75 yo slice. That's the beginning of baby boomer generation. Meaning this generation has been retired for more than 10 years now.
It's going to be 10 more rough years, until 2032, and then the shape stabilizes. Changing the age from 62 to 64 won't change anything to this generation impact on the system.
Now is the 2032 shape sustainable with the current retirement age ? that's another question, but it's not a matter of protecting against the baby boomer impact.
Who says its not a sustainable system? That is really just a popular assumption. The system is working well at this point with enough headroom. Lobbygroups from the EU and large institutions are pledging for this change. There is not enough workforce according to them. Their profits are endangered. Nobody from those entities are looking at the well being of the citizens.
> that causes inflation which quickly erodes the value of the payment
Pension payments cover basic subsistence-level costs for goods that can be mitigated by supply-side production and productivity increases. Claiming that they cause inflation is just rebranded austerity politics. Inflation is caused by fraudulent debt-relief for "businesses" like we saw with PPP and low interest rates that create asset price and shitcoin bubbles.
I don't know why someone downvoted you, as you are right. But it seems that gigaton of useless little pieces of paper called pesos with which that the governments has flooded the economy since decades has nothing to do with out inflation problems.
nope it is not the same outcome. one sacrify the working class and the current generation that went through multiple economic crisis and a horrible housing market while the other sacrifies boomers that lived through full employment and the golden age of france economy. I ve made my choice.
if only it had control of its currency! The way out of this previously was to devaluate currency so that the face amounts of pension stay the same but purchasing power decreases (in other words, it decreases the value of pension in a much less visible way, and done over many years is like a slow boil).
You are correct and Euro comes with restrictions on creating currency for macroeconomic reasons. This was in the limelight during the 2008-2012 Greek debt crisis, and also came up around that time for other EU countries (Spain and Portugal at least). Additionally, Iceland, which does not use the Euro, had at one time pegged their króna to the Euro which caused issues in the 2008-2012 time period (though as I recall the main problem had to do with some other nation taking a major Icelandic bank into receivership post-2007 collapse).
These stats are for the U.S., but one thing that usually get ignored in these retirement discussions is just how massively life expectancy depends on income level and sex: http://www.equality-of-opportunity.org/health/
Raising the retirement pension age screws over the poor, especially poor men. Perhaps retirement age should be tied to income/wealth somehow ... and maybe even sex (as controversial as I imagine that would be).
I've always wondered about suing the government for raising the retirement age. They're changing the deal we agreed to, without my consent. If I had known the full extent of the altered deal (i.e. no retirement till 69), I would have made different decisions from the start.
If I have a 20 year mortgage with the bank I can't just change the terms so that the deal suits me better. Why can the government do that with my retirement age, with zero repercussions?
Usually they don't. For everyone currently over 50 nothing changes. For people between 40 and 50 one more year.... So only a fraction of the population is affected and young people don't have a lobby.
> For everyone currently over 50 nothing changes. For people between 40 and 50 one more year.... So only a fraction of the population is affected and young people don't have a lobby.
So I'll go to the bank tell them I'm just not going to pay the last year or two of my mortgage?
Or a car dealer and tell them I'm simply going to pay less for their car without them being able to say no?
You just said the same thing - "it's only a small inconvenience, so it's fine".
The government regularly screws people over without their consent. The repercussions is to protest and make the government’s life as miserable as possible.
No, the repercussion is to realize you can't rely on government and stop voting for governments that make lots of promises. This is what happens when a society rejects libertarianism. Instead of a nice private pension provider you can take to court you have the government, who forbid others from running Ponzi schemes whilst forcing everyone to take part in theirs.
Wonder why race is the metric here? Men also have shorter lifespans, and I assume there will be other constants that correlate with life expectancy (height, hair colour, genetic disposition to disease, etc).
In Switzerland, also to retire earlier, which seems almost trivial given the 1 year difference between men and women, but by spending just 75 francs for the reassignment, they unlock of 28,680 francs of additional retirement over their lifespan: https://www.europeantimes.news/2022/02/a-man-changed-his-gen...
And I realize these sources are not great, but I chalk that up to the fact that this is an untouchable subject for mainstream, a taboo subject for many, and an uncomfortable subject for most of us. These are also still fringe cases, even if the benefits are quite clear. There is also something unsavoury about exploiting the system in this way, but it's counterbalanced by the fact that it's a system that's screwing you over.
In a way I do look forward to cases like these ending up in court, solely because I want to see the decisions that result. Do we get a legal ruling on the mutability of gender? Does gender become permanent at a certain age? Does the court instead decide to deal with each case individually, knowing they could potentially set up a tsunami of cases?
Pragmatically, it seems easiest if you just erase gender from these systems, but realistically that would benefit men which makes it unlikely from the current wave of Western-influenced lawmakers.
I figured the one upside of retirement was it was a baseline for the poor. If it screws them over too I think it should just be eliminated all together and return the tax to the worker to save/invest on their own.
The origin of the modern pension system in Prussia was not actually designed to let people retire; the age was initially pegged to 70, the life expectancy of Prussians in 1881.
American Social Security had an age of 65, but at the time of its passing life expectancy for American men was 58.
> American Social Security had an age of 65, but at the time of its passing life expectancy for American men was 58
That was life expectancy at birth. It makes more sense when considering retirement system design to consider the life expectancy of people who are at least old enough to be in the workforce.
Of the people who were 21 when Social Security passed around 65% of them survived to at least 65.
Of the people who were born around the time Social Security passed, over 70% of those that made it to 21 made it to 65.
> The origin of the modern pension system in Prussia was not actually designed to let people retire; the age was initially pegged to 70, the life expectancy of Prussians in 1881.
As you can already read sidethread, a life expectancy of 70 means huge majorities of people living well past 70. Every baby who dies at the age of 8 months means half a dozen people die in their 80s. (Or, you know, several dozen people die in their 70s.)
Even if lifespans weren't skewed low, which they are, 50% of all people would live beyond the life expectancy at birth.
And if I remember correctly, the primary motive for the Prussian pension system when it was introduced was to reduce youth unemployment by getting the elderly out of the way.
I think still today that is a deciding factor, as some economies have high unemployment and there retirement can be cheaper and better than caring for unemployed people at all ages. And other economies have high employment and would even benefit economically from a larger workforce.
This trend is starting to reverse; in some low birthrate economies like South Korea and Japan, we are seeing dual effects of both labor shortage and declining health of old people due to declining social pension payments and lack of socialization in old age.
You know what would happen: they'd be taken by scams disproportionately, and we'd hear to no end how their lesser educations left them vulnerable to that. The taxpayer will still be on the hook to bail them out.
Yes they might just invest with some sleazy ponzi scheme that then collapses, telling them the money they thought they saved isn't there and they'll have to keep working for longer instead of retiring at the age agreed.
It seems like unfortunately many governments have proven incapable of responsibly handling the money. In the case the government is entirely incapable of handling the money I'd at least see the worker get that tax waved to have something for whatever meager existence is left with the money.
In Aus, the government doesn't manage the money. They set a mandatory percentage of your wage which must be put into superannuation, but you as an individual can choose the fund to manage your account, and you can move funds at-will with no penalty. The Tax Office actually facilitates the move to help prevent any nefarious actions from the funds.
There is also the option of running a self-managed fund, where you invest the money yourself.
That said, it has created an incredibly politically powerful industry managing $3.3 trillion, which comes with its own issues.
> They set a mandatory percentage of your wage which must be put into superannuation
For further clarification, it's the employer who has to pay the super contribution, not the worker.
And if anyone is about to claim "same thing, if the employer didn't have to pay that, they would pay it out as additional wages", my only response is a heartfelt "lol".
I think "lol" needs to be expanded a bit to be convincing.
I can't see how it is not the same thing. The employer looks at the total cost of employment and works out if it's worth hiring someone. If that cost is 10% higher because of super, that means there is 10% less to go to (direct) wages.
Now granted, that will differ at different points in the labour market. For minimum wage jobs, I agree that employers wouldn't suddenly start paying 10% above award if super was scrapped.
I haven't changed jobs much in my career, but when talking about pay I still find people need to be explicit if they are talking about including or excluding super. Most jobs advertise the pay excluding super, but some will quote total package.
I don't follow how Social Security in the U.S. is tied to how responsible or otherwise the government is. It is paid into by the current workers and is a mandatory spending item in the U.S. budget.
Maybe you were referring to another country though.
> unfortunately many governments have proven incapable of responsibly handling the money
The system that GP described forces people to put their money into superannuation funds (not government) that invest on their behalf, which I'd say is pretty competent government policy. For the most part it works well, but it does distort the market (e.g., super funds buy housing stock, old people have more money available to them), and not everyone can contribute enough before retirement age. The counterfactual would be a whole lot of people that have spent all their savings by retirement age.
You almost certainly want people who aren't working any longer to get some sort of base level income. And if this income comes from the government, the details may differ, but the big picture looks a lot like social security. This is especially true because, at least on an ongoing basis, few private firms offer a defined benefit pension any longer except for whatever obligations they incurred before they mostly scrapped the plans going forward.
I mean if you want to be precise than maybe make the retirement age based on the health conditions of the individual in question? In good shape. Work more. Bad shape? Retire.
I'd like you to read about the Cobra effect first, though.
As a French citizen, I find it unsurprising that the usual top comments here are all about numbers. Life expectancy going up, do your part, work work work.
That people are angry is not about the damn numbers. It's about the attitude of a political class that had private restaurant dinners behind closed doors during lockdown times where the population was fined for being out walking their dogs, it's about a president that's been deliberately calling left-leaning ideas of the younger generations about ecology and equality "extreme-left" while joyfully siding persistently with the actual parties created by fascists, it's about a reform that comes in with a justification of a deficit that was literally created by giving money to large companies and rich people in the form of tax deductions, it's about some of his ministers who take part in all sorts of horrible things and continue to go unpunished, it's about people asking for compassion towards difficult jobs more than for their own selves, and I could go on...
> deficit that was literally created by giving money to large companies and rich people in the form of tax deductions,
I have no particular knowledge of French macro economic policies, but a tax deduction is not "giving money". It is "not taking money". Your framing assumes that corporate or individual earnings belong to the government and the government can decide to allow the money to be "given" to the taxpayer. Whether that is an appropriate arrangement of private property rights and the relationship between the people and the government is a hotly debated topic, to put it mildly.
Not taking money that otherwise would be taken absolutely is giving money. Let me know if the government decides to absolve you of all taxes if you don't think at the end of your year that you've been given money. Also that's conveniently the narrative that Macron's party would adopt were it the other way (read: when they "give" a one-off cheque to students or poor people). Accounting tricks have broad shoulders to take the load off the political bullshit of our era.
>In contrast with stimulus checks, for example, which were given, because even if you earned no money at all you still got them.
At the end of the day, there's no difference from a fiscal perspective between handing a company a $1M check and giving them a $1M tax deduction. While I agree that this is technically a distinction (ie. tax deductions require a tax liability to actually be used, as opposed to cash which can be spent as-is), I don't think it's relevant here because the companies were already known to be making money. Even if they had a bad year and the tax credits could only be used on profits, they'd likely turn a profit sooner or later.
>I think you mean tax credit instead of tax deduction
Tax deductions are equivalent to tax credits once you factor in the marginal tax rate.
>and even then there is a substantial difference from a fiscal perspective.
Specifically... how? Giving a company a $1M check has the same effect on the government's balance sheets as giving them a $1M tax credit, given the assumptions listed in my previous comment.
I agree - not taxing something ordinarily taxed is very much in the vein of "giving" money. I'm a little surprised at the disagreement, but I guess it depends on a persons point of view.
the question comes down to whether or not the money is viewed as the person's, as a part of personal property, or viewed as the government's, as a part of state ownership.
The concern about the framing isn't about looking at the tax code at a particular point in time but instead setting a context for how the tax code and spending priorities evolve over time.
If you start with the idea that the money belongs to the government and you have to ask to get it back (via the legislative process) the discussion is going to be very different than if you start with the idea that the money belongs to the people and there has to be a very strong reason for the government to get any of it (via the legislative process).
You are not robbed as a matter of course. The government takes your taxes as a matter of course. Not taxing you (by giving you a 10k tax deduction, for example) is, in a practical sense, basically identical from the government's perspective as giving away money.
Except that it isn't. If you adopt that framing, you are working with a mindset that the government gets to figure out what to do with your money first and you get the leftovers. That is a completely different mindset than setting the expectation that the the people get to decide (via representatives) what money the government gets and how it should be spent.
Those two mindsets are very different and I would argue is one of the ways that the left and the right are different.
People living in certain parts of the world are robbed regularly as a matter of course; does that mean robbers are giving somebody money if they band together one day and decide to stop robbing that person?
The thing is we are not talking about tax deduction but tax credit and yes it is sometimes literally giving money. In France it even happens that big companies are given money while they layoffs people while they're making a profit and distributing the artificially increased profit to their shareholders…
> left-leaning ideas of the younger generations about ecology and equality "extreme-left"
Whatever the labelling you want to use, but we know for a fact that extreme ecology is going to destroy our country. We saw what happened with French nuclear, we are seeing it in the EU car industry, we are seeing it in French housing. We already know that radical ecology is going to bring social unrest. That the first to suffer is going to be poorest people.
> deficit that was literally created by giving money to large companies and rich people in the form of tax deductions.
We are still one of the most tax heavy country with the most social contribution in Europe and in the world. Macron is just trying to level the playing field and make France attractive.
> it's about people asking for compassion towards difficult jobs more than for their own selves, and I could go on...
After this reform, we will still be one of the most generous country in the world even for pension and social net even among Europe and even more worldwide.
> Macron is just trying to level the playing field and make France attractive.
... to whom?
> After this reform, we will still be one of the most generous country in the world even for pension and social net even among Europe and even more worldwide.
Not sure why I'm thinking about a frog being slowly boiled alive.
To the people whose job it is to advocate for the privileges of the wealthy. And that is a frightening number of highly-trained, well-paid people.
They are starting with the foundational belief that taking any privileges whatsoever from the wealthy will end in complete catastrophe for all of society. This is, of course, not true, but it's a story that pays well to tell and re-tell. So, it gets told a lot, particularly here in the Anglosphere, and also apparently now in France.
France has been very generous during COVID, has been very generous during the Energy Crisis with the `bouclier tarifaire` that has helped most the poorest. We really have to put that in a world context where most does not get anything during time like this. Can we really say that France is boiling alive its people?
>Not sure why I'm thinking about a frog being slowly boiled alive.
The double entendre (https://en.wikipedia.org/wiki/Double_entendre) here is wonderfully funny, I love bilingual jokes.
It is true that this reform (like all others before it, they revolve every 5-10 years in France) is only modifying the system at the margin, so it really is a slow boil.
>That people are angry is not about the damn numbers. It's about the attitude of a political class [...]
You say it's "not about the damn numbers", but what does that mean? Does the underlying problem with the numbers not exist? Would the french pension system be fine without such reforms? If not, and reforms are needed, why are is stuff boiling over now? Sure, all the things you listed are legitimate grievances, but it seems counterproductive to get mad at politicians doing painful stuff that needs to be done. It's like getting in a fight with your spouse about how they're "controlling" or whatever, when your house is on fire and you need to evacuate. The only sensible interpretation I can think of is that the people think the reforms are not warranted or there's a better reform that's not being considered, and that's the straw that broke the camel's back and caused people to come out and protest. If that's the case, I wouldn't exactly frame that as "not about the damn numbers".
First off it doesn't need to be done. You're taking a statement from the government as an axiom when it's not one. Secondly, the attitude matters. There is ni trust in the government to not swindle the population, mainly due to Macron's track record and the other mentioned things in my messages. Basically it is not about the numbers, it's about a well crafted narrative led by people who have done everything to wither away the trust given to them, time and time again.
I didn't even get into the minister pushing for the reform doing crosswords during a parliamentary session on his subject, the inflation absolutely exploding in France, the surge of students falling below poverty lines and needing food stamps worse than during covid, the ministers genuinely advising the population to "wear turtlenecks during the winter", the abuse of 49.3 article (similar to Canada's notwithstanding clause) exactly 10 times in order to push laws that were not democratically agreed upon, the fact that the prime minister got a football t-shirt for Christmas that had that very same "49.3" number on it and really appreciated it.
Or the political failure when handling the CCC (citizen's climate convention) that Macron himself created to satisfy people's expectations, and which actually delivered amazingly as a panel of 150 citizens representing all parts of France giving educated and actionable input on what the country should do. The energy prices putting small business owners on the street in a country where nuclear power could have pretty much carried the load but has been grossly mistreated (admittedly by nearly every single president in a long time). The recent Uber papers, where Macron was directly cited, at a crucial time where now most poor jobs in France have literally been called "uberized" in pejorative terms. And that his party calls for "decency" in the mist of all of this.
French people aren't dumb, contrary to what the sneering suits might believe. This was not only poorly timed, but absolutely tonedeaf by the government, and revealing of the amount of contempt they have for people who at a majority reluctantly elected Macron.
This comment is good illustration of why most democratic gouvernements lose support over time. The media collect a list of disappointing behaviors, social media push said content to disgruntled citizens, and the government loses all credibility over time.
The ability for a government to not slip is crucial for slowing the decay.
What's your point? That seeing how we're getting screwed is bad for us?
How about having the government actually do better and be accountable for it instead? How about Macron promising to follow the CCC's recommendations on dealing with the climate crisis and instead throwing it all in the trash?
That you attribute my remarks to some kind of misled social media craze is what's actually messed up in this exchange. And as far as I can tell, the guardian or euro news are far from being simple tiktok ads, but people who refuse to see things will continue to find arguments in bad faith to do so.
This is all dramatic and very tragic, but the numbers don't make sense. It's not something where passion should win over reason. Current and future generations will be screwed if this pension system isn't reformed. If anything Macron deserves applauses for committing political suicide for the greater good
Nobody is getting screwed if this isn't getting reformed, the central committee dedicated to making projections for retirement funds projected a mild deficit by 2070 in only 1 out of 4 of its scenarios. The government gave this money away to the already rich and is trying to bullshit everybody else that "there's no other way". People have had enough of this behaviour, and the strikes on a scale unseen since 95 show it.
This is not true. Numbers aren't alarming at all. And there are many solutions that could be deployed if it were the case. It is a matter of political choice.
As a french citizen, I agree it's not about numbers.
If young people were understanding the numbers, they would go on streets to push for the reform to be adopted.
The problem is, there is an extreme left group, dreaming of the big night of uprising and revolution to install a communist government in France. So they take every opportunity to block the country and mess everything up, even though they're not even concerned by the reform themselves.
There is a silent majority who is in favor of the reform, which will eventually pass, like always.
Your contempt won't do much in the face of an actual majority voicing its disagreement (you know, the majority that Macron did not deserve but got because people feared the extreme right). And your numbers would be wrong unless you chose to ignore the Cor.
Either you don't understand the risks of disregarding the political unrest or you actively want that unrest. Sorry but I'm not keen on having an extreme right president at the next election myself.
you have more at stake in the topic than i do, but as someone still affected by the strikes, i got a few words to retort:
if the way to go about protesting is to choose days as per convenience and to have barbeque on the tram tracks, then feel free to do this on a weekly basis. meanwhile, the people on the grind are being affected by disruption of essential public utilities. just like the roller-skating phenomenon mentioned by another poster in the thread, it is only reinforcing the belief of not relying on others in society for your day-to-day needs.
the way people go about it in this instance is not garnering any sympathy by those who need the most support in society.
My grandfather a few years back passed a rather profound point in his life - he had been retired so long that he officially spent less of his life not working than working (despite entering the workforce at 15).
And it's not lost on me I am essentially doing double work: it's not enough for me to generate enough economic value for myself, society kind of depends on me to generate enough surplus value to cover an entire life's worth of labor (Or more! After all I started much later than my grandfather).
In a way, when Keynes predicted that everyone in the future would work a 20 hour workweek, he was right! He just didn't appreciate how much we would use those productivity gains to backfill that vacation time later in life.
If he started working at 15, doesn't that put him at 45 years in the workforce and 30 years retired? He has to make it to 105 to meet your original claim.
I have no comment on the issue at hand, but I've got to give it to the French for their always impressive level of civil engagement. It feels like Americans are far less willing to take to the streets to support/oppose political causes than they were in times past, and I think that's a shame.
In which states? Under what conditions? What is allowed if a mob threatens or begins to pull you and your family out of your car and beat you to death?
This is a reference to Florida's Combating Public Disorder Act (2021 HB1). Amongst other things it creates a defense to civil damages for personal injury,
wrongful death, or property damage if the injured person was "acting in furtherance of a riot" (a crime created in the same act). This was widely reported at the time as being a response to cases of people driving through or shooting rioters, which was seen by the right wing as justified self defense against criminals.
FWIW it looks like there's a injunction against the law being implemented while courts decide on whether it infringes right to protest [1]. From what I understand though, that means any civil suits trying to use that defense would be on hold.
It s very hard for these reforms to pass in europe, to the point where it might be better to just let the pension systems collapse.
Raising the retirement age is not a great strategy, 70 yo people are not as productive and hoard jobs thus increasing unemployment of the most productive, the young. This is massively happening in all of southern europe and is a major reason for economic retardation.
Young people are increasingly aware that they will not get pensions. Old people hold vast amount of wealth in real estate which has become entirely unaffordable even to well-earning young professionals. At some point the collapse of pension funds will meet the need for housing. Hopefully there will be a tradeoff
One big challenge I see with the whole business about pension reform (and government spending in fact) as a public debate is that two sides are talking on totally different planes. In France, and someday very soon, here in the US. And the public in a certain sense, will problematically have to end up voting a simple yes/no on extremely complex topics which are incentivized to push buttons on single issues. cf. Brexit.
On the one side (hopefully meaningful to this crowd) is a group that when confronted with the sheer numbers involved and tradeoffs that would make any dent in the coming demographic-driven bankruptcy (shorthand name for it), have to keep things running and try to come up with the actually mathematically workable or "implement this decision" plans with the resources they have. Not aspirations.
See those numbers/scenarios, there is no getting around the severity of the situation.
Then on the other plane, there are people (politicians, and people in general in the country) who deal in "symbols" and qualitative statements about what they think who is entitled to, what was promised, etc. "Eat the rich!" etc.
And lately it seems, rarely the twain shall meet. Or at least, it's quite rare to find leaders who are equally incentivized or capable of handling both sides of this adeptly. Also, the people who don't understand the numbers generally tend to shout and insist they're right. On the other hand, numbers people don't usually shout (and underplay the severity of coming problems; the type that analyzes is usually civil about it). Also, and this is an evolving thought -- I don't think democracies are very well suited to allocating the pain of a country's long-term downturn very well, or having people understand when your country's resources are actually decreasing.
One thing is for sure -- there is a massive unpleasant reckoning coming in terms of what benefits and tax rates people believed they would experience. There is no magic getting out of this hole, it will be one of / combination of:
-- taxes will rise (for whom?)
-- benefits will decrease (for whom?)
-- retirement age will increase
-- borrowing will increase (from whom?)
And undoubtedly it will largely fall on the next generations. Or just in time for my retirement.
These pensions were bankrupt the minute they were implemented - the capital appreciation rates were completely insane to start, and have only looked worse as time rolls on (which, I have to stress, is extremely tough to imagine). Delusion around pension portfolios eclipses all but the most insane crypto scams.
Quite a bit of my university work in the early 2000s revolved around studying and modeling pension-type retirement plans, primarily in the United States (Chicago and Philadelphia mostly come to mind), but a little in foreign countries. While EU pensions tend to be in worse positions, it's a distinction without a difference: Pension reform is basically impossible. Catastrophic bankruptcy and refusal to pay benefits is coming to a theatre near you, because the political will to even begin meager cuts (and so-called "drastic" cuts are indeed merely meager) does not exist.
Politicians who propose meaningful cuts to pensions are guaranteed a single term in office while the candidates waiting in line promise to keep the Ponzi scheme going.
Philadelphia's pension "scheme" is crazy and borderline criminal how its implemented. Pay days on retirement date based on salary in the past several years, absolutely rampant overtime fraud, cronyism abound everywhere. There are plenty of stories of people retiring milking tens of thousands of dollars from fraudulent overtime, getting a one time payment on retirement in the hundreds of thousands, and then getting a pension higher than their real salary.
I support pensions, but this has to be done at the federal level, and funded heavily through taxes and pro-natalist policies to keep demographics correct. Cities, states, counties and companies are not able to adequately fund defined benefit pensions.
I have heard these schemes and problems being perpetuated by agencies like the police, where they have terminal salary-based retirement benefit plans. (or in the style of, "your last 3 highest paying years") The officers conspire to get the retiring man as many hours as possible in his last years, overtime etc. Or more subtle things like, every road construction site has to have a police officer on duty. It's a bad oversight / policy by the government that allows this to happen. And hard to change politically.
Cops are one of the offenders, but make no mistake, teachers' unions are up there as well. There's no one particularly bad abuser of the pension systems; the system itself was set up by either innumerate or corrupt individuals. Or perhaps both.
If I was a pension rep or director for the cops, teachers, firefighters, or whatever, best believe I would maximize my members' benefits to the maximum extent the law and guidelines allowed. That's really all that is happening with these unions. Sure, there is some corruption going on (when isn't there in any large organization, much less government agencies) that isn't helping matters, and there are idiots that are making things worse. But these issues are in the seriously tiny minority of the real problem: People who could not do math properly or were corrupt from the get-go set up an insane pyramid scheme built on ridiculous population growth and capital appreciation models, and no one wanted to stop the music for decades on end.
The most likely scenario by a WIDE margin is that pensioners are wiped out or forcibly restructured in a court of law, getting a small reduced fraction of their promised ("guaranteed") benefit. It just is. In America, we don't fix gradual issues - there is simply no incentive to do so. We ignore them until they blow up and then we do something about it. This sounds stupid, but it's perfectly rational on an individual level.
A federal system sounds like a horrible idea and a really dangerous single point of failure. The consequences of such a system collapsing would be apocalyptic, and forcing everyone into a single system without competition all but guarantees corruption and mismanagement. Social security is bad enough, please don't expand it.
I did say "Social security is bad enough, please don't expand it."
Luckily, most Americans have pensions outside Social Security, so you won't end up in a situation where nobody has a pension if it collapsed. It would still be bad, but not as bad as if the federal government had a pension monopoly.
My experience from Finland is that there is always a pension reform going on, or at least people are planning the next reform. It's been recognized for decades that the pension system is unsustainable, and reforms have gradually made it more sustainable. Pension growth is now based on a mix of price and wage growth, the initial pension is based on lifetime contributions rather than final wages, retirement age automatically follows changes in life expectancy, and so on.
Older generations certainly got a better deal, and young people are always cynical. But as people age, they tend to gain confidence in the system, as they have seen it change over their careers.
Finland is in a much better spot than most US/EU pensions due to incredible natural resources per capita, high trust society, and low discretionary spending in non-public welfare areas. Some reform is probably required but nothing compared to the catastrophic situations in the US/EU. Fortunately.
Pardon my language but where the f** is all this money going? Is it even humanly possible for a group of regular joes to audit where all the money is going? I think thats the first thing that HAS to happen, a clear transparent audit down to the penny. As a coder, this kind of complexity just drives me up the wall.
Also on a side note, I love how sneaky that NY Times article leaves out the option to cut defense. After all we can NEVER reduce our military industrial complex, only cut everything else to the bone.
The top 3 chunks of spending are social security, Medicare, and Medicaid. The majority of that spending is payments to individuals or on behalf of individuals for medical bills. You can probably find the exact fraction of overhead for each program somewhere.
If you assume that most government programs have on the order of a very few % misspending or outright fraud (which is the case, aside from fiascos like the pandemic stimulus payments) then you just have to assume that the real decisions to be made are the "should we have this program at all" or "do rates need to increase / benefits need to decrease". The auditing and details will get worked out by an existing government apparatus designed to ensure this. You cannot let yourself get lost from the bigger picture believing that what is missing is the audit. The big questions are what need to be solved.
There is no reason to believe government programs are ran efficiently or without large amounts of fraud and corruption. There has to be a reason it costs governments (including government contracts) several times as much to do things compared to the private sector and non-profits.
I didn't say efficiently. I said fraud, which is a different thing.
If you want to attack efficiency, you have a lot of work to deeply change how the government, and in fact many aspects of our public / government works. How they use contractors, the kinds of contracts they're allowed to enter into, the reviews and permitting and public commenting they need to engage in, unions, labor rates, etc. That would be as big a challenge as the above debate.
Maybe I should not have said efficiently, as it really understates it. It's like if someone gets hired to work full time and then only works 20 minutes per week. Is that person committing fraud or just inefficient? What if the person gives part of their salary to their boss to look the other way? What if the person is a company, their boss is a politician, and the money is given to campaign organisation?
Citizens hold their government to a higher standard. As an analogy, the government can't just go to the hardware store to buy a hammer. It needs to buy a hammer from an American using a drawn out bidding process that preferences veterans and minorities, etc etc. Iterate this for evey little thing.
That isn't fraud or corruption as most folks understand those terms. It is more simply not designing for efficiency. People are more concerned with other factors like fairness transparent process.
More realistically, it needs to buy the hammer from a political donor, a family member or friend of a politician, or some other politically connected person. The hammer will cost many times as much as anyone else would pay for it, and may well be the wrong kind of hammer or otherwise defective, assuming it's delivered at all. If a bidding process is used, the criteria will usually have been designed to favour a predetermined winner.
I'm not alluding to a specific case, but I think it's a pretty good analogy for how contracted government projects are run in general (at least in the UK, but I don't see why it would be different elsewhere).
> There has to be a reason it costs governments (including government contracts) several times as much to do things compared to the private sector and non-profits.
I've dealt with both commercial contracts and government contracts.
Commercial contracts are more lucrative with overhead rates that are truly illegal on govt contracts.
> Pardon my language but where the f* is all this money going? Is it even humanly possible for a group of regular joes to audit where all the money is going?
Not really, but for as bearish as I am on the government in general, the Congressional Budget Office (CBO) is a bright spot, and they do very good work at forecasting, auditing, and evaluating tax cuts, tax increases, budget cuts, and so forth. The average person can have faith that the CBO does mostly good work because politicians on both sides of the aisle really dislike the department when they tell the truth about their plans.
On the state/city level, all the money is going to former employees for labor performed in previous decades. The scheme is voters today purchase government employee labor for lower cash outlay today hence lower taxes today, then subsequent taxpayers pay higher and higher taxes as the can gets kicked down the road.
The reason this is different from regular old debt is that via questionable accounting methods and actuarial assumptions, the cost of the deferred compensation is presented as absurdly low compared to what it really is. So it does not show up on any official figures anywhere, just greater and greater portions of the government budget go to paying benefits.
> On the state/city level, all the money is going to former employees for labor performed in previous decades. The scheme is voters today purchase government employee labor for lower cash outlay today hence lower taxes today, then subsequent taxpayers pay higher and higher taxes as the can gets kicked down the road.
This is why contracting out services makes public sector CFOs so happy.
Replace a large % of your civil servant workforce with a company that specializes in that one function, eat potentially higher or inflated OPEX, but no long-term costs regarding pensions. If the requirement for services change, scale down the contract.
This site puts you in a dead end. I followed one thread to figure out Air Force spending and this is the most granularity that it offers. OK I know that 1.9 billion was spent....on what?
The US has spent $100 billion in the Ukraine over the past year, with more on the way, it is sending billions a year to Israel and Egypt, is involved in Iran, China, Venezuela etc. It just stopped spending a ton in Afghanistan. All the money spent there seemed to have no positive effect.
The US seems to have money to throw all over the world for this kind of bloodthirsty waste, if it cuts it can cut there. People getting back money they put into Social Security should be the last thing to go.
The US spends hundreds of billions on these wars of choice, that can be cut very easy.
> You call them wars of choice. It would be more correct to call this preventative money.
No, we that served don't.
> They spend this money in order to prevent having an actual war later.
Having spent a good part of my life prepping for Fulda Gap defense against the USSR I know that is incorrect.
The US has spread NATO right up to Russian doorstep, on the cusp of inside their early warning systems for missiles, having fomented revolution and armed the Western Ukrainians in their civil war against the Eastern Ethnic Russian Ukrainians.
Iraq, Afghanistan, Syria, the Arab Spring turned Winter - more of American Adventurism than critical national security objectives.
Am all for a strong military, just not it being overutilized for incorrect purposes.
You served in the american millitary during the cold war but don't think that the countries that were beind the iron curtain should have been allowed to join nato?
> You served in the american millitary during the cold war
To this day, Fulda Gap Defense is a part of US military practice in Europe. Most people that work for a NATO flagged unit practice this also.
> but don't think that the countries that were beind the iron curtain should have been allowed to join nato?
First of all, US leaders from the past have made numerous promises not to extend NATO that far East.
When you take what was intended to be a defensive alliance and extend it right up to a potential enemy's doorstep, inside their missile defense early warning shield, when you foment a number of color revolutions in another country's sphere of influence (Ukraine, Kazakhstan, Georgia, etc), and threaten their sphere of control, you are not just on the path to war, you are provoking it.
I’ll ignore your lame…rhetorical method and address your point. No, they should not join NATO. When we all die in a nuclear holocaust I will have the comfort of knowing it was all Purim’s fault.
For what its worth I don't intend it as a rhetorical method, it really does seem like a disconnect from what I'm familliar with. My experience living in europe is that when I do meet folks from romania/poland/lithuania/estonia etc are viruently anti-russia, and pro eu/nato - almost disconcertingly so. Especially because they see their own governments as corrupt (I can't say whether they are right) and seem to look to these other organisations to save them from that.
I don't know what point that serves, but I do find it difficult to see membership as something imposed on them. If they weren't allowed to join, I don't really know where that would go?
Though the answer to your suggestions is that any populist conception of the American Empire is delusional. Like a mafia they will take your money and spend it in whatever way they damn well wish, and there's nothing you can do about it
Is this a real question? Top few percent of capital owners captured nearly 100% of productivity inrease that came from last few decades of technological development.
I read the article and no, I do not see that there is no getting around the severity of the situation. The very last plot is ridiculous, how can they even extrapolate that from the graph given?
Maybe you should read more about it. If you know how many people are going to be aging into the Social Security system, and needing Medicare/Medicaid, and some simple assumptions about the budget and tax revenue, you can easily generate the approximate shape and amounts of those financial projections.
It is so simple a calculation and so ridiculous a situation, as you say (but in a different way than you mean), that this is a huge problem that will have to be confronted.
The CBO generates those kinds of calculations, and they're not a group known for making up things out of thin air.
Maybe I'm too pessimistic, but sometimes I feel that bloc got all the goodies at everyone else's expense. This isn't a typical 'boomers' or anything argument against the people, but perhaps the demographic itself and the way politics played out.
Pensions are unheard of now, and companies are still struggling to keep up with them, likely meaning lowered wages for the next group(and no pensions). Tough luck.
I fully expect to pay social security my entire life to subsidize those getting it now, and to be dead before I'm ever able to collect a dime.
Honestly, even having paid into it my whole life, I wish they'd just kill it off. It's an unsustainable pyramid scheme, especially as birth rates flattened. Even if I do live long enough to collect, I don't want that burden on the next generations.
The age is going to keep being raised. A quarter of Americans don't even live to 'full retirement age.' And when it's raised so high it's profitable, the USG is just going to raid it like a slush fund.
>>I feel that bloc got all the goodies at everyone else's expense
Pensions and SocSec were both Ponzi Schemes, Only government could allow something so fraudulent to legally exist. (Interesting Fact, the original SocSec retirement age was 2 years higher than the Life Expectancy Age, now it is something like 8-10year lower... )
It could have kept working provided the population continued to grow at an ever increasing rate keeping the worker to retired person ratio at 10:1, but 2 or 3 generations of declining birth rates, and low immigration means the scheme is coming apart
More so your 401K is currently, and will continue to be reduced in value as the boomer take more and more capital out of the market for their final years. I think we will need to reassess what "normal" returns on a 30 year portfolio looks like as well, in addition to inflation which I think will stabilize at more than the target 2%..
Simply put.. we are economically stag net, and if you are under 40 retirement will be much harder
Do you have some kind of similar study that doesn't come out of the Republican Party? Maybe something a little more non-partisan?
An example of the flaws of this argument/article is how Social Security is self-funded, and not in any financial jeopardy on its own. [1] Some of the other entitlement programs on the list also work that way.
Regardless, my understanding is that a government's budget never has to be balanced. It doesn't operate like a family household. Oftentimes, national debt is used for pursuits that return on their investment, just like how startup companies operate at a deficit on purpose to prioritize growth that will make the company more valuable in the long term. Inflation also lessens the value of the national debt over time.
I quite like one of those options: taxes on the wealthy and ultra-wealthy have a lot of room to rise. Jack them up, billionaires shouldn't exist, and people like Jeff Bezos shouldn't have a single-digit tax rate.
The other part would be looking at government inefficiencies and flawed policies that aren't on your list, the kind that result in wasted spending that's hard to demonstrate tangibly. For example, should we not talk about how suburban development and the interstate highway system is a monetary drain on wealth for the majority of the country?
It's really obvious to me how building more sewer, road, and utilities per person and forcing everyone to own one car per capita or more is a dumb waste of money on a national level. Our government on every level plays a heavy hand in subsidizing that development pattern.
It would be really easy to afford my tax rate increasing to a much higher level if I wasn't forced to own more than one car just to get myself to work. It would also be easier for me to afford housing if a bunch of single family home owners weren't preventing dense housing from being built, and then all that extra money I saved could go toward something more economically productive than a parking lot.
The average American spends somewhere between $5,000 to $10,000 per vehicle annually. Imagine a USA where everyone could go down to one car per family and how the rest of that money could be used.
But no, instead let's add one more lane and make our retirees work until they're 85 rather than fixing our structural problems that make America a very expensive and energy-wasteful place to live.
Because, when you think about it, national wealth is basically access to energy, and America is squandering their own wealth by dumping it into their GMC Yukon Denali Ultimate that gets 14MPG.
I don't understand why there's a temptation to jump to the conclusion that the answer is to make people retire later in life or cut safety net programs, which are often investments with ROI (e.g., hungry kids learn poorly, hungry kids result in reduced workforce education and productivity).
Are 70 year old employees particularly productive for the economy in the first place? It seems like there are smarter ways to save wealth or earn more wealth for the nation.
> "Do you have some kind of similar study that doesn't come out of the Republican Party? Maybe something a little more non-partisan?"
Not sure what your point is. I'm not sharing the article/infographic and animated budget scenarios as "this is what needs to happen" from some party's perspective. The point is a graphical display of the size of different buckets (which I take as fact) and the sliders that you can play with. The cases being presented are just examples. You can mentally slide the bars / cut line and see how much is required.
> "I also find it funny how the infographic doesn't show a scenario where only defense cuts are made, because it would show us how cutting defense spending is a really simple path toward a balanced budget without changing anything else.
I don't know if you have looked at it, but the defense bar is as big as each of the
Medicaid, other mandatory, and "all other" spending bars each. You would have to cut the entire defense budget and still not solve the problem, and only make a fractional share of what is achieved if you implemented cuts to those other programs.
> "Another example of the flaws of this argument/article is how Social Security is self-funded, and not in any financial jeopardy on its own. [1] Some of the other entitlement programs on the list also work that way."
Maybe you have to redefine your definition of self-funded. Sure it is self-funded, as long as taxes increase a lot, given the demographic wave coming. If taxes don't increase, or one of these other options, it will run out of funds. If we don't agree on that, we have a problem. This is the entire debate about the problem we face.
> "Regardless, my understanding is that a government's budget never has to be balanced. It doesn't operate like a family household...."
Well, correct, but the question is how deep do we go into the hole. If you read the story, and the charts, you can see the projections of debt going to 200% GDP. At that point we will be paying enough interest on our debt to have funded several large programs themselves.
> "You're saying our only options are for taxes to rise, benefits decreasing, increasing retirement age, or snowballing debt. But why are those our only options?"
And the other options are?
> "The other part would be looking at government inefficiencies and flawed policies that aren't on your list. For example, should we not talk about how suburban development and the interstate highway system is a monetary drain on wealth for the majority of the country?"
Sure, talk about it, but can you change the bulk of the US to capture whatever benefit you can from that change, within 50 years to save the programs needing the money?
> "I know I've spent a lot of time on this one issue as a specific example, but it's really just one of many ways in which being smart and efficient about the use of the vast wealth generated by the US would go a long way...."
The talking is all good, but the bottom line is will your proposals come up with the money in time?
> Sure, talk about it, but can you change the bulk of the US to capture whatever benefit you can from that change, within 50 years to save the programs needing the money?
We can start changing it today, and save ourselves the pain of having to deal with it when we retire.
It would also improve the quality of our day-to-day life on many dimensions, long before we do.
What the grandparent poster is alluding to is that our culture is sick with a myopic, penny-wise-pound-foolish mentality, where people are personally spending tens of thousands of dollars for a service that could be provided collectively for thousands of dollars. While also complaining about outrageous taxes.
Sure, the basic data about government spending is real but in this particular article it’s being leveraged for a distorted narrative, and the distortion is the idea that there’s no possible way we can pay for these things without fucking over the common person.
The infographic sliders are reinforcing the idea that “the money must come from one of these things” when it really should just come from progressive taxation at a reasonable rate instead of letting the wealthy off easy.
The Republican Party cut the taxes of the wealthy in 2017 and increased the deficit by doing so. They can’t be trusted to give advice about government spending because their basic party platform is that government is bad, the wealthy need tax relief, and their actual legislative track record is increasing the deficit. And yet here they are telling us through their study and this complimentary article that the only way to cut the deficit is to fuck the poor and the elderly.
Anytime a real protest occurs in the US, 100s of people wind up sitting in solitary confinement, uncharged, for months or years. We've only had one real protest in living memory (that I'm aware of) and that will probably be about it. No one really wants to go to the Gulag.
Thanks. Some of us were so well organized with cool songs and stuff, I'm jealous so we're writing one for next week (probably based on Vian, Lluis Llash or Ogeret).
In the US at least, the original retirement age, set in 1935, was 65. The average life expectancy was 60. Today in the US it's 77.8. In France, it's 82.
As populations age into a higher percentage of retirees, the system is forced to cope with more people who are purely consumers, and contribute nothing to the system. In a post-scarcity world, this would not be a problem, but currently with the oldest generations owning the vast majority of wealth and real estate, and with college, housing, and many costs of living having inflated 3-20x since the older generations were younger, it is a problem.
Giving old people money for free when their 10x more valuable houses inflate the market, keeping the younger generation from being able to start families, is a killing blow for population growth and the livelihoods of younger generations.
That's just because people died young. The mode (most common) age of death was over 75 in France for men in 1930. I'm not sure how WWII factors into that. It's now about 82, eyeballing it (yes, still higher).
People were not "old" and dying at appreciably higher rates given they reached age 60 back then. The general premise that there's a lot of rich old people now is true. But the factors that have raised life expectancy are probably working against this trend, and to minor effect, as they primarily raise the current number of kids.
My understanding was that almost all countries with advanced economies are experiencing negative growth in producing children. So even if you are right about the nuance in age, go look at Japan. Their population is shrinking.
Purely economically, only a total moron would have a child. Child labor has been outlawed and society says the (grown) child is their cash cow not yours, so the retirement from taxing the kid is spread across everyone else. Meanwhile you're asked to pay the lions share of the investment for everybody else to cash out on. So the name of the game is to let everybody else have the kids and free-ride the fuck out of that by paying some token contribution like the property tax for their grade school or whatever and then taking advantage of their tax dollars when you get older.
This is a huge departure from almost all of human history except the last 100 years in the developed world, where the family formerly was the safety net so these kind of investments and arrangements stayed in the family leaving a much stronger economic incentive for children.
There's also the aspect that old people will feel bothered by your kids and complain if they have to endure hearing happy kids after 6PM. Even though they were the ones who bought the house next to the playground...
> Purely economically, only a total moron would have a child.
OK but nobody is making that decision "purely economically." Returning to a world of filial piety laws and no real social safety net sounds nightmarish.
>This is a huge departure from almost all of human history except the last 100 years in the developed world, where the family formerly was the safety net so these kind of investments and arrangements stayed in the family leaving a much stronger economic incentive for children.
except the evidence seems to point towards kids being a net drain, even in preindustrial societies.
Feels a bit like saying the compressor is a net drain on a jet engine. Sure, if you disconnected the compressor while running, the engine would make a lot of power for a very brief moment. But the compressor is needed to keep the engine running.
Except the linked article argues that in hunter gatherer societies, kids were a net drain even when their parents were approaching retirement, and in agricultural societies there were "retirement" options in the form of land ownership and financial instruments.
Some of the calculations they made were utterly bizarre. Like assuming the child wasn't paying anything forward until "retirement" of the parent. All adults being net positive is not the same as the elders not benefitting from in-kin capture of investments in a scheme that almost resembles taxation moving benefit upwards in in-kin seniority.
So if you were living in an agricultural society, you would trust their financial instruments and institutions governing land ownership more than you would trust your own family? Really?
I’m not sure what you’re saying. There are other factors that have changed between now and then, such as the general acceptability of being unmarried, family planning tools, reduced religiosity, and woolier stuff like people’s idea of what a good life is.
If you are employed in manual labor then I'm not sure how working into your mid-70s is supposed to work. It seems like it's just saying that people should go off and die.
I think you're making a big leap to saying that economics are the reason people aren't having kids. Many people who are financially well off don't want kids either. I haven't looked for good numbers, but it seems the poorest members of society have the most kids, while the richest have the least (could be some issue with lack of controls here).
"Able to have kids" isn't the only economic factor. "Incentivized to have kids" is another.
Kids used to be cheap labor plus a retirement package. Now they are an expensive hobby. With privatized costs and socialized benefits (or, if you prefer, benefits that get sucked to the top of the social pyramid), kid production stopped making sense for kid producers and we are seeing a supply shortfall. If we fix the incentives we can fix the supply shortfall. Even a partial fix is probably sufficient -- people enjoy having kids, they just need the personal economic consequences to be less of a flaming trainwreck.
'"Able to have kids" isn't the only economic factor. "Incentivized to have kids" is another.
...
people enjoy having kids, they just need the personal economic consequences to be less of a flaming trainwreck.'
You start out saying one thing and end up saying something different.
The point is, even when people have the money, they don't want kids, or at least not very many. If people truly want kids, then they are already incentivized and just need to be able to.
Parents already get tax breaks for kids. Primary and secondary education costs are mostly covered via taxes, whether one has kids or not. So there are already economic incentives, they just aren't a net benefit to the parents. I don't believe making them a net benefit is the right course of action since that has potential problems as well.
The social safety net will cover that. SNAP, WIC, CHIP, Medicaid, school, are all covered. All you need is subsidized housing and to know where the different charities are that have free food and clothing.
If you look at the link I previously posted, the under $10k a year group have the highest birthrate. So it can be done.
Hmm, sounds like forbidding pensions would fix that (make older people rely on their kids).
Cheap labor is no more, especially in the age of highly specialized jobs requiring education (manual labor is greatly automated now, especially in agriculture, compared to 100 years ago).
How else would we incentivise it? Money payouts on birth don't work -- only poor people would make good use of it, middle class would see the payouts too small for them anyway.
Depends on the payout. I’m decidedly middle class, as are practically all my friends, my large family would probably qualify as „rich“, but I and everyone I know are still weary of the financial burden of having kids. Although my personal theory is that it is not so much the cost, but the lost income potential and career opportunities for women that keeps people from having (more) kids.
I think they're still relevant but in a different way. Upper-class parents have higher expectations for the amount of extracurricular education and activities their children are going to do and it's infeasible for them to do that with many.
I think the population distribution by age band in the different eras would illustrate why there was enough money then and insufficient money now.
The premise wasn’t that you the worker would pay your own retirement but that you would pay for the current crop of retirees and then when you retire the younger age bands would be paying for your retirement.
If the worker would be funding their own retirements then they have to pay in a whole lot more.
"If the worker would be funding their own retirements then they have to pay in a whole lot more."
What? That doesn't make any sense. If my social security contributions went into a bank account that was invested, I'd be way ahead of what social security will pay me.
Did that article you link say anything about the ratio of those that reached 60 or not? In a pay as you go system what matters is the ratio of retired to working and in a system that is actuarialy sound and actually saving then the percentage that pays in and does not collect by dying before retirement matters a lot. The most common age you die given you make it to 60 is pretty irrelevant in both situations other than it indirectly partially relates to the load of old people you have to contend with in the system, which is what actually matters in both situations.
75 was the most common age to die for French males from that time across the board. Not conditioned on making it to 60.
The "life expectancy" of someone given they made it to 60 was similarly high. Highlighted only to dispel people's imaginations that people used to be "old" when they reached their society's average life expectancy. They don't look physically old. Nor are they even outliers. 1930s French society would have had lots of people in their 60s, 70s, and 80s,
Why does the mode matter? We are discussing cost, which is related to the the number of retirees. The average lifespan tells you how many people you can expect to be retired at a given moment, the mode tells you... what exactly?
If you have 100 people of which 50 died below age 10 and the 50 that survived lived to 75 that's a lot of retirees.
If all 100 survive past age 10 but 90 of them die before age 65 you have not a lot of retirees.
The exact numbers can work out to the same "life expectancy" with wildly different results for retirement planning. And also in genealogy the high infant mortality rate makes for small average life expectancies and you might be surprised how old most people that survived to adulthood actually got.
When someone says the life expectancy used to be lower and we now have a lot of people who are old are not working would lead you to believe that there were not a lot of old people not working in the past. That would be wrong. The plurality of people were dying at 75 as I said.
The average lifespan is very insufficient to tell you how many people you can expect to be retired at a given moment.
1. A high infant mortality rate brings average lifespan down.
2. Infants don't contribute to the economy nor to public pension funds.
A country might have low life expectancy, but a relatively close number of workers and retirees, as life expectances can be (even more so in developing countries) multimodal.
These people are not contributing during retirement, but HAVE contributed in the past. In fact people pay (especially in places like France) into a government retirement fund.
And this happens over 20-40 years of work. This is a long time and if properly managed, should be fine.
So people aren't just being given "free money", this is something that they have paid for and so they are protesting, because it's basically a kind of service that they have been promised in exchange for being taxed each pay check.
But I still come back to the question of what you will do at retirement?
The people should themselves be managing their retirement corpus. Some would become rich, some would be poor but in the end they won't take money off the taxpayers.
Instead they gave their money to governments who immediately consumed, mismanaged, gave it to themselves and while kicking the can down the road with cheap loans.
Now, current governments are left with old people with no money demanding benefits and young people getting taxed into poverty.
> There is no retirement “fund” in the way that word implies
well, France really has 2 systems (to simplify, it's really more like 42+), the "public" one (i.e. civil servants) and the "private" one (i.e. anyone employed by an employer other than the state).
The "public" retirement is based on the assumption that the state guarantees its liability for future pensions but doesn't actually put it on the books (if it did real debt would be another 2,000 billions euros), while the "private" retirement does have a "fund" (really several of them, one per sector of the economy) but it's revolving money put in by the current workforce but paying immediately current pensioners. This second system can in theory have excess money (but every time it does, a law is passed to extract some more money out of it to the benefit of the first!).
Part of the issue in France is the existence of these 2 systems and the very fact that the state allows itself to do its accounting differently (in a way that unlawful for anybody else). If at least the state played by the same rules... (of course then it would have to recognize this extra debt of 2,000 billions euros, and that would disqualify the country from the eurozone!).
But in short, yes it is very much the government's problem. They (since 1945) have "organized" pensions in a way that makes them a time bomb both in its accounting, and in its unjust rules (rules vary a lot per sector of the economy).
The status quo is so bizarre. Human life has no inherent value unless it makes continuous contributions to "the economy". It would be economically most efficient to drop dead on the day you retire. Thanks, human!
All of this to keep a machine running that wrecks the planet and everything living on it, including ourselves. Probably some 50% of the economy is pure bullshit that nobody asked for, just keeping each other busy.
At some point we lost the plot. The economy doesn't work for the people anymore and drastic productivity increases have somehow not really improved our lives in terms of freedom, time, physical/mental health, quite the opposite.
> Probably some 50% of the economy is pure bullshit that nobody asked for, just keeping each other busy.
You mean that 50% of the economy is bullshit that you think nobody should ask for. You and I may agree that developer at an online gambling company is economically useless, but the their boss certainly doesn't and the gamblers probably don't either.
Even if we accept your premise, you can't just assume that tanking the economy will only cut out the useless jobs instead of the useful ones. Useful jobs are perhaps more likely to survive, but that's not always going to be the case. During the next recession, people will more likely give up on a solar roof than give up gambling.
> The economy doesn't work for the people anymore and drastic productivity increases have somehow not really improved our lives in terms of freedom, time, physical/mental health, quite the opposite.
People's lives are objectively improving. It mostly just happening in Asia though. It requires a lot of money to build power plants, hospitals, and water towers, and much of that was financed by selling "useless" trinkets from the West.
Sometimes people fail to recognize that the oldest super powerful artificial intelligence is several hundred years old. It’s our economic system.
It’s the software running on all our “wet ware” that convinces us to value productivity and money over human life, the environment, or happiness. It is the paper clip maximizer and it’s happily churning away.
But we’re not maximizing paper clips we’re maximizing profits .
What does it mean to value human life? I would argue that the economic engine has given us ALL of the improvements in quality of life, and the fact that we live so much longer than we used to, IS valuing human life. There is no other way we could have given ourselves all of the amazing things (tech-wise) we have today.
Why would we value the environment over human lives? That just seems like nature-worship.
> The economy doesn't work for the people anymore and drastic productivity increases have somehow not really improved our lives in terms of freedom, time, physical/mental health, quite the opposite.
If trees could just all agree to remain short, they wouldn't need to waste resources to outgrow each other to reach sunlight.
> Probably some 50% of the economy is pure bullshit that nobody asked for, just keeping each other busy.
Obviously this cannot be true. "The economy" isn't some magical object somewhere, but the emergent behavior from all our needs, desires and faults. If something is truly not wanted by anyone, nobody will pay for the work to get done. That's the magic of the invisible hand of capitalism. Doing stuff that truly nobody wants and getting paid for it is usually more of a feature of socialism and bureaucracies.
There are cases where individual motive leads to macro behavior that's not desirable by any individual, those are the cases where we need to tax negative externalities or regulate, depending on the problem. These issues usually don't emerge though because nobody wants something but because too many wanting a thing creates side effects that nobody likes. The book Micromotived and Macro behavior by Thomas Schelling covers that nicely.
Just look at the huge amount of money being invested into advertising, PR, and marketing. That industry is mostly focused on finding psychological tricks to manipulate us into wanting things we just don't need, in various ways.
One of the best known examples is the PR-manufactured tradition of diamonds in engagement rings, which sky-rocketed the demand for diamonds in the general population.
Another great example is the huge industry of "supplements" which is legalized fraud on a massive scale, selling useless pills to people with a promise of making them better in some way, and relying solely on the fact that it's hard to prove that they don't actually do anything since their claims are so vague.
These are prime examples of entirely artificial demand created out of whole cloth through manipulation. There are numerous other cases of more subtle effects, where marketing is significantly inflating a demand which would exist but be much smaller otherwise (toys, smartphone upgrades, new cars every few years, beauty products, fashion etc).
>but that want is itself manufactured by the economy.
Is that an issue? There's not much demand for 8k ohm SMD resistors from people, but people do want smartphones that require 8k ohm SMD resistors to manufacture. The same applies for stuff like managers and other "bullshit jobs". Nobody wants them, but they're nonetheless required to keep the company/economy humming along. And if they're actually not required, then the economy that supposedly cares what's "economically most efficient" should have eliminated them.
I think the previous poster may be thinking more along the lines of a Mickey Mouse shaped bar of soap, rather than an important component of something useful, like resistors.
There is a mountain of trash end-products out there, which marketing is creating the want for. These products may not otherwise exist without the manufactured want, and could be removed entirely without much detriment to the very small amount of people that conscientiously decided of their own free will they wanted that product.
Marketing is what makes something like a Peloton a viable business, rather than those customers just taking a regular static bike and adding a tablet mount to the handlebars.
In some senses, I think the economy isn't always looking for the most efficient methods. I believe there is some political input involved to keep everybody's heads down under a quagmire of pointless work, so those people (even in a democracy) don't start asking too many questions. Some people could easily be automated out of work, yet they aren't, despite the efficiency it would bring.
To each their own, but I'd be fine with a huge amount of (what I deem) useless products and jobs being removed from the market. Most serve very little real purpose and as somebody else stated, are destroying our planet and wasting away the best years of our lives to attain them.
I would frame it with a different emphasis. Want is inherent to living organisms, humans and others alike. The economy discovers, amplifies, and satisfies our wants. But it is also important to remember that economies emergent, not some external object imposed on humans.
Don't confuse the metrics with the thing itself. The economy is not metrics in the human mind. The economy is me liking Envy apples more than disgusting Red Delicious apples and buying Envy instead. The economy is an employee getting a good offer to fill a need a company has and going back to their current employer to find out who will pay them more / gets more value from them and it's willing to thus pay more. Things like the GDP just try to approximate the sum of all these actions and exchanges.
It most certainly is and I have not encountered anything to indicate otherwise. Individual transactions are no more relevant than GDP is. These are individual metrics or acts that influence those metrics, which try to quantify aspects of an aggregate concept.
You’re comparing decades of productivity going to capital to debt incurred within the last half decade (“Here's where the money went”).
The US does have a lot of sovereign debt, no doubt, but that’s not why Labor isn’t seeing a greater share of the productivity gains since the 70s. A loss of collective labor power and 10% of the country owning 89% of public equities gets us here.
To arrived at an improved end state, one would need more unions and labor organizing, as well as perhaps ratcheting down the work week to 4 days.
I presented a chart going back to 1970. It covers the time period in question. It shows an enormous increase in government per-person spending. Why do you think that has nothing to do with where did the money from the productivity increase go?
> why Labor isn’t seeing a greater share of the productivity gains since the 70s
Globalization seems like a major factor that's often ignored for that. We had productivity gains. We didn't benefit from them as much as expected because people in Asia had bigger productivity gains. Joe six pack now competes with people in China working 996 instead of just his neighbors like in the 70s.
The other political sports team cuts taxes for the rich too. For instance they recently removed the cap on the SALT tax deduction which primarily benefits rich people, largely in coastal cities, i.e. those most likely to vote for and donate to them.
This isn’t true - the cap on SALT tax deduction hasn’t changed since it was put in place in 2017.
Some members of congress, apparently from both major parties, are proposing legislation to raise the cap from $10,000 to $100,000 or otherwise raise or remove the cap. But these proposals are not certain to go anywhere.
Ha ha ha. If you taxed 100% of the wealth of the wealthiest (Bill Gates, Elon Musk, Zuckerberg, John Kerry, et al - everyone worth say over $100 million) amongst us, you wouldn't even make a dent in the national debt. And I mean take every nickel they have, the national debt will still be out of control. The old saw that tax cuts for the wealthiest increases the national debt is an argument that simply cannot stand up to scrutiny.
They are contributing to entertaining end users of the casino. Entertainment is a valid need. You or some academic in an ivory tower can't dictate worth or contribution. It is determined democratically by actions of consumers (literally voting with dollars).
That said, there are some jobs we can easily label as zero wroth. E.g., jobs where people dig pits and fill them up (common in job schemes in socialist countries). These are jobs that powerful folks invent to remain in power by bribing poorer folks.
A mega job-guarantee program to alleviate massive rural distress may have had an unexpected, deleterious effect: luring India’s skilled labour away from the organised sector. ... Lured by the lesser effort involved—MGNREGA jobs like digging pits and filling them don’t need any skills—they leave their factory jobs to work for 100 days under the program and then take up other contractual jobs for the rest of the year.
Nokku kooli is a euphemism for extortion by organized labour unions in Kerala under which bribes are paid to trade union activists in exchange for allowing unaffiliated workers to unload their own belongings and materials.[1] This happens with the tacit support of political parties including those in government. In Malayalam, 'nokku kooli', translates into 'gawking wages' or 'wages for (just) looking on'.[2]
Bullshit jobs are not specific to state capitalist ("socialist") economies - they are a constant of all capitalist systems, as common in big corporations in the USA as they are in China or they were in the USSR. They do tend to take different shapes, but they are a natural effect of corruption, which tends to affect all large organizations.
> Bullshit jobs are not specific to state capitalist
Yes, but unlike in socialist governments, companies with a lot of bullshit jobs will die due to being inefficient. Thats the point of capitalism. Nobody has to work to support other able bodied humans rent seeking off their labor and capital.
But in the US this is not true, as we don't have true capitalism in the US, we have a socialist mix and the govt can sometimes prop up inefficient companies.
But in socialism, authoritarians will remain in power for decades even if the majority doesn't like it. Rent seeking is a natural state of affairs in more socialist countries.
> But in the US this is not true, as we don't have true capitalism in the US, we have a socialist mix and the govt can sometimes prop up inefficient companies.
This is the "no true capitalist" fallacy. The reality of capitalism is that big companies get to impose whatever they want on any smaller entity they want. They may either do so directly (e.g. when operating in a weak country, like Chiquita's Banana Republics) or by co-opting government (either in cahoots with an authoritarian government like the USSR or China, or a democratic government like the USA or Europe). And big corporations will always have local fiefdoms with bullshit jobs, since corruption rears its ugly head in any large org - be it Oracle or the US Federal government.
> Thats the point of capitalism. Nobody has to work to support other able bodied humans rent seeking off their labor and capital.
Before claiming such hilarious idealism, maybe take a look at the capitalist US South and the way it was built by 150 years or more of slave labor.
How is it different from the "no true socialist/communist" fallacy that is more common?
> Before claiming such hilarious idealism, maybe take a look at the capitalist US South and the way it was built by 150 years or more of slave labor.
A free market requires free participants. Therefore, the US South was not purely capitalist. Also, slavery was not the only component in building the South. Other continents and countries have/had slavery for longer periods and are poorer.
The US South was an exploitative mix of socialism + capitalism that was defeated by the more capitalist and freer North.
> The reality of capitalism is that big companies get to impose whatever they want on any smaller entity they want.
Which exploitative project by a company has the lifespan and reach of CCP or Soviet Russia's decades long exploitation and rent seeking?
The difference is Oracle can't force you to buy their database for your small company but you have to pay gawking wages even if you are a poor person.
> weak country ... or by co-opting government (either in cahoots with an authoritarian government like the USSR or China, or a democratic government like the USA or Europe).
Thank you, thats my point. They can't survive long unless they are supported by an authoritarian govt or by a weak govt.
It is obvious now that we are arguing in circles with you supporting my point. So I guess we can end the conversation here.
It seems that to you, capitalist simply means free market, and you call any kind of state intervention socialist. If those are the definitions, we probably agree.
However, that is not how those terms are normally defined or used. Capitalism means "an economic system where most enterprises are wholy owned by those who invest the initial capital". This differs from earlier economic models like feudalism, where enterprises were typically wholy owned by a lord through hereditary rule.
Socialism is normally defined as "an economic system where most enterprises are wholy owned by the workers who work in them".
Socialism can very well be a free market system, just like workers co-ops compete today with other worker's co-ops and more traditional capitalist corporations. Conversely, an economic system doesn't stop being capitalist just because there are tariffs or subsidies or other interventions by the state.
In particular, you can have a purely capitalist system with slave labor, since workers' rights are entirely irrelevant to whether a system is capitalist or not. In fact, freeing slaves has usually posed a problem to those with capital, and so the states that forced them to free their slave typically had to reimburse the owners for their loss of property as if they had nationalized a piece of land.
Later edit:
> Thank you, thats my point. They can't survive long unless they are supported by an authoritarian govt or by a weak govt.
My point about the weak government was that a powerful corporation faced with a weak government will just hire its own mercenaries and do what it wants, ignoring any law (usually forcing people to work) - like Chiquita and other banana companies did in South America.
I understand the sentiment, but in this current system, that counts as contributing because eventually it can be exchanged into something that you consume (e.g. food, housing, healthcare). Even if there were no money and everything works with barters, you'd still have to offer something that other people need. Unless somehow you could survive without requiring food etc from someone else, then they won't force you to "contribute to the system"
I think you contribute with real dollars (in Europe case, it's Euros). Whether these euros are derived from a real activity (ie: garbage collection) or a fake activity (ie: finance and eh, politics) or a negative activity (ie: a tobacco company). It's irrelevant.
uh, didn't the old people finance their own social security? Didn't they give up money their whole lives to finance their homes? Don't they contribute to society in other less-measurable ways?
That said, there could be some ways to retire, but be able to work in such a way that retirement is not adversely affected. Some of my friends who retired had to carefully not work or social security was adversely affected.
> In the original Act benefits were to be paid only to the primary worker when he/she retired at age 65. Benefits were to be based on payroll tax contributions that the worker made during his/her working life. Taxes would first be collected in 1937 and monthly benefits would begin in 1942. (Under amendments passed in 1939, payments were advanced to 1940.)
That's from https://www.ssa.gov/history/briefhistory3.html - so generally, the old were financed by the younger at inception, and that's basically continued ever since. Nobody funded their own SSN fully between 1937 and 1940.
That sort of insurance is still a good idea.
The "house" part of the person you're replying to's post is interesting: "Giving old people money for free when their 10x more valuable houses inflate the market"
By definition, anyone whose house is 10x more valuable than it was when they bought it is not inflating the market. The people buying at the new price are the ones driving the current valuation of that house.
But constrained supply does also come into play; and other forms of social assistance are conditional on income levels and such; it wouldn't be totally unreasonable or unprecedented to make some benefits conditional on assets in cases like that - if you're sitting on a 900k asset, maybe leverage that first if you don't otherwise have any savings? And in doing so, open up that spot for a younger generation that still has to commute, etc?
> uh, didn't the old people finance their own social security?
No, that's the original marketing but the payments you get out of it aren't related to the ones you put into it i.e. they're just a tax to fund the program.
Same in Italy but it’s related to how much you paid, it’s not the same money. The money I’m currently paying are used to finance pensions to people retired now.
When I’ll retire (will never happen at this rate) I’ll get a pension that’s based on how much I contributed but the money will come from people who will still be working.
We are living in an artificial scarcity world is more of a problem than us not having enough capacity to sustain retirement and increase leisure time of the pre-retirement demographics.
Technologically, imho we have been beyond a post scarcity level for quite a while - its our economic system and its poor allocation of wealth and resource allocation that is antiquated, irrational, and constraining the system. Austerity is just giving up at actually building the system in the ways needed for more people to retire or even live out their lives avoiding things like climate change.
Austerity is the neoliberal elites like Macron way of feigning poverty. They want a small, weak government, powerful businesses, and an impoverished society completely dependent on their whims and generosity.
Any government wants power, money, and having society depend on them. The bigger and more powerful the government, the more they can do.
Same with companies: the larger the more annoying, but at least you can choose them, and there's competition. Not so much with governments, they just act like a powerful monopolistic megacorp.
The goal is to make power decentralized, not further concentrated in a few hands, especially not a government that can get away with it as much as they want, and even use violence, contempt and oppression if needed.
I am skeptical that blanket decentralization works without some central framework to maintain it. Otherwise power still accumulates and without some enforcement of openness and a collective discussion - corruption also grows perfectly fine without government involved. See decentralized crypto industry as a microcosm.
I would say that government and a healthy protest of government as the French are exercising is one way to check the over accumulation of oppressive power.
To add, simply take a look at the % of USA federal spending that goes to Medicare and Social Security, which are benefits for the over 65 population. It's 1/3rd.
1/3rd of Americans are also over the age of 55, which will push that number higher.
We are consuming our young. As a 29 year old, unless technology advances radically and I have positions in the companies controlling it, I will not get what I put in.
There are many advanced economies in worse positions. France for example spends ~15% of it's total GDP on pensions alone.
We can all blame whatever severely rich people exist, however the death by a thousand cuts brought on by too few supporting too many is the root of the issue.
The worst part is, many of these supported elderly aren't even able to live decent lives.
Social Security isn’t federal spending. People pay into the trust fund, then withdraw when they retire. It is set up so that it cannot run a deficit.
However, congress raided the social security fund, spent the money, and now they are deflecting blame away from themselves by claiming the system was insolvent by design.
If you're referring to social security, that money is not free at all. People pay into the system for 40-50 years so they can get a fraction of it back in retirement.
Regarding college inflation, that's purely caused by young people taking out loans. Don't do that. My kid is taking a good number of his classes at the community college. If y'all started shopping for the cheapest way to get an education, costs would come down.
If that happened en masse then the universities you ultimately want to attend will start requiring their courses and not accepting transfer credits or something else. Not saying it’s a bad idea or anything to take classes and then transfer them in.
1. At least in the US, contributions to social security stop once you hit 160k, making it a regressive tax. Raise that cap and like magic, the system is solvent.
2. Growing home prices come from a lack of supply. And you’ve completely flattened an entire generation into one wealth class, which is a gross distortion of the facts.
That doesn't make it "regressive". The untaxed dollars after 160k don't count towards benefits.
Rather, the tax is extremely progressive due to the various "bends". As you contribute more into the system, they make the per-dollar value of your contributions go from .9 to .3 to .15.
Anyway, Social Security is fine. It's Medicare/Medicaid that's going to nuke the budget.
The payroll tax is an income tax with the following brackets:
0-147k: 12.4%
147k+: 0%
The number goes down at the higher income bracket, which means you pay less % of your money in payroll taxes the more you make. That is the very definition of regressive.
Those aren’t the only tax brackets high earners are subject to. Aggregate tax load is roughly still progressive.
That aside, as a matter of policy, uncapping the taxes would destroy the popular notion that the amount of Social Security you receive reflects your contributions. If the public believed it was literally just income tax, and if there was no cap there would be no reason to not just adjust the income tax by that amount, it would be subject to the same politics as income taxes and could be cut on a whim. Treating it differently than income taxes, even when it is not, is essential for its survival. If they didn’t cap it, top income tax rates would be >60%, and there isn’t much appetite for that.
I'm sorry but I've contributed a fuckload of money to this system and I better be getting the value I paid for out of it when it comes to that time. These people are not 'consumers'
> with the oldest generations owning the vast majority of wealth and real estate, and with college, housing, and many costs of living having inflated 3-20x since the older generations were younger, it is a problem.
This is one "benefit" of inflation. Whatever you did 50 years ago in exchange for your wealth isn't worth as much to society today as it was back then, in general. So you can continue to do something productive or hope you were productive enough before you retired that your compensation lasts.
It's less about wealth of the oldest generation and more about the fact that we don't have a good replacement rate from reproduction or immigration. Birth rates around the world are not even at replacement rates. The entire retirement system is built on the idea that younger workers will chip in to pay for the elderly, but...we can't do that at scale, because there won't be enough people. There are still a lot of older poor people now, and caring for them and end of life care is incredibly expensive. Even "rich" people now will be poor by the time they die, especially in the US. A huge portion of US inheritance will evaporate paying for parents aging.
As populations age into a higher percentage of retirees, the system is forced to cope with a more people who are purely consumers, but contribute nothing to the system.
Also interesting that the inflationary effect of this phenomenon is starting to be recognized. A large fraction of the population has nothing to do but sit around spending money. I'd never considered this point before now, but hopefully the Fed takes it into account when they decide how much to hose the rest of us with high interest rates (which the Boomers also DGAF about.)
The problem isn't that retirees spent too much money. Most money gets spent by people in middle age who have kids, active income and no choice but spend the money. Retirees typically try to be prudent. This is why you see the large export numbers with comparatively low imports in countries with low birth rates in parts of Asia and Europe. Very productive people with no kids spending little of their money and soon stopping to contribute and cut down on spending to brace for the long haul. (source: numerous Peter Zeihan interviews and videos)
Still will lead to inflation though, as you point out, since production will drop.
I also wonder what that means for index funds and the stock market in general. Every month massive amounts of retirement savings get directed there because there is really no other place to invest. What is gonna happen when contributions turn into withdrawals?
So it's everyone's fault but... I don't get it. The system is a ponzi scheme. It was bound to have issues while benefiting the early players. Why not admit that?
Because once you're invested in a Ponzi, you lose it all when it crumbles.
It will, ineluctably, but if you can push the date further, then maybe you can get away with it.
To postpone its fate, they'll advocate for a harsher taxation of their neighbor and the business next door so they can profit from them the most ("I know they have money, while I'm so poor you know..."). They also need newcomers in the pyramid, so they advocate for more recruits.
Then they will call that "solidarity" so they don't have to face their short-term, greedy mindset, the same they blame others for.
Realistically that's what needs to happen. Wealth needs to be redistributed from the old rich to the old poor. Social Security is meant to be security for the old poor, not a middle class pension.
I thought the idea of Social Security was an insurance program to guard against you outliving your means if you live long enough, not an I-get-paid-back cash-out of your payments.
Aren't you having a fundamental misunderstanding about what the purpose of SS is?
And not sure if you know, but the dollar figures are more like:
Max pay into the program: ~$300k over your 40 year working life
(if you maxed out the contribution cap, 6% tax on $167k currently)
Max payout from the program: ~$600k
(if you draw the maximum when you retire and luckily live a long time, ~20 years)
Not "paying in $1m, and only getting $200k", by a long shot.
I think it's quite in the opposite direction of how you think you're being taken for a ride.
The Social Security tax rate is 12.4%, not 6%. The “employer contribution” exists solely as a mechanism to obfuscate how much tax is being taken out of people’s paychecks to pay for it.
This was increased from ~10% to 12.4% in 1983 under the Reagan Administration. The extra funds weren't paid to beneficiaries: they were intended to build up a trust fund for future generations, but they were instead borrowed by the government for general spending, and to mask the effect of Reagan's tax cuts.
> I thought the idea of Social Security was an insurance program to guard against you outliving your means if you live long enough, not an I-get-paid-back cash-out of your payments. Is that a fundamental misunderstanding about what the purpose of SS is?
Yes, this is a fundamental misunderstanding of social security. Social security isn't insurance or an investment, it's a tax that's presented as an insurance or investment in order to make it more palatable. The social security tax rates were set with the demographics and life expectancies in mind decades ago. And now that these demographics and life expectancies have changed we'll either have to drastically increase the tax workers are paying, or drastically cut the amount that people withdraw.
I think if you call it insurance it assumes you are entitled to something, but you are not. A future government can decided to stop paying or reduce payments if they want to.
I prefer what we have here in Australia where you are required to pay money into an account that is actually yours, with a balance that you can watch grow, and that you can withdraw as you need when you retire.
Is it true that you can actually withdraw it all the day you retire to buy real estate and then the government will start giving out a pension for you? This is something I was told by some Australians.
The Age Pension is designed to support the basic living standards of older Australians. It is paid to people who meet age and residency requirements. It is targeted through the means test to those who need it most. Pension rates are indexed to ensure they keep pace with Australian price and wage increases.
If you only have the house you live in (that's more or less median) and no income (from additional rental properties | other investments) then you might qualify for a pension.
Typically people might draw on their superannuation fund to provide a weekly income for themselves although they are free to use it for their retirement plans as they see fit.
I don't know if I agree with your example figures. SS was meant to be self-funding, and lately it hasn't been. This is partially because people are living longer.
Furthermore, the decline of pensions and rise of the 401(k) has enabled Americans to blow their opportunity to save for retirement, often on things like housing and college tuition (but that's another topic).
I think that either SS needs to be THE retirement plan, or it's the 401(k). As someone who maxes out their 401(k) each year, I do not want to participate into SS. I don't want it taken out of my paycheck, because that money would otherwise go into my 401(k) (technically), which I have more control over (where it's invested), which I can draw from in case of hardship, and which I can access at 55 1/2 instead of 65.
I do think SS is a good safety net to have, and I don't necessarily want to be disqualified from it because I "opted" for a 401(k), but realistically SS payments are so low relative to the cost of living that if I found myself living on it exclusively, I'd probably be only slightly more-comfortable than if I didn't have it. It's a shitty retirement either way. You're definitely not traveling or eating out or anything like that.
Assuming you’ve got the typical HN user’s job and career trajectory, this is exactly what’s going to happen. It’s what’s going to happen to me, too. It’s what SHOULD happen. I don’t think that many people are going to be shedding tears for your financial loss.
I'm not looking for tears, believe it or not. I would like to opt-out of SS (once I have paid in a certain amount - I realize it only works when EVERYONE pays in), and put that money in my IRA instead.
In order to pay $1M into social security you would need to make the maximum contribution for 45 years.
In order to pay $1M into social security and see less than $200k back you would need to die less than three years after starting to collect social security (assuming you don't retire early, which you probably didn't with a 45 year long career).
You can't collect SS until you are 65, 65 - 45 = 20, most people are employed by 20.
There are probably more people who pay more into SS than they get back, than you think, whether they make it to age 68 or not. Many Americans don't even make it to 65 because they had a heart attack at 58... So yes I would agree that the odds of you not making it to 68 but making it to 65, are low, but even at 68 you're still way way underwater vs what you paid in over your career.
To assume I'm one of those types just from that tiny comment... Jeez it's math. Why do I have to pay way more into my retirement than I am going to get back? I don't mind my taxes going towards others' retirement, but why does the beating have to be so brutal and severe? Why can't I pay $200k in and then opt out of SS and start putting that SS tax into my IRA?
If you're talking about US social security, your premiums are capped and your payout is directly linked to your contribution. Not sure how you could ever put $1M in of your own money over an entire career.
Do the math but ignore inflation (because the cap and payment is indexed to inflation)
If you work 30 years at $150,000 per year, you've put in 6.2% per year ($9,300) or a total of $280,000 (your employer put in another $280,000). You can't contribute more than that, since income above ~$150,000 is exempt from the social security tax.
Assume a 3% real return, your contribution turns into $500,000 plus the employers $500,000, so $1M.
If you get the max payment (because you put in the max contribution), you'll get $3,627 per month or $43,524 per year. If you retire at 65 and die at 95, you would have drawn over $1.3M. That's more than what you put in.
I'm not sure where the "rip off" is? I guess it is if you die early, but hey, that's how pensions work.
It's not a zero-sum game. You pay, you receive back all the benefits of a developed society AND the retirement. Otherwise you could keep all your money and live alone in a jungle or desert.
> Giving old people money for free when their 10x more valuable houses inflate the market
Aside from that money not being "free", the important part of your observation is on the housing price and how the market works I think. These are IMO way more important issues than wether elderlies should work until 65 or 95.
The good example of the extreme skew is Japan, when government optimizes their policies in favor of old people at the expense of young people who can't even influence the policy enough.
Not sure why you are getting downvoted. At least in the US Social Security is a benefits program like Medicare, Medicaid, Snap, etc. It has special accounting rules for Congress but that’s about the only difference.
It’s not a forced retirement savings scheme where you “pay into” it. At anytime Congress can change what the benefits are and the only reason it hadn’t happened yet is because it’s such a popular welfare program.
I am trying to understand this. What were the mini tens of thousands of dollars I paid to the federal government over a period of 40 years in the form of Social Security taxes then?
They were paid to other retirees at the time. Some excess dollars were loaned to the government for general spending, which put Treasury bonds into the "social security trust fund." You in turn received credit that entitles you to receive similar payments when you retire, paid for by then-working taxpayers and by repayment of those bonds (which also comes from tax revenue.) As other posters mention, the democratically-elected government could change the law so you aren't paid those benefits: if that bothers you, you should avoid voting for politicians that want to change the arrangement.
Just so you know, I would be happy to end the arrangement, even though it would mean losing my Social Security benefits, which I should come into soon. I think it’s a terrible system. I am just having trouble understanding your terminology.
His terminology makes sense and it hits directly to the core of the problem: It's a ponzi scheme. These people were not saving into "retirements". They were giving their money, freely, for other people in the expectation that the next generation will do the same.
The same thing is true of your investment account. When you buy bonds you're giving money to a company or the US Treasury who then spend it. That money is gone. You're assuming the borrower will choose pay you back from some future revenue stream. When you buy into a stock IPO you're betting that the company will pay you dividends from a future revenue stream (or do related things that make the stock perceived as valuable.) In the case of Social Security that future revenue stream is taxes drawn from the US taxpayer. None of this is a Ponzi scheme.
Social security has always been simply a means-tested welfare program like any other we have in the US. The tax to to support it the same thing - just an income tax to balance out the budget.
I wouldn't describe myself has having "paid in" to SNAP, or disaster relief funds, etc. Just as I wouldn't describe myself as having "paid in" to social security. I simply paid an income tax at the time like any other. If I'm lucky, when I'm in need some other poor sap will be paying it forward as well.
Social Security taxes are just ordinary income taxes, no different than the rest of the income taxes you may have paid. It does not entitle you to anything.
It's a tax. That money is spent and gone. You no longer have any claim on it. If you live long enough, you may get to claim tax money paid by other workers, but that has nothing to do with what you were taxed.
You don't have a "Social Security" balance that you can eventually withdraw from in retirement. SS taxes just go into the general government budget, and the future retirement benefits they are theoretically associated with can be modified or rescinded at any moment. The odds of any 20s-30s-year-old--who is currently contributing funds to the Social Security scheme--eventually receiving Social Security checks to the tune of those that boomers are receiving today is virtually zero. It is simply a fiscal impossibility.
> As populations age into a higher percentage of retirees, the system is forced to cope with a more people who are purely consumers, but contribute nothing to the system.
Sort of off topic, but I do agree that the older generations in the western world, particularly the american baby boomers, act sociopathic as a group. There is a good book about this: A generation of sociopaths. [1]
Sad to watch an entire generation hate their children and grandchildren (if they even have them). Believe me, I do not enjoy painting an entire group of people with a shit-stained brush, but it is what it is and it should be called out.
This being any sort of ‘tit-for-tat’ response is coincidentally a pretty ‘boomer’ take on mental health.
Anxiety can be (and is often) situational, and anxious situations can be a catalyst for general anxiety disorder, etc. I’m not gonna sit here and pretend to know what it’s like to be an average income earning millennial, even though I am a millennial. But the fact that I’m sitting here on my nice fat tech worker salary (after still finding it quite hard to buy a house), supporting my partner who is studying and working part-time, and am still feeling the pinch of inflation, makes me completely sympathise with those earning less than me that are surely freaking the fuck out.
This is an ageist perspective and foundational to what you've written. Older people have a lot to contribute and it's unmeasured.
The same goes for partners who stay at home with young people instead of working. They're DEEPLY contributing without pay.
You're going after old people in a faux-scarcity world. How about you take on the collective issues, like capitalism choosing to gatekeep resources behind labor?
Their perspective also ignores the fact that previous generations built the world that current and future generations continue to develop. We all stand on the shoulders of giants…
First of all, you don't freaking need your own new house to start a family. In most countries most people never buy a new house.
Second, wealth is not zero-sum, there isn't a magic pot of gold redistributed between people. As value and demand are added to the economy, so is wealth because the new young people with demands can provide skills or time to be used in value creation and then they also (and older folks that are not creating value because they are not working) can consume and create demand which defines the amount of wealth they create. Poor old people are a net negative but rich old people create demand and thus wealth for value creating youth, unless of course they have everything they need and live in the woods or something. But even poor old people need to eat and have health care demands that young people provide.
The forest you are missing for the trees here is the greed of corporations who are not increasing wages to keep up with not just inflation but the value young people are creating. Things like labor unions are a joke in the US and politicians need corporations like fish need water. So the profit margins of companies and the wealth of shareholders is increasing as a result of the young people who are creating that wealth and giving it away to them because they can't collectively bargain and say they want fair pay. as individuals they can be replaced easily if they don't like the compensation.
So this whole old people vs young people and millenials destroying things and boomers hoarding wealth and all that is bullshit.
The education in the US is shit, you can't compete in a global economy and keep up with wealth creation as a result (still at the top but getting closer to stagnation). And the US is essentially and oligarchy at this point. The richest country in the world and it is the rich share holding class that only care about amassing enough wealth that their descendants will make it through whatever shit the country goes through, so they don't care how much americans suffer or get robbed in day light.
This comes down to democracy being a game of information. Whoever controls information controls democracy and this means two things, education and media. You have so many idiots even young ones fall for the trump bullshit because of education and media/social media bubbles and it isn't an accident that education is shit either, it isn't an accident that racism and xenophobia and other hateful things are the tools the ruling class uses to manange democracy.
America embraced greed as a way of life and the greedy rule and we are finding out why greed is evil in all forms as If we are part of a fable people will tell their children ages from now to teach them to avoid greed and pride.
But not all hope is lost, information and disinformation are education and self education are still popular thanks to the internet. Americans need to pursue truth and justice and fight evil because nothing built on lies and evil lasts.
Democracy can still work, but if the voters embrace greed, the the result is what you see. Ask most americans what they think of basic welfare and they'll tell you it's just black people being lazy and taking from the government (in reality it is mostly not black people but why does race matter at all?). We all know greed and hated are wrong, we can't blame corporations and politicians when we choose hatred and greed, these things must be adressed before you can change the way things are done and have fair wages and a stable democracy and solve so many other major issues in the US.
Forgive the long post, let me know if you disagree.
If we removed the electoral college in the US, or if voting day were a national holiday, all those issues would automatically be addressed.
The old and conservative make too powerful a voting block, and it perpetuates every corporate, oligarchic, xenophobic greed cycle one could point to as a rot in our system. I don't think old people are bad because they're just taking government money and have big fancy houses, but largely they do vote the same way and that way they are voting is causing problems.
> First of all, you don't freaking need your own new house to start a family. In most countries most people never buy a new house.
It's important to understand the similarities and differences between "need" and "precipitates conditions that massively increase the chance of", when it comes to demographic trends.
The "all problems will be solved if all my political policies are implemented" seems to be a fairly insidious strain of authoritarianism that is infecting the progressives.
'insidious authoritarianism' is a curious way of describing two not-unreasonable proposals that are presumably aimed at making american democracy more representative and accessible...
> The old and conservative make too powerful a voting block, and it perpetuates every corporate, oligarchic, xenophobic greed cycle one could point to as a rot in our system. I don't think old people are bad because they're just taking government money and have big fancy houses, but largely they do vote the same way and that way they are voting is causing problems.
You must have missed the part where they referred to human beings who they disagree with as "a rot in our system". The fact that you're apparently blind to such toxic rhetoric isn't surprising--it is increasingly common among progressives.
I believe you may have misread. They weren’t calling any specific group of humans a rot in our system. They said they believe a specific and overly powerful voting bloc perpetuates every corporate, oligarchic, xenophobic greed cycle one could point to as a rot in our system.
It’s not the voting humans who are labeled as the rot, it’s the cycles that result from the exercise of that bloc’s outsized voting power—as said in the second part of your quoted excerpt: “… that way they are voting is causing problems.”
I’m not suggesting the original wording was great and non-toxic, but I don’t think the poster said what you interpreted them as saying.
That fairly insidious strain of authoritarianism isn’t infecting progressives alone, sadly. Nor is it infecting progressives more. The “all problems will be solved if all my political policies are implemented” argument appears to be the starting line of most vocalized political positions.
I see this suggestion a lot, but I struggle to understand what problem it's expected to solve. It certainly wouldn't help voter turn-out. Most service sector jobs (the kind where it's hard to get a couple of hours off to vote) require you to work more on national holidays, not less. It's mostly the relatively voting friendly office jobs that give the day off for a national holiday.
you don't need to make it a holiday, just doing it on a weekend should suffice. E.g. in Australia, elections, Federal, state and local are all held on Saturdays.
If you actually want to improve turnout, enact compulsory voting. That is much better, but still no silver bullet to electing sane competent and not corrupt politicians.
>If we removed the electoral college in the US, or if voting day were a national holiday, all those issues would automatically be addressed.
The road to hell is paved with good intentions.
>The old and conservative make too powerful a voting block, and it perpetuates every corporate, oligarchic, xenophobic greed cycle one could point to as a rot in our system. I don't think old people are bad because they're just taking government money and have big fancy houses, but largely they do vote the same way and that way they are voting is causing problems.
You seem to be making an assumption that rich old people can consume their wealth. I suspect the reality is that they cannot and in many cases are obligate savers. This creates a problem for the economy as individuals may lack the capital to start new businesses, innovate, or grow the next generation.
Having a nation of renters renting from rich old oligarchs is not efficient. some redistribution may be necessary.
But a lot of times it's invested in the economy to the worker's detriment. Look at the huge investments into real estate recently. Are the new landlords going to price units at something remotely affordable for someone on part-time minimum wage to raise a family in like it's still the 50's, or are they going to charge an unaffordable market rate? Resulting in people living with roommates into their 30's and beyond. More active participation in the market by the government would do wonders - real estate developers are in business to make money, which is what's lead to so many luxury condos. The government is able to pay market rate to blue collar workers who actually do the construction while not taking any profit, and thus are about to build units that are affordable by plebeians.
Another example of socially irresponsible investing is in any company that hires minimum wage employees for 39.5 hours a week, just under what's needed to qualify for company-sponsored health insurance. The market's slowly changing, but you're deluded if you think that's not still happening and that corporations are just happen to make small accidental practices that result in wage theft from employees, especially those at the bottom rungs.
There are bourgeoisie who pride themselves on their philanthropic work, and socially responsible investing, but greed's a more reliable driver for how people invest.
The money isn’t sitting in a vault - but it also isn’t necessarily being consumed. In order to leave the vault it must be invested or more typically loaned. As the vault earns interest, a dynamic can emerge that consumers must borrow progressively larger sums in order to avoid bankruptcy.
This occurred in the Great Depression where inequality rose and in turn debt loads. The fed has papered over this problem by simply printing more money. However historically, the US faired better following the massive federal wealth redistribution that was ww2.
The US government can’t afford ww2 style spending programs, and increasing evidence shows that money printing isn’t helping the economy.
> In order to leave the vault it must be invested or more typically loaned.
Which it is. All of it, except for the reserve requirement. The idea that wealthy people hoard money is simply not true. The money is put back to work in the economy.
Land is zero sum. The easy (partial) solution to that is just to build more housing on the same land, except older homeowners spend their time blocking new housing, which has essentially turned housing into a zero sum market as well.
> greed of corporations who are not increasing wages
Increasing wages will do nothing if those wages end up chasing the same fixed amount of housing/land.
Now, people are going to point out that the US is a big country and there's lots of land and so on. And that's true, but a lot of the economic growth and opportunity is concentrated in the cities where housing growth is being blocked. The same problem occurs in Canada (and a few other Western developed countries too).
Your message is wrong on so many levels I don't really know how to start.
First, average life expectancy is absolutely not an interesting measure. You should at least look at the average age up to which people are alive and in good health. And this is much lower. Also, life expectancy is very different depending on your social class. Construction workers die much younger than software engineers. And this is even more true regarding life expectancy in good health. By increasing the age at which one can retire, what you actually do is to make the poorer contribute to retirement money they won't be able to benefit of because they'll be dead before or soon after while the rich will enjoy their retirement since they live longer in good health.
Concerning the whole there is more old people thing: yes, there is, but at the same time workers have never been as productive as they're now. And France as never been as rich as it is now. There is no technical problem here, just a political choice. The Cor (Conseil d'orientation des retraites, which is the official institution that studies retirement in France with projections into the future etc) says our retirement system is currently stable with no real risk to its equilibrium (actually there is one scenario over four in which it may temporarily have a deficit in a few years but that resorbs itself over a few years as well — and you have to know that a few years back they made projections and were quite pessimistic for the situation today, but the reality is that nowadays our retirement system is afloat and well, with multiple billions in positive this year for example). Also, there are solutions if we need more contribution to retirement fund: one of which is to increase wages, another one of which is to pay women the same as men (in France the gap is still between 15% and 20%), another one is to tax the richest more, or simply to politically accept to keep the portion of GDP we spend on the elderly the same rather than wanting to keep the absolute amount the same or lower (which is what Macron wants).
Finally, retirement pension is not "giving people money for free". Retired people are not "just consumers", they contribute a lot to society, even if from a capitalist point of view it is not directly visible: more than a third of the volunteering in (quite sadly, indispensable) non-profit is done by young retirees who can still do it, almost half of baby-sitting is done by grand-parents who can do it because they're retired, etc.
What kills the livelyhoods of younger generation is small wages, no political control over rent prices, a partly artificial inflation which main effect is to make everyone pay more at the supermarket to enrich shareholders who bet on the inflation even more, and soon, if this law passes, it will be the burden of having to take care of their parents who could not work til the increased retirement minimum age for health reasons and will therefore have way too small pensions to be independent.
So a lot of people will label you a conservative because that is a conservative take but I've come to understand that you're simply American and your views are normative for an American. American normative positions are inherently right-wing.
Corporate profits in the US amount to about $10T/year [1]. You can and should view this as an estimate of the surplus value of labor that is being extracted. This amounts to $36,000 for every adult (~275M) in the US per year.
We could absolutely afford an unimaginable increase of standard of living for retirees and workers. We simply choose not to.
I understand the financial need for a higher retirement age, but I also wonder about the viability of a single retirement age. Doing some jobs that are physically taxing is quite different from my comfortable desk job. Maybe this is where disability aid comes in? On the other hand my mental ability night decline and now I'm simply unemployable and wouldn't qualify for anything but unemployment. Such a hard and nuanced topic.
I have to say, the people in France really know how to live!
Here in the US, people do not give a sh**. Already benefits have been reduced to the point were you cannot live on Social Security unless you pitch a tent next to a dumpster outside of a restaurant.
Not only that, every year the retirement age is increased. For people born after 1960 full retirement is 67. The GOP in congress is trying to raise it to 70.
Do US people care, no they do not. If this happened in France I think the full government would be dragged out and "guillotined".
I admire the French for standing up for their rights.
> Here in the US, people do not give a sh*. Already benefits have been reduced to the point were you cannot live on Social Security unless you pitch a tent next to a dumpster outside of a restaurant.
This is a problem with Congress not managing the Social Security system properly over the last 85 years.
> Not only that, every year the retirement age is increased. For people born after 1960 full retirement is 67. The GOP in congress is trying to raise it to 70.
That's because the combination of benefits times life expectancy times demographics is either going to result in a 25% reduction in benefits that the SSA can pay out or result in a high tax burden on workers (read: major economic drag and recessions) or some kind of half-assed compromise in between.
Had Congress continuously and properly managed the retirement ages, contributions, and SS trust funds properly over the last 85 years we would not be having this conversation. But they haven't, and now there will be pain for almost everyone because of it.
>This is a problem with Congress not managing the Social Security system properly over the last 85 years.
Correct, but most of this issue is because on Party has been trying to eliminate it since its inception.
>demographics is either going to result in a 25% reduction in benefits that the SSA can pay out or result in a high tax burden on workers
Right now the Tax cap is 160,200, Congress should eliminate that tax cap, then there will be plenty of $. That cap is about equal to 9300 in 1938. Lots of people in Mang. makes well over that amount.
The way retirement is done was broken from the start. If you have a fixed age, you will get issues when the population pyramid changes and fewer people are around to support the retired.
What the system ought to be is:
1) Everyone who can't work gets a pension/state support/whatever you want to call it. If you get run over by a car at 25, you are on this list until you die and the state supports you. It's expensive, but there aren't that many people who end up in this state. Maybe a few percent, eg 3%.
2) We set a pensioner ratio. For instance if it's 20%, the 3% of people in cat 1 above get a pension, and the 17% oldest people who aren't in cat 1 get a pension.
This would naturally change the age at which people get to retire, moving it up and down depending on birth rates.
What we have is not workable. There aren't enough young people for the number of boomers who are retiring, and not only that, the older people turn out more and have more votes, enabling them to force worse conditions on everyone else.
1) Everyone who can't work gets a pension/state support/whatever you want to call it.
Of course, this creates a giant perverse incentive to get yourself classified as "can't work". Ask the US Social Security disability system how that goes.
It's an incentive, but not a perverse one. It's actually a straightforward incentive: you get a meal ticket for life. A perverse incentive is like the Hanoi rat bounty: it creates more rats instead of fewer.
There's no way around it though. Either you make a judgement about who gets a pension, or you just let people who've gotten paralyzed in an accident try to fend for themselves.
We can certainly do more to help paralyzed people be functional members of society. Just because you are paralyzed doesn’t mean you have to be worthless.
With advanced interfaces and equipment for instance, a paralyzed person could control delivery robots to help deliver food or items to people, allowing them to earn an income and pay their costs of living and perhaps even invest their money to eventually retire.
Or maybe they could just do typical office work, just wouldn’t be with a mouse and keyboard. No reason why they can’t join zoom calls.
The system is broken, yes, but not how you think. Automation and how automation benefits society (or actually not) is the core issue. "Population bomb" discussions, both in terms of how old people get and population age distribution are just straw man arguments for the much larger underlying issue.
I currently live in Germany, like about half of the population is in the age group that is allowed to work. About 1/4th of these work at minimum wage, and I would wager a guess that up to about another 1/4th is either officially declared "unemployed" (the official definition of that gets regularly messed with, guess why) or in a state every normal would declare "unemployed" one way or another.
On the other hand you have massive automation everywhere, but taxes for companies are totally different to taxes for people, and the basic idea of retirement is that the current production output is paying the retirement for the current old people. From a large scale view on this it shouldn't be an issue for Germany, but they face similar issues like France and sticking through the status quo doesn't leave many options in the end with a system like that.
And yes, it obviously is larger scale, because as you see, it is not just retired people affected by the problem, it is everyone, kids included (their parents being the proxy).
Now think about how multinational corpos use nation states for their own benefits and other such stuff and you see that where things are currently heading on the larger scale is actually the worst possible option to fix anything, it just speeds this entire process up towards the breaking point. For all this "intelligence" humans supposed to have, this whole thing is a terrible joke.
Really? Try injecting the majority of hoarded wealth into the equation and re-run the numbers, and then tell us there aren't enough workers to support the system.
Capital flight is a potential risk, true. There are any number of potential remedies on a niceness continuum ranging from using the legal system to freeze assets on the nice end to guillotines on the not-so-nice end. You're encouraged to consult any number of history texts for past examples of wealth transfer from the elite classes.
>There are any number of potential remedies on a niceness continuum ranging from using the legal system to freeze assets on the nice end to guillotines on the not-so-nice end
You do realise the guillotines in the French revolution weren't used on "rich people", they were used on the nobility (ruling class)? And in the times that approach was used on the rich people, e.g. Stalinist Russia, Maoist China, Pol Pot's Cambodia, the countries in which it occurred was plunged into decades of extreme poverty and genocides.
Youre proposing the military hold hostage billionaires in france until they all sign away their wealth to the state? This is basically post WW2 newly-found communist states, or Mao level of fascism. Think twice before you write stuff like this, most Americans cant even imagine the atrocities that were committed during communist times. Literally read any book about how communism felt like. You're offending millions of people who tried extremely hard to escape communism and live a normal life. I am a post-communism kid whose parents grew up in one...
idk man, I've been sold capitalism as this great wealth generating machine, the trickle down economy, the invisible hand of the free market, yadda yadda yadda
This isn't a maths equation, it's a societal choice, that's why Macron doesn't get it, he's a bead counter for Maastricht, what he does is making sure the spreadsheet is balanced
Got nothing to do with capitalism. If you're going to let some people retire, some other people are going to have to pay to support them. That's regardless of whether we're hunter-gatherers, feudal, or post-industrial.
What I don't understand is how people can't see through the framing. Do old people deserve to retire? Sure. Who is going to take care of them? Younger people. How do they not get a raw deal out of this?
That's what you get when 60%+ of the wealth generated in the last two years went to the top 1% and you ask the bottom 80% to work two years longer to cover for an imaginary deficit
fyi taxing the 40 richest people in France 2% more would cover the same amount of money as having the entire active population work 2 more years.
edit: since it's not clear, I'm talking about pension related debt (the main argument of the french government for raising the retirement age), obviously not the national debt/deficit
This is what? Personal wealth? But wealth in France is rarely personal. It is rather distributed over controlling shares of private businesses and foundations, board seats and god knows what.
The richest family of France counts at least 700 members and most of these people run businesses from retail to mobile apps to media.
The French are no stupid. The state can not easily extort money from the likes of Mulliez, but it should try harder, not seek easy money from the working class.
I suspect the disconnect, then, is that the statement you quote appears to be referring to a tax on wealth, not income.
Moving the 2% to that puts it in the right order of magnitude; at that point, the discrepancy is likely to be in the guess of the retiring population size.
France's deficit is not imaginary. Yes, taxing the right people the right amounts (and successfully getting them to pay) would solve the problem, but the hole that needs to be plugged is 100% real.
There is no hole: https://www.youtube.com/watch?v=GsL1wT8jxVU. The French government based their diagnostic on a report by the COR (their advisory board) but that report had only one (among many other) scenarios where they might be a hole. The President of that board said it very clearly in his Senate hearing (above)
No, this is what happens when you make almost the entire population dependent on the state for retirement, it makes changes and cuts difficult and limits the options the country has to adapt to changing economic, demographic, and other circumstances. Kind of like how at the start of COVID in the US there were arguments like "We can't close down schools because poor kids won't be able to get their free school lunches."
Edit: I looked it up and the net worth of all of France's billionaires is ~half a trillion dollars, so even if you seized it all it would basically cover the French government's budget deficits for a grand total of two years, assuming they were actually able to seize it all and it didn't have disastrous economic side effects. That's France's total deficit, not sure how much of that is directly attributable to the pension system.
I'm talking about pension related debt, not the entire national debt
> Kind of like how at the start of COVID in the US there were arguments like "We can't close down schools because poor kids won't be able to get their free school lunches."
You should ask yourself why kids can't get their basic needs such as nutrition covered then...
30 billion a year? Second time I read this, where does it come from? I thought the system was beneficiary in 2021 and 2022? +900M in 2021 and +3B in 2022?
I'd love to find where your information come from, mine is from the Cors (public entity) and from Agirco (private entity). Do you have this information from Facebook?
Edit: full disclosure, I just walked 3 hours, danced in front of the police while holding a sign, so I might have my sources wrong, but I tried to only get them from ddg front page. Didn't see the 30B figure anywhere, I know it's a lie, and I just want to embarrass parent poster for it.
The guy you replied to didn't advocate to leave people to their own devices but to have a retirement system that is a healthy mix of different sources of revenue / investments rather than 100% from the state.
And similarly I wasn't saying to not feed poor kids, I was saying that by making it dependent of physical schools it limits the ability of the country to adapt and make changes like remote learning, responding to a pandemic (though I'm doubtful school closures accomplished much if anything in that regard), etc. Flexible ways to accomplish the same or similar goals are preferable to enshrining one specific way of doing so in law.
Money is only superficially the issue. Your currency is only as valuable as there is a market of goods and services to spend it on.
Even if you ate the rich and took all of their money, all you've done is created inflation because the actual value of the economy hasn't shifted. An economy is more about the "stuff" than the money - even Marx would have agreed with as much.
So this is only ostensibly about funding a deficit - this is just as much a measure to prevent a GDP freefall from a shrinking aging working population.
It's not an immediate effect, but give people money to people who want food and more food will be purchased, which in turn increases the production of food.
Only if the cost to produce food is below the sales price. There is not an infinite "grow more food" capacity. The cost to produce 5% more food may be more than 5% of current costs.
This is the same idea behind trickle down economics, but I don't think reality really works this way. Simply giving people money does not inherently create economic growth.
The total net worth of all of French billionaires is ~half a trillion dollars, so it could only cover the 30 billion per year pension deficit for about 15 to 20 years if you seized 100% of their wealth (and somehow didn't cause disastrous economic side effects in the process). Not seeing anything in your first two links to support your claim, not going to bother with the other two links. I just really wish the "eat the rich" UBI crowd wasn't so innumerate.
Wealth was not generated, prices rose. Those are valuations, they did not come out of the pockets of the workers. A wealth tax would suppress those prices, not to mention capital flight. It just does not work. If it did, everyone would do it.
If you have a 5% profit margin and the price doubles, so do your profits. Of course you could lower your profit margins and pass up on the opportunity of the decade.
Of course rising prices are an opportunity for producers, war or not. If war had devastated their profits, you wouldn't bat an eye.
Moreover, the prospect of profits is what gets the supply going in the first place. Many shortsighted politicians have proposed to instate price caps to curb "immoral" profits - which would make an actual shortage more likely. After all, some gas at a high price is better than no gas, at any price.
I am in fact not making your point. Your moral concerns are completely independent of whether your proposal would work. I'd be in favor of wealth tax if it worked. It doesn't work.
Or maybe the poorer parts of society should stop trying to be overeliant on the tax levied on a minority of skilled earners (so no trust fund kids) creating welfarism/populism, breaking the fabric of society (as in ancient Rome),incentivizing emigration/delocalization of taxbase; and try to be more selfsufficient from a budget stanpoint, like having a self-funded pension system, that in France case would be increasing contribution, raising retirement age, linking pension output to having kids (to stabilize age pyramid)
"skilled earners" here being a euphemism for inherited wealth oligarchs and trust fund kiddies, or are we pretending wage earing individuals are included in the top 1%?
are we pretending wage earing individuals are included in the top 1%?
You seem to be confusing the top 1% with the top 0.01%. The vast majority of top 1% income earners -- in Canada, the number was recently reported as 95% by Statistics Canada -- are employed, with the largest numbers being in management, medicine, and "business professional" (lawyers, accountants, etc) professions.
most income for the state is from income tax, trust fund kids and oligarchs dont have high income tax[0] , and the wealth tax can be easily lowered by tax planning
as an engineer, you choose to stay in France for the values, for the quality of life, for your family, or from some kind of patriotism after having had free college.
And you go the USA for money !
Median earnings for engineering graduates is 36k/year in most schools. After direct 'contributions', you're lucky to get about 2000k€ /month (on which you have to save for other income taxes for the end of the year)
My first engineering job, during COVID, was paid 20k€/year ! (bellow the legal minimum, but it was declared as an internship)
It's far from the 6 figure salaries in cali !
Medical doctors should do about 6000€/month too.
Companies in here don't care about hiring skilled workers. They want cheap workers, because they have no long term R&D.
ironically the leverage that poor people had and have is their children, once upon a time for farming landlords & factory owners, today for government revenues, bcs poor people & middle class pay the most taxes in % as VAT, income tax, fees, contributions, etc... and dont have tax planning while making the welfarism looking remotely sustainable, but with modern demographic trends things are changing for the worse, and
with printing money and "eating the rich" as the only policies on the table, we dont solve anything except kicking the can down the road
And for the invading France via Belgium joke, it is hilarious bcs one of the compelling reasons why he started his aggressions in 1939 before the nation was ready was because he emptied German coffers to prop up his Nationalsocialistic welfare system and (he felt he) needed just an imperialistic trip to refill them[0]. the rest is history
USA is a lot inefficient with spending money as a lot of it get syphoned in one way or another from various interest groups, from big pharma/healthcare/insurance, hedge funds that run universities to local government that run homeless shelter in opaque way (ask Cuomo sister). As OECD data, US social spending as % of GDP is above OECD average at 22.7%[0]
I’m not quite sure what they expect? Do they want the government to just print money for them until they die? And will they have to keep doing that for every successive generation?
If people get older on average, and there’s less young people to take care of them (pension wise), then the old people will have to work longer. It’s not a hard equation.
Honest question: what should the French government do instead? Some people in this thread have said that the government doesn't need to increase the retirement age by 2 years. If that's so, why are they proposing to? Have they done the math incorrectly, are they being needlessly cruel, or ...?
At first, macron is neoliberal. He doesn't believe in the role of the democratic representation in the economy, nor taxes nor wealth redistribution. On his first mandate, he deleted capital tax at the same time he lowered housing subsidies for the worse off. Today, he saves on social security to fund tax breaks.
Then some say it's "pantouflage", and he's pleasing future employers. Indeed, a lot of formerly high ranking politicians and civil servants ended up on the board of profitable companies. For example, Nicolas Sarkozy was hired on the board of Accor (Europe #1 hotel company). François Fillon, a former prime minister, joined the board of a Russian state owned oil company after he lost a presidential election (he was a conservative and nationalist candidate). So politicians and regulators can just make financial companies happy to get a top job.
A third explanation is that poor workers won't vote for him anyway. Macron's party only rely on 20% of the voters. Raising retirement pleases them.
It's ok if he upsets the other 80%, as other political wings suffer from too many similar parties that compete (we had 3 trostskyist candidate during the last election, 1 communist, 2 socialists) so they number of voters get split. or they don't get along (traditional right wing was weak after the cases with Sarkozy and Fillon)
My wife and I only just started putting money away for retirement. It took us until 40 to get to a financial position where we could. At this rate, we can retire eventually, but it will always be tight. Likely looking at 70 at the earliest.. That's if no one has a major health crisis.
Top 10% wealthy of population in France holds almost 50% of net wealth of the country, which is around $16 trillion. That gives $8 trillion that could be taxed at higher rates, which is a far greater pool to extract from than just billionaires discussed throughout this thread.
And when Australia moves the retirement age to 67... nothing happens. They're already talking about moving it to 69, to pay for stuff like US nuclear submarines and even paying the French $830,000,000 to NOT buy their nuclear submarines!
We can all learn A LOT from how the French hold their elected representatives accountable, and don't let them get away with BS.
As a side note, I like to listen to RFI or France Culture in the morning in my time zone since there are a couple of good science shows at that time (Autour de la question, La Science CQFD). Lately, though those radio stations have just been playing music as those shows are canceled during nationwide strikes in France. :-(
It's strange to me that the neolib position is that we should have a universal basic income, that automation portends the end of work for all but a highly specialized creative and managerial class, but also that the retirement age should be 85.
People does not understand how Social Security works. Your payments today finance old people's pensions today. Your kid's payments tomorrow will finance your pension. That is the reason why this is a problem.
The discussion in here is why this whole thing needs to go defined contribution. Nobody is getting screwed over by these plans except the young paying for it.
Maybe they have been heard and listened too and the democratically elected government of the people disagrees. Just because you don't get your way doesn't mean you haven't been listened to.
> "We are using the only means we have left: it's the hard strike ... we are not going to give up."
This is the part where the petulant child that doesn't get what it wants threatens to hold its breath until it turns blue. This is anti-democratic and nothing but coercive, naked extortion. Like literally extortion.
Without commenting on the French government specifically (which I haven't followed closely):
Consider the fact that politicians can be elected and then break the promises they made during the campaign. The electoralist response to this is 'well you can vote them out next time,.' But that ignores the cost of the damage that can occur during the interval, plus it's not clear how the populace is supposed to hold other politicians to account - to the point that there is a general expectation of politicians being dishonest and mendacious.
Really, in what other job are you only subject to review every few years and if people don't like what you're doing in the meantime you can reply with complete BS, often overtly?
Democratic elections are a good thing, but they are not the be-all and end-all of politics. Strikes and boycotts are absolutely a legitimate form of political expression, in which labor or consumer market participants coordinate their economic activity to obtain political leverage. If you won't tolerate anything other than elections, North Korea has those.
With comments like this you are closer to the petulant child than the people, some with low paying jobs, who decided that the issue is critical enough that they prefer a loss of income in the short term ...
If investments are allowed in said scheme, the inequality can be relaxed slightly:
A + (C:=(investments * return_ratio * withdrawl_%)) >= B
with (investments:=(previous_investments + A-B)), and (return_ratio:=(1 + return_%)).
From here, 2 long-term paths can emerge:
a) C >= B : The entire scheme can run off of investment returns, reducing reliance on A. This is the ideal.
b) A + C < B : To rebalance & reaffirm the inequality, more is taken from A or C to return back to A + C >= B (see below). Future C may be less than Current C as a result, making the chances of (b) happening again increase.
The vehicle begins to fall apart when A + C < B, with no alarms sounded until it's been made known.
From there, the following solutions are brought out to reaffirm the inequality:
Some of those modifications are unpalatable to some of the voting population, and thus can't be changed:
- The elderly will not be happy if avg_benefit_payout decreases
- The 'close-to-retire's & the general working pop in general will not be happy if the retirement age increases, in an attempt to reduce retirement_pop
- The working pop, depending on culture, will not be happy if avg_pension_tax_% increases
- Anti-immigrants will not be happy with immigration, in an attempt to increase working_pop
That leaves very little on the table:
- Child tax breaks & incentives in trying to increase working_pop, but this takes time
- Increase avg_income, increasing pressures on businesses in order to keep margins the same
---
There is a way to always keep the scheme alive, when all else fails, but it's a last-ditch effort only reserved for emergencies.
Referring back to the relaxed inequality above (A + C >= B), we can append another inflow stream to the left side of the inequality:
A + C + (D:=(treasury_money_printing)) >= B
This will keep the scheme working, but it sacrifices the long-term value retention of the currency being used. The baseline inflation for said currency increases, giving everyone a 'soft tax' via the debasement of the currency in question.
The implications of incorporating D into the inequality would mean that the currency's ability to keep its value long term will be brought into question. Very little good will come from a weakening currency, unless the country is a net exporter.
There's a lot of UBI proponents who really just intend it to be a way to strip away current benefits with something that in aggregate provides less. Not all UBIs are the same.
There's a similar situation with the UK's universal credit. On the face of it it was replacing a patchwork of benefits with a single unified benefit, which should be better and more efficient. However the implementation was designed to actually reduce benefits paid out (e.g. they replaced up front payments with payment in arrears, made it difficult to sign on to, kick people off for small issues, etc etc).
Changes labelled with the same name can be radically different in actual results, you really have to look into any given proposal.
Not only are these not assumptions, they're trivially proven with even the briefest of research on the subject. Capital hoarding: go look at GDP graphed against wages over the last 60 years. Wages don't go up, so all that extra productivity is going in -someone's- pocket. Capital hoarding is destroying modern society: global news media is largely controlled by 7 organizations, the international housing market has been invaded by investment funds, healthcare outcomes in the US continue to lag behind most industrialized nations worldwide despite record profits, the list goes on. It has never been harder to get a leg up (at least in the US) at any point in the last 50 years, and the percentage of US households that are living paycheck to paycheck keeps increasing year over year. Not sure what you're stanning over there but that is definitely an impressive set of blinders you've got on.
Capital hoarding only refers to wealth being held back from the market. Investments wouldn't count because you are lending your money to others and that generates economic growth. I think you are conflating terms with some other inequality concepts.
You're clearly trying to shorthand a lot of disparate political topics into one point (a good share of hospitals and insurance companies in the US are non-profit - it clearly doesn't affect medical prices), but I don't think it's as clear cut an issue as you are making it.
I mean if you want to pretend the issue is murky despite one being able to toss (at random) a loose collection of off-the-cuff examples so be it, but I don't think your confusion is rooted in much beyond cognitive dissonance. Put even more simply: the haves are taking too much from folks that actually work, hampering their social and economic mobility.
I'm not trying to argue against inequality or even a wealth tax.
But France is in a demographic collapse the likes of which has never been seen before in the country. There simply not going to be enough working age adults to supply all of the goods and services the dependents of the state are going to need. Furthermore, major international trading partners are a) increasingly cutting them out of trade deals and b) waging wars amongst each other.
So while I think inequality is certainly something to deal with, it is not the sole boogeyman. The idea that wealth is just some sort of economic piggy-bank that can be raided for easy gains is vaporware.
France already has a wealth tax and it is famous for being completely ineffective. Very wealthy people just move away with their wealth to richer countries.
Switzerland has a tiny wealth tax instead of a capital gains tax, Switzerland's is 0.3% and Norway's wealth tax is above 1% and also has capital gains tax, totally different. The total tax per wealth is much much lower. Also you can opt for a lump sum tax, and then you don't tax your wealth or income at all, you just pay tax based on your expenses. Switzerland's tax is very lax.
If there’s true political will one can do it, especially if you’re a country as big as France.
Let’s say Arnault, the wealthiest French guy, decides to decamp for Switzerland were the French to introduce a wealth tax, then one of the most obvious solutions would be to nationalize his assets with pennies on the dollar, introduce an “emergency societal clause” in the mix to make it more “legal”, and I can assure you that the rest of French billionaires will be happy to pay an effective tax rate of 50% (let’s say) as long as the State will still allow them to keep a nominal hold on things.
And before anyone comes in and says “nationalization is a thing that only dictators do”, the modern history of France is full of examples to the contrary. As recently as 1981 Mitterrand won the presidency by promising just that, i.e. nationalizations.
> As recently as 1981 Mitterrand won the presidency by promising just that, i.e. nationalizations.
And what a colossal failure that was. After two years of this policy, he was forced into a severe austerity turn. France's economy was never the same afterwards.
After all you're right, if there's true political will, anyone can shoot themselves in the foot.
Then people don't invest in France as much for fear of having their wealth nationalised and invest in neighbouring countries instead. Then the middle class leaves to the better jobs in the neighbouring countries.
Are you under the impression that most wealth in a country comes from rich people? Because observation over the past few decades strongly suggests it's the reverse. Rich people drain money out of the economy; working people create value, and thus wealth.
Or what do you think is going to happen? The billionaires will pull out, but they'll make sure to retain ownership of all the businesses they ran—and fire everyone, thus ensuring that those are just losing them money? How is that going to be better for them than paying the tax?
And how long before France just nationalizes the businesses and puts people back to work without the billionaires getting a cent?
Investors are usually not billionaires but either regular people putting money in the stock market for their savings or retirement money, companies looking to expand their assets, state looking to manage some of their funds, etc.
But that's not who was being talked about. The contention at hand was that if France were to tax its billionaires' wealth, they would leave and stop investing in France's businesses...and this would somehow destroy jobs.
What’s more, it led to an exodus of France’s richest. More than 12,000 millionaires left France in 2016, according to research group New World Wealth. In total, they say the country experienced a net outflow of more than 60,000 millionaires between 2000 and 2016. When these people left, France lost not only the revenue generated from the wealth tax, but all the others too, including income tax and VAT.
Depends on how you arrange it. In the Netherlands we have a wealth tax, but pensions are not affected by it. Pensions are counted as "deferred income", so you can pay into them with "pre-tax" money but when the pension is paid out the income tax is applied. This makes it so that it is beneficial for workers to save into their pensions, since the effective income tax of pensioners is usually lower than for people still working.
The best way to reverse the capital hoarding is to deeply understand the way the policy making system works, not to debate the merits of different policies. Folks who believe in a wealth tax also don't believe in putting their noses to the grindstone for decades to engage in the high octane chess game of bureaucratic power politics. So it'll never happen.
Many do. Invariably they run into issues trying to finance their campaign when competing with candidates who are funded and offered media coverage by oligarchs. So having thrown our hands in the air and given up should we just make serfdom a thing again officially, or should we just go on pretending?
that and eliminating the creation of money out of thin air to generate the famous healty 2% inflation, the money injected into the financial system tend to go to the connected and financial worthy aka already rich, creating bubbles and cheating society. A 2% wealth tax would be more equitable
You can beat millinials and zoomers into the ground with low wages and no one bats an eye, but if you mess with the boomers the retirement the entire country is shut down.
The idea of relying on the government for your retirement is insane to me, for exactly this reason. You're willing to bet your life that the government is always going to do right by you?
Save your own money. If Social Security exists by the time I retire, great. I'm planning as if it won't.
That's if you have enough salary to save enough for retirement. Which is not the case for a lot of people unfortunately. Hence a government lead system where wealthy people are required to pay more to help less wealthy have a somewhat acceptable retirement.
> Hence a government lead system where wealthy people are required to pay more to help less wealthy have a somewhat acceptable retirement.
Nothing stopped about this. Our demographics have changed for the worse in this regard, is all. From the latest report from the SSA's Board of Trustees:
"Social Security and Medicare both face long-term financing shortfalls
under currently scheduled benefits and financing. Costs of both programs
will grow faster than gross domestic product (GDP) through the mid-2030s primarily due to the rapid aging of the U.S. population. Medicare
costs will continue to grow faster than GDP through the late 2070s due to
projected increases in the volume and intensity of services provided."
Furthermore:
"For the sixth consecutive year, the Trustees are issuing a determination of projected excess general revenue Medicare funding, as is required by law whenever annual tax and premium revenues of the combined Medicare funds will be below 55 percent of projected combined annual outlays within the next 7 fiscal years. Under the law, two such consecutive determinations of projected excess general revenue constitute a “Medicare funding warning.” Under current law and the Trustees’ projections, such determinations and warnings will recur every year through the 75-year projection period."
The pension money doesn't come from nowhere. The people who are living paycheck to paycheck are paying 20% VAT and ~20% income tax. Maybe they would have less financial trouble if they could keep some of their own money.
I'm all for a safety net. Scaling the system way down so that it only serves the people who need it would reduce the tax burden and solvency issues.
If we're talking about the USA, the USA is one the developed countries with most inequality, both income and capital. Way more than in France anyway, where I live. Even though USA has way lower tax rates than France (about 30/35% vs 45/50%).
Although not perfect, taxes work quite well in France to reduce inequality. And the low taxes in the USA have the effect of helping a handful of super wealthy whilst leaving a lot of poor people behind, without access to good higher education, medical benefits, etc.
High earners and capital owners should most likely be taxed more in the USA, so the gov can redistribute have a better education & healthcare system, if the USA is to reduce inequality and become again the land of opportunity it once was.
Only because the debt is denominated in USD, so the government can always print it to pay it back. It’s not like it’s the most fiscally responsible government around
Mandatory pension schemes remove the option to defect and spend money that "should" go toward retirement to instead compete in zero-sum games for benefit today for yourself and your kids (say, housing in good school districts, tuition, et c.). That part's pretty nice.
The part where it takes people's money and prevents them from bettering the life of themselves and their families in favor of feeding that money into older people, most of whom are wealthier than the working person you're taking money from in real terms (e.g. most are homeowners)?
I wouldn't classify that part as "pretty nice", but you do you.
Money burned on these games (by making e.g. home prices in good school districts higher because people are competing with money that ought to be going to retirement) isn't helping anyone. It just hurts responsible savers because their and their kids' opportunities & QOL suffer relative to those who pick "defect"—unless they also sacrifice their retirement.
With just a 3% APR on a savings account, if you took the 12.4% that everyone currently pays into social security and deposited in that account for 40 years (25 to 65) of your working life, at the current median annual income, you'd have $715k in cash saved.
If you had invested that into a Roth 401k and invested it in the market at an annualized average return of 7.3% instead, it'd be $2.25M in retirement savings.
Social Security is a Ponzi Scheme because it's taking money as an "investment" from people working today, to pay out returns to previous "investors" who are now retired, while the government has raided it and filled it with IOUs to support spending unrelated to the pension.
that 6.2% from your employer is in fact also part of your paycheck, it's just not shown on your pay slip (probably to fool you, by making you think you got something "for free").
> You're willing to bet your life that the government is always going to do right by you?
Hear, hear, especially given the historical priors : (hint: across a generation-sized time spans, governments never keep their promises. Why should they, they usually are in power for decades at most).
And yes, relying on governments to handle your retirement money is completely insane, but the vast majority of folks in e.g. the EU have drunk that kool-aid even though it was guaranteed to fail since day one.
Retirement plans the way they work in Western Europe were always an absolute con, very much like a ponzi scheme (new players pay for the earlier players).
When the young, working population was vastly larger than the old retiree population (because the retirement age was designed so that most people died before reaching it), the government milked their working young for all they were worth.
Now that the age pyramid has inverted (large retiree population, few working youngs), there simply isn't enough income generated by the young to pay for the old and retirement income is paid using debt.
It’s the same scheme that has existed for all of humanity: the tribe’s young people work to provide for the children and elders. No one was retiring by hoarding a pile of gold. The tribe is just bigger now.
>Retirement plans the way they work in Western Europe were always an absolute con, very much like a ponzi scheme (new players pay for the earlier players)
That's pretty much how families worked before retirement plans, the kids payed for the parents.
This just got transferred to the whole society. And it worked as long the rise of productivity led to a rise of wages.
GDPs are mostly artificially pumped in all the world except maybe switzerland and few others. For example China is financially collapsing now bcs its infrastructure ponzi scheme to weather 08' slowdowns is over. A lot of other countries are playing financial alchemy and poisoning themselves
I'm relying on a functional democratic government still existing when I retire. It doesn't seem like a high bar, though admittedly less of a certainty than we would have imagined a decade ago.
If you don't trust your government, what makes you think that your money will keep its value over time regardless of government actions? A reckless government can destruct not only the retirement system, but the monetary system as well. A few populist decisions about inflation and your savings go to the waste bin forever.
Most people (in the world) live entirely without saving and are making do in whatever way possible. For democracies that have stable governments sans USA, there is absolutely the assumption that the gov will pitch into avoid people starving in the streets.
> Save your own money. If Social Security exists by the time I retire, great. I'm planning as if it won't.
I would guess that most people my age (between 35-45) got told some variant of this in their business and economics classes in university. At least, I hope they did.
Looking at Social Security budgets for about 20-30 minutes and what politicians have proposed to do to fix it is enough to make most reasonably-minded people understand that expecting anything more than token amounts of money from the program is idiotic.
What makes you think that if people are stupid enough to elect corrupt government officials they will be smart enough to invest their money wisely?
If you trust the financial markets more than the government that you elect, I have a bridge to sell you.
Sure some smart people will be able to extract profit from the market but most won't. I'd rather live in a country where the people I chose can organize to ensure that nobody needs for anything rather than in a country where I gamed the system and now have to protect my loot against hordes of have-nots.
> Sure some smart people will be able to extract profit from the market but most won't.
Source?
Put your money in an index fund. The S&P 500 from 1958 to 2008 went up 90x. The worst case scenario - All your savings are in stocks and you retire during the second worst financial crisis ever. And your returns are 90x. Not 90%, 9000%.
The idea that "most won't extract profit" is nonsense. In the long term, its free money for everyone.
If it doesn't, well, American society has already bred the perfect group of shock-wave troops: a bunch of dead-eyed, lives paused, waiting for an apocalypse that never came Gen Xrs who will dub their explosive-laden waistcoat's "retirement vests." They're tech-savvy, they've waited for killer bees, land invasions, acid rain, nuclear war, and watched the low-risk sex of their elders transform into a high-stakes gamble at a lingering death. They remember 9/11 and Ruby Ridge. They won't factor into any threat profile because everyone forgets they even exist. They waited dutifully for the Boomers to retire only for 2008 to put a big hold on that, and the Millennials just climbed over them on the ladder. If that quote about "Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats" rang true for a group, that's the one I'd pick. Probably the last bunch you'd want to ditch Social Security on.
The French are sometimes ridiculed for their "unrealistic" worker demands but as a Dutch person, I greatly admire their unity.
Here in the Netherlands, we pride ourselves on our "polder model", a trinity of government, employers and unions that come to a consensus, hence no need to strike. That system worked well for some decades hence society runs on auto pilot.
Trouble is, due to globalization and ever more temp contracts (fire at will), the power of unions have been decimated and the combination government/employers are calling the shots, slowly eating away at worker rights.
Our "holy" retirement age used to be 65, unchanged for a huge amount of time. It was declared as unsustainable to keep it that way, instead it should become a rolling number, coupled with life expectancy. My pension fund predicts my retirement age at about 70.5.
This change was pushed through because keeping it at 65 would cost 5B per year for the foreseeable future. Absolutely unaffordable for our tiny country.
40B in support to keep businesses open during COVID though...just pulled from a hat. 25B in energy compensation so that households don't freeze to death...arranged in mere weeks.
Just saying...unaffordable means no political will.
Anyway, regardless of the money mechanics, retiring at 70+ is absurd. It effectively means no retirement at all. I know a huge amount of boomers, many were able to retire at 58-62, especially blue collar. Most by then already were in poor health but managed to pull off a decent decade of rest and joy with still some activity like going on holidays.
By 70 it's over. Some dead, the others depleted. Their partner may have died. They have severe health issues. No energy or will power left to truly have one more adventurous run. Hobbies abandoned. Health and quality of life declines exponentially. 60-70 and 70-80 are not the same thing.
Further, nobody actually wants these old people at work. Blue collar people are broken by then and white collar is either obsolete and outdated or strongly discriminated. I'm in my 40s and struggling to stay relevant.
The point of my rant is that there's always an economic reason to make workers' lives shittier. Always. Every time there's a rational reason to do so that seems to make sense. And that's how you end up working as a couple for 50 years straight. It's never going to be enough.
Only with unity as seen in France can you call out their bluff.
The age should actually be 60 and we should be having ever shorter worker weeks. A concept I call "time for wealth". In the future we probably have to do with less stuff. But it's not a vision for the future to say to people that their wealth is under pressure whilst still needing to work themselves to death.
Hence, we trade that wealth for time. You learn to live with less material goods which increases your appreciation of them. More durable/reparable products. Higher prices because externalities are included. Doesn't have to be bad at all, restoring some sanity here. In return for this material "poverty", you get more economic security, more free time, retire earlier. Also fits in well with our AI future that will disrupt work.
I think that's a vision people can get behind, and we'll still leave the door open for the super achievers that want more stuff.
This is another example of how the state gets its numbers wrong, promising something it can not deliver without bankrupting the country.
France is not alone, other country's have raised the pension age, but other countries use their food legislation to keep the population docile, high house prices to keep people from protesting for fear of losing a roof over their head, and other tactics people are getting wise to and slowly rejecting when they wake up to the subtle forms of manipulation that goes on.
> This is another example of how the state gets its numbers wrong, promising something it can not deliver without bankrupting the country.
France pension system isn't close to bankruptcy. It needs some adjustment but pushing retirement age isn't the only option. Also one thing to understand is that there are two criteria to get a full pension
1. work 43 years (this used to be 36.5 but has been increased 10 years ago), so we're not feeling this yet
2. be at least 62
The reform wants to push 62 to 64 in 2. The problem is that educated people will already retire after 64 because of the first constraint. So this reform targets explicitly those who started to work younger, and who are also those with lower life expectancy and with the hardest job. This is unfair. At the same time, France (as in French citizen) has never been as rich in history as it is now. There should be better wealth redistribution here. It's very apparent when you look at the numbers.
Another issue is employment. In practice, a lot of people struggle to find a job when they are 55+. These reforms will increase poverty in the country.
Last point. France isn't like the US were people are incentized to build equity for their retirement. The rule of the game here is that current employees pay for retirees and in exchange expect their pension to be taken care of when they are older. The rules are changing midway and people are upset about it.
> France isn't like the US were people are incentized to build equity for their retirement.
This is true but puzzling for one reason: the US pension system (Social Security) pays retirees the same amount of money as the French one. US pensions are not ungenerous compared to Europe. Americans are incentivized by the government to build equity in addition to their government pension, so that they are not wholly dependent on the government pension -- this has been a consistent part of the messaging.
I think this takes some pressure off the US pension system, since it creates a joint responsibility between the individual and the government, rather than putting it all on the government to unilaterally solve this problem to everyone's satisfaction. I do understand that it is easier to build equity in the US than Europe, so that probably is a factor in how the population views it.
Yes, an American friend of mine just started to claim its SS pension and it seemed reasonable compared to what we would get, but that's just one data point. And the US is a much richer country with higher wages, so that plays a role.
I think, for most French, the retirement model was that we should own a house/apt by the time we retire, and then our pension would be enough to cover our expenses. It seems we're transitioning to a system more akin to the US and it's causing some friction as we're not prepared.
Another interesting point to me is that the retirement age is causing protests, but we were essentially screwed when they increased the number of worked years from 36 to 43 - which arguably was a necessary reform. Someone who started to work at 23 (college graduate - HN demographics) won't retire before 66. At that point, my concern isn't so much about working until 66, but having a job at that age. Working in tech, I don't see many people over 50 around me.
If you have less than 43 years, the amount of your pension will be decreased according to some formula. At 67, you'll get the full pension no matter what. But this amount is also determined by the number of years you worked. So if you take a sabbatical, or go work abroad for a few years, you won't get the full amount.
I recommend that you do a simulation of what your retirement will be. I think it's something like 50% of your 25 best years, if you worked 43 years. Then it depends what you invested outside of the system.
One more point is that the employment rate for 55+yo in France is quite bad (56% in 2021 for 55-64yo).
So for a lot of people pushing the retirement age means surviving two more years with their savings and the small welfare benefit (as regular unemployment benefit is capped at two years).
This is not addressed at all by this reform.
Also the government was caught lying about some aspects of this reform (and still do).
> France pension system isn't close to bankruptcy.
Citation required.
Last I looked, France's national debt as a percent of its GDP wasn't exactly in happy territory.
On the other hand, if you believe that France will continue to be able to borrow for eternity to feed its increasingly large retiree population, then yes you are correct: when a banker is always ready to lend you money however large your existing debt, you can never physically go bankrupt.
Roughly 20 billion euro per year, which isn't big.
For comparison, public debt is 3000 billion. Bernard Arnault net worth is 120 billion (6 times more than 10 years ago), Total profit in 2022 is 40 billions.
There must be ways to have better wealth redistribution.
The reason bernard arnault is rich is partly because of tax cuts, but mostly because the luxury industry sells well internationally.
The reason french people in general are poor is because france, as a country, is collapsing, because french people have been voting for the wrong people for the last 50 years.
People that managed to sell their skills to other countries are less affected.
So you're telling me with all the technological increases we've had, France can't afford to feed its people for the few extra years of life expectancy they have?
That seems absurd, and it seems like if that is truly the case, then a lot of other things should change before this.
France does have a history of not accepting crap from the ruling class with bloody results for the ruling class. Less the ruling class forget that.
Do you frankly believe that french civilisation is dumb or masochist enough to have produced like ten thousands of hours of passionates TV debates (to pick only one metric) if the underlying math was simple?
Even if this was true, I would like to point out that a good part of this debates is about the accuracy of the input data used for the math. With disputed input data math is never simple just ask any data analyst around.
Edit: Also this math involve predictions about demographics evolution over the next decades in a global warming and war in europe context. Both can result in unpredictable populations movements. This is never simple ask any demographer around.
Edit2: What is complicated about politics especially in french strong state tradition is that laws reform are precisely meant to alter the input data of your model, often with unforeseen side effects, so it's not simple math ask any historian around.
This especially worst in France because it's a known and widely discussed issue that the government is indirectly doctoring some key statistics like unemployment data. Changing the metric while you are rolling out a reform is at this point a patented french strategy to prevent any citizen to evaluate a new policy.
"france has never been as rich in history". Which number are you talking about ?
It seems like a pretty hard fact to demonstrate. If you look at the production of france-based international companies, then you're also including the production performed by citizen of other countries.
If you look at total revenue per inhabitant, then you need to adjust for inflation, and the fact that some citizen gain revenues from production performed in other countries (via shares, or simply working in a multinational company)
What's clear however, is that france as never been ranked lower in every international ranking (education and economy) as today.
That's the point right wing neoliberal policies applied in France over the last two decades have degraded life conditions of the commons people and only maximized record profit of french shareholders (this is what OP was referring to "never as rich in history")
So yeah maybe it's time to stop trying to fix the french model by applying the same recipes that increased inequalities in the US in the first place...
We are so far away from anything remotely looking like liberalism.. france has the worst of both worlds : a behemot of a public sectors, costing a fortune, but undergoing enough random budget cuts to make it also very bad at fullfilling its mission.
It’s a disaster, but it’s very very far from anything remotely looking like a liberal economy..
Yes and this is precisely why many french economists make this distinction by referring to the term "neo-liberalisme" maybe the meaning is somehow lost in translation.
French neo-liberalisme is what you describe, the worst of both world. A strong state that impose highly impacting laws on both public and private sector.
The difference between left wing strong state policies is that theses laws tends to benefit huge companies and shareholders instead of common people and small business.
le néolibéralisme est une doctrine de critique radicale de la main-mise de l'état sur l'économie. La signification est la même en français.
C'est ce que faisaient regan et thatcher, et ça n'a rien à voir avec les politiques de de gaulle chirac ou françois hollande. Même les plus à droite comme sarkozy continuaient d'avoir une vision très jacobine de l'état.
Ok ben alors le premier truc qu'un gouvernement vraiment libéral devrait faire c'est supprimer l'ARENH ou encore plaider pour l'arrêt immédiat du "quantitative easing" qui est la pire forme d'interventionnisme. C'est par ce type de contradiction que le néolibéralisme actuel se distingue je trouve de son idéologie parente.
En fait il y a un ambiguïté forte autour de ce terme et une différence observable entre la théorie et les politiques menées qui sont censées s'en inspirer.
Donc pour ma part quand je me réfère au néolibéralisme français je pense plutôt à "la doctrine politique néolibérale appliquée en France ces 20 dernières années et ce qu'elle a entraînée". Parce qu'une théorie économique coupée de son contexte et de ses conséquences n'est qu'un objet intellectuel abstrait et inutile.
Si on excuse les conséquences de l'application du néolibéralisme, on devrait par exemple excuser de la même manière les conséquences de l'application du communisme en URSS. Pour ma part j'estime qu'aucune des deux doctrines (parmi d'autres) n'ont résistées a l'épreuve du réel. La doctrine de demain, adaptée au défi climatique notamment reste à inventer (et dans l'idéal via une transition démocratique et pas un bain de sang).
> France pension system isn't close to bankruptcy.
You are in the Euro zone now and whilst France, Germany and Italy are the main sponsors, I haven't forgotten the Greek Govt crisis of 2009.
I know Norwegians are paper millionaires because of where the Norwegian govt has invested like a state hedge fund, but start cashing that in and and like share prices, the status of paper millionaire will decline rapidly, in much the same way if Zuck cashed in his Facebook shares.
> France isn't like the US were people are incentized to build equity for their retirement.
I know, the price of some of your chateaux's are an absolute steal compared to UK houseprices.
> The rule of the game here is that current employees pay for retirees and in exchange expect their pension to be taken care of when they are older. The rules are changing midway and people are upset about it.
Well the US Boomer rhetoric perhaps exemplifies the younger generations dislike of their grandparents (and parents) being able to raise a family on one wage, job for life, afford a reasonable family sized home, and have a comfortable lifestyle and retirement, shows how some countries have kind of shafted their young.
Here in the UK, the North Sea oil and gas revenues were _supposed_ to have paid off the UK's national debt, I see that hasnt happened!
But with govt's like this, who needs enemies, when the vampire state sucks the life out of you with the "Death and taxes" idiom.
AFAIK, pension age raise is driven almost entirely by demographic collapse of the developed countries. Specifically there are more people are retiring than entering the workforce. After that happens pension funds start bleeding money and something has to give. Pension age raise is a giant hammer, but the alternatives include raising taxes, making healthcare drastically cheaper, or Machiavellian tactics like banning abortions/contraception 20 years prior...
France already has high taxes and amazing work-life balance. I don't know much about state of medical industry to comment. However, if its not completely terrible, then raising the retirement age seems like the only knob that could be turned.
>promising something it can not deliver without bankrupting the country.
If the government can not get something basic like covering subsistence-level costs for its population over 62 working without bankrupting the country, the government is broken, the economic system is broken and shutting it down is an appropriate response.
Technology and efficiency has caused labor productivity to increase [1] and that increase has not been captured in wages. It has been instead captured by private capital as profit.
Fascinating article. Loved this quote in particular:
> The truth is that this trade surplus is not really a choice: it is the outcome of decentralised decisions made by millions of economic actors and in the absence of an adequate mechanism for correction. To put it simply: there is no pilot in the plane, or at least the pilots available are not very accurate.
The reason for discrepancy between productivity growth and wages stagnant is because the productivity initiatives were created by a few people that benefited handsomely, not by the masses employed in call centers / coffee shops / warehouses. I think one probable reason for this change was technology - technology made spreading knowledge and controlling processes among thousands of entities a lot cheaper.
Who are these few people? Most likely you will find them in corporate centers. These people constantly fine tune processes, haggle with suppliers, diversify their suppliers, create new machines, lobby for legislation to make off-shoring easier, etc...
I had the opportunity to work 4 years in Amazon as Financial Analyst. None of the cost savings initiatives came from call centers / distribution centers. Even more to the point, as part of ACES program, bright motivated individuals in call centers / distribution centers would be picked up and brought to HQ so their initiatives can be applied to the entire company.
When I worked as Financial Analyst with Starbucks there was only one cost saving initiative that came from a store manager - that store manager figured out how to use less milk for the lattes. All the other cost saving initiatives came from HQ.
No mention of Lichtenstein when it mentions The Emirates, Norway or Luxemburg.
> In contrast, the persistent backwardness in British productivity, which never reached the American level, is usually attributed to the historical weaknesses in the educational system.
The British state getting rid of grammar schools is often highlighted, but during the 70's and 80's the old rote ways of teaching were scrapped, but continued in overseas territories and the results spoke for themselves, higher literacy and education were achieved on average in these overseas territories than back in the UK.
"However, advocates of traditional education have criticized the new American standards as slighting learning basic facts and elementary arithmetic, and replacing content with process-based skills. In math and science, rote methods are often used, for example to memorize formulas."
This US driven process based thinking, is an attempt and demonstration of the US' desire to have everyone in front of a computer where they can be monitored surreptitiously.
Something else not mentioned is the difference in the US diet compared to the European diet.
If you need a diet to boost GDP, to constantly stimulate then the US diet is it, but it will burn people out more quickly with ill health.
The European model with higher food standards currently is a good standard, especially when comparing how the Chinese have been taught to eat anything that moves, hence their diverse range of palatable foods.
This blog, could enhance its credibility by taking into account factors like diet and health care, instead of just muddying the waters.
No one can predict this stuff decades out. You'd need to somehow predict technological changes, major wars, and other events that require basically being a prophet.
Even when people do vow not to cut these programs, they are planning on making a change, it's just what they plan to change is the tax rate or amount of debt issued.
The world needs basic income, with guaranteed housing, internet and food.
We have the means to do it.
Upto 75% of population is employed in bullshit jobs anyway (= not producing anything, or even being harmful to the society).
Only 2% of population working in agriculture already produces food for 10+ billion people, just 8% works in manufacturing (IIRC).
Give the basic income population plant-based food (== use just 25% of agriculture land) and automate transport (trains) and distribution (like amazon with its warehouses).
Everybody can choose to work on anything they want, and be compensated for doing so, of course.
We'd save the environment, stop biodiversity loss and store more carbon than produced since 1750 (reforesting grazing lands), solve the world hunger, save the environment (no need to own so much cars, burn so much fuel and time going to meaningless jobs, to pay for a roof over a head with 40 years of life, no need for so much pesticides/herbicides, deforestation etc.) ...
> Upto 75% of population is employed in bullshit jobs anyway (= not producing anything).
Source?
I love that so many people are convinced everyone but them is doing nothing and somehow getting paid for it.
> Only 2% of population working in agriculture already produces food for 10+ billion people.
What's your point?
Who's going to take care of sick people? Who's going to educate our next generation? Who's going to maintain our infrastructure? Who's going to police people? Who's going to defend our country from war? Who's going to make sure your cellphone still works? Who's going to make sure your house still has electricity? Who's going to make sure the laws are being followed? Who's going to make new entertainment for you?
> I love that so many people are convinced everyone but them is doing nothing and somehow getting paid for it.
That's not the point. The point is what they are producing isn't contributing value to our lives, or actually creating negative value. Building highways looked very productive on paper in the 50's, but now we live in car dependent sprawl, and we continue to pay people to maintain that sprawl when we could have walkable cities that are human friendly.
You're forgetting that a lot of people that use those highways want to live outside the city and don't want to be crammed into the city.
I love it in the city, can't imagine living where you literally cannot walk anywhere - but most of those people out there like it or they wouldn't be out there.
So, no, the people maintaining those highways aren't doing nothing. Maybe they're doing nothing for you. Maybe you can argue you're subsidizing other people's lives. But you can't say that people maintaining highways are doing nothing or are net negative.
> Who's going to take care of sick people? Who's going to maintain our infrastructure? Who's going to police people? Who's going to defend our country from war? Who's going to make sure your cellphone still works? Who's going to make sure your house still has electricity? Who's going to make sure the laws are being followed? Who's going to make new entertainment for you?
You simply seem uninformed. My english is not so good to be persuasive enough, somebody please help me.
Basic income doesn't mean all people will stop working. Jobs would still exist, and people would still choose to work, but for different reasons than they do now. They could do what they want, and stop anytime for any period of time, and start again whenever and with what ever they would feel like it.
We have voluntary firefighters now, don't we?
People just wouldn't have to choose job based on its capacity to provide sustenance for their family, but do what they love no matter the financials.
For example many teachers and nurses are now leaving the profession (in the US), because they're unable to earn enough to sustain their living expenses and would have to work multiple jobs.
> Who's going to take care of sick people?
Do you think that doctors and nurses are in it for the money, and nothing else than money? No, they do it because they want to help people. I don't fully understand it, but it is so. And they would still be awarded for choosing that vocation.
> Who's going to defend our country from war?
You're an american, are you not? Are you people really that scared? With all the money on your offensive defences and with bases in 3/4 of all countries of the world?
> Who's going to police people?
Don't keep people in poverty, and you wouldn't need so many policemen and prisons. Do you know you're 1st in the world in this area too? And do you think there would not be anyone who would want to police, without being forced to earn a living?
> Who's going to make new entertainment for you?
All those youtube attention seekers are not going anywhere.
Basic income would start a massive creativity boom. I'm sure of it.
> We need to do more than just have beans to eat.
We can be forced to do something, or choose to do something. That's the difference. The beans are just the failsafe.
You're probably 15 years old or thereabouts, so I'll keep this simple:
With UBI, you will have to drive your trash to the nearest landfill yourself. And the car will barely work for lack of mechanics. And the road will barely function for lack of construction workers. And the landfill will just be a disordered rubbish tip, and not a proper facility. Because no one--and I mean no one--is working in garbage, grease, or tar when they can sit at home instead.
It's the purest idiocy anyone ever thought of.
And yeah, doctors and nurses are in it for the money. No one works in shit and puke for fun either.
I work in healthcare and could make more money doing other jobs I am qualified for but prefer to work in in-home healthcare because I don't hate it. Cleaning up human waste is preferable to working a higher-income soulless job. I have also been a volunteer firefighter for a part of my life and that didn't just not pay me, it also cost me.
Not everyone is a cynical monster who would only ever do anything that benefitted themselves personally.
Maybe (ignoring the fact that ours is the age of trash, one of the things that should be solved first) those jobs you've mentioned are in fact essential and the only thing it shows is that the way how incentives are set is artificial and has nothing to do with the real utility of the job.
Making majority of population to work their whole lives although there are (will be) ways to automate it completely just because we need few dirty & greasy jobs done is not a stupidity?
And I for one don't believe that doctors and nurses are in it only for the money, there are many examples of people choosing jobs and risking their lives for others, no money are worth that. People (can) act out of their heart, not just out of their greed.
It's a complicated topic, with many unknowns and many things that would have to change, but insisting that status quo is the best way to handle things ... that seems like blindness to me.
France's system has the working population pay for the pension on the retirees, as a social security tax. With the retirement age around 62-65, with the lifespan increasing, and with the Baby Boomers retiring, it isn't a sustainable system.
Every president, be they socialist or liberal, have attempted to tackle the issue, only to get country-paralyzing backlash. People will nitpick the details of whatever current plan proposes, but the fundamental problem remains.
[1] https://pari-roller.com