If private individuals have pensions promised by governments of a specific amount, and at the age it becomes due there is a tremendous budget deficit and huge government debt accrued entirely during their lifetimes, should they receive payment of what they are ‘due’?
Perhaps this is a question of morality and principals.
These people have worked their whole lives to reach this point, they have contributed to the growth and continued survival of the country and some of them fought to ensure the future of this country.
To renege on these promises would be a monumental shirking of responsibility.
But that is not the question I ask.
In any other aspect of life, if your expenses outgrow your income the shortfall must be made up by your savings and investments.
This is true of everything but the life you live as a citizen of a country.
We work for so many years, enjoy the fruits of our labour through public services and then a payment to see through the rest of our lives believing we are entitled to it.
But what if we aren’t.
What if instead of being entitled to it we are merely hamstrining future generations and stealing their lunch money.
As the size of the population over 65 grows, less people under the age of 65 are left to foot the bill.
To put it another way: In 1970, in the U.S., there were 5.3 workers for every retired person. By 2010 this had fallen to 4.5, and it’s expected to decline to 2.6 by 2050. In Germany this number will fall to 1.6 people by 2050. In Japan it will be 1.2.
That scares the hell out of me and makes me fear my required contribution to sustain the lifestyle these people expect.
And if I’m worried for my future my fear for my children’s is even more startling.
The impending population explosion is the biggest crisis humanity will ever face. That isn’t hyperbole, it is merely cognition of the fact that we will be unable to cope with demand.
And spending commitments are only growing! In other words, there will be fewer and fewer productive adults around to fund them.
One revelaing measure to show what im talking about is lifetime net tax benefit. This measures the benefits that a person receives over their lifetime by calculating the difference between all taxes paid and all the government transfers that he or she has received and will receive. A 2010 study found that in the U.S. the lifetime tax burden was positive (tax paid was less than benefits received) for all age cohorts above 18 years, with the largest benefit accruing to those over age 50. But the figure for future generations is negative (benefits received will be less than taxes paid), meaning they’ll have to meet the obligations of their elders.
Shockingly, this is probably underestimating the problem because such measurements do not take account of the cost of environmental damage that has been sustained or rising commodity prices due to shortages.
To me this is a disgusting abdication of duty from government.
They are merely kicking the can down the road for future generation to deal with. Until they cant and countries go bankrupt.
Incidentally, in my opinion, governments are the largest Ponzi scheme ever known to man. Whatever belief system you adhere to, capitalist or communist, liberal or republican, any government can only survive as long as the rate of birth is higher than the growth of the elderly. As soon as it falls below this, they depend on the accrual of debt from future generations earning to keep the wheels spinning.
Eventually they will fall off.
What does this mean?
The biggest industries in the next 50 years will be centred around enabling the elderly. Think of the labour hours that could be saved if technology could enable an at risk elderly person to have a shower safely and efficiently. You immediately reduce the need for care.
Technology must evolve to replace simplistic tasks like the above, and most likely will evolve to include complex tasks such as cooking. Invevitably, this will include developments centred aound fighting the loneliness that isolated elderly people typically face.
Efficiency of care is essential if the wheels are to remaing spinning for as long as possible.
That said, the world we live in and the future we have been promised are entirely unsustainable.
Either the age of retirement will have to raise 10–15 year, and continue to rise on a sliding scale. Or inflation will rise to such an extent that the pensions the elderly have been promised cannot sustain them.
Welcome to the impossible choice.
I’d just like my lunch money.