
The Old Are Eating the Young - petethomas
https://www.bloomberg.com/view/articles/2017-06-13/the-old-are-eating-the-young
======
ar0
Note that the article makes a crucial assumption: That all those unfounded
future liabilities (most of which are pensions etc. I assume) of governments
are fixed and cannot be changed. This isn't true, though: By changing the law,
those unfounded liabilities can be erased at the stroke of a pen.

What does this mean? That these staggeringly high numbers (if true) do not
necessarily mean doom but "merely" that at some point people will find out
that the pensions they have been promised won't be there when they reach
retirement. (I.e. what the people in Greece are currently painfully
experiencing will eventually hit others, too - one pension cut after the other
until little is left.)

This doesn't necessarily affect "future" generations, though: Those that will
pay for it is the generation that lives through the cut, i.e. which has paid
into the system before the cut but was due to receive money only after the
cut. This can very well be a generation that is alive today.

Edit: Just to clarify - the article conflates these financial liabilities with
environmental damage. Just to avoid confusion: obviously, environmental
degradation cannot be erased with the stroke of a pen, the above is only
talking about the financial side of things.

~~~
TeMPOraL
> _By changing the law, those unfounded liabilities can be erased at the
> stroke of a pen._

True. However, the problem is: doing that will land a government in a world of
trouble.

Firstly, the popular unrest. While in my country, it seems that most people
under 30 don't believe the government pension scheme will survive to our
retirement, people older than that do hope for their promised pension. After
all, that's what they worked so hard and paid so many taxes for. Pull the rug
out from under them, and my bet is you'll have riots in the streets[0].

Secondly, loss of trust. Kill off something as big as a pension scheme, and
good luck in convincing _next few generations_ to believe you if you want to
reinstate it again.

\--

[0] - Related - many young people will join too. While I fully intend to
support my mother in her old age, if the government decides to take away her
retirement money, I'd be pissed _personally_ too - after all, they'll be
impacting my finances as well.

Also related: that's why the loss of low-skill jobs by automation _can 't_ be
ignored by people with high-skill jobs. Because after all, when your father,
uncle, sister and closest friends will find themselves unemployed, who will
they ask for help?

~~~
qb45
Disclaimer: I know about economy as much as the next guy.

Retirement pensions are one thing, the other is debt - whenever I hear that
all countries are in debt I think of the law of conservation of mass and have
an obvious question: who is this monumental, multiple-GDP debt owed to?

I figure it must be the private sector, but in such case - why are they
lending? It looks like either there are people with resources they have no
idea how to invest in something actually productive or there are people who
knowingly choose to invest in this somewhat risky business of "pay companies
to do something for the public now and hope that the public will return you
more than the GDP of the whole country, maybe it will work out", which is how
I see these big national debts.

Who are _these_ investors and how hard would it be to make them cut their
losses?

At the risk of committing a blasphemy against capitalism, could it be a sign
of insufficient taxation of the proverbial "top 1%"? This doesn't necessarily
need to be "top 1% individuals", maybe it's "top 1% companies" or "top 1%
banks" or whatever. In either case, it appears that somewhere, someone has
some big money which is being spent on public projects anyway but under the
guise of an "investment" which may actually be a big dud.

~~~
RobertoG
The problem arises when you assume that the debt of a country in its own money
is the same that private debts.

When a private bank credit some household or business they get an asset (the
debt owned to them) and a liability (the money they just created from nothing)
that cancel each other. The entity receiving the credit have the same position
but inverted. So, if you take all the economy, everything cancels to zero and
not "law of conservation of mass" has been violated.

The debt issue by a country is a very different animal. In fact, probably we
should stop calling it debt. When a government issue debt they are creating
financial assets that allows the private sector to operate. An interesting
mental experiment is to think in what would happen if all the governments pay
all the 'debt' and stop spending.

Stephanie Kelton write about those things:

"Our challenge is not whether we can “afford” to make the payments we have
promised to seniors, veterans, the disabled, government contractors,
healthcare providers, bondholders, etc. (today, tomorrow and into the
indefinite future) but whether we will be a productive enough nation to allow
the government to make good on those promises without causing an inflation
problem. That is the debate we should be having."

[http://www.nakedcapitalism.com/2013/10/stephanie-kelton-
how-...](http://www.nakedcapitalism.com/2013/10/stephanie-kelton-how-to-talk-
about-debt-and-deficits-dont-think-of-an-elephant.html)

~~~
qb45
> An interesting mental experiment is to think in what would happen if all the
> governments pay all the 'debt' and stop spending.

I suppose they would have to explicitly collect taxes to cover their current
spending, not make bets on the future of economy. Isn't it how our
civilization worked for a long time?

> Our challenge is not whether we can “afford” to make the payments we have
> promised to seniors, veterans, the disabled, government contractors,
> healthcare providers, bondholders, etc. (today, tomorrow and into the
> indefinite future) but whether we will be a productive enough nation to
> allow the government to make good on those promises without causing an
> inflation problem.

I don't really see the difference. If we are productive, the government can
compel citizens one way or another to deliver on those promises. If we aren't,
it can't and it needs to reduce them - either explicitly or implicitly by
devaluing the money they are denominated in or any other creative way it could
come up with. So sure, whether the government can afford future spending is
the same thing as whether the economy will be big enough to tax it with
fulfilling these promises. I think.

OK, so somehow I got back to making bets on future economy. But this time it
appears to be a bet made to justify future spending, not current spending, so
unavoidable.

~~~
Someone
Part of "current spending" _is_ making bets on the future state of the
economy. Governments build roads, dig ports, build new neighborhoods, etc. in
anticipation of economic and/or population growth.

When a company lends money to do such that, it is called leverage, and
considered a good thing because it allows them to make higher yields on their
capital. Shouldn't governments be judged the same if they borrow money to
speed up such developments?

------
peterburkimsher
Some parents are generously allowing their children to live at home rent-free.
Mine are not. They provided me with an education, but in fact that was a
scholarship from the institution my dad works at, not their own generosity.

Young people are better-educated, well-travelled, and more aware of the world
than ever before. But old people control the Human Resources department. To
protect themselves, they keep changing the rules to keep us out. HR demands
years of continuous work experience, not only a degree.

The result is that we settle for low-paying entry level jobs. We can't afford
to have children. Instead of seeing this as a problem, I consider it a weapon
in this war of generations. I'm denying my parents the joy of grandchildren.

Pension funds take money from young people and pay it out to old people. I
have no hope that the fund will still be around by the time I'm able to retire
(and the retirement age is probably going to increase anyway). A similar thing
can be said about insurance. Therefore I think that young people should
boycott pension funds. The system is not working for us, so we should not pay
into it. We must continue to pay taxes because of legal requirements, but all
other financial services are biased towards an older generation.

The worst part is the inequality that will come when the older generation
finally pass on their inheritances. Some people will be very rich. My parents
promised me that I will not receive any inheritance. So I will be poor.

The instability and debt is likely to lead to a war. It wouldn't surprise me
if the USA decides to fight China about the huge debt they owe the Chinese.
And who will die in the war? Young people.

We really need to see this through. (Anthem Part 2 - Blink 182)

~~~
TheWiseOwl
>Some parents are generously allowing their children to live at home rent-
free. Mine are not. They provided me with an education, but in fact that was a
scholarship from the institution my dad works at, not their own generosity.

You seem to feel that you are owed more. Are you joking or are you really this
bold-faced entitled?

>Young people are better-educated, well-travelled, and more aware of the world
than ever before. But old people control the Human Resources department. To
protect themselves, they keep changing the rules to keep us out. HR demands
years of continuous work experience, not only a degree.

Since when does being well traveled or aware of the world mean you are better
qualified for most jobs? It very rarely matters (would you put this on a job
resume?). Young adults do have degrees at a higher rate than ever before, but
most of those degrees are worthless degrees.

>But old people control the Human Resources department. To protect themselves,
they keep changing the rules to keep us out. HR demands years of continuous
work experience, not only a degree.

This is quite the conspiracy theory. So there are jobs to be had but the old
people are keeping you out of them?

I define a worthless degree as a degree where you could have learned the same
skill on the job or at a trade school. This is the way your parent's
generation did it. The degrees in this case are a waste of time and money.
They provide false hope as well.

>Pension funds take money from young people and pay it out to old people. I
have no hope that the fund will still be around by the time I'm able to retire
(and the retirement age is probably going to increase anyway). A similar thing
can be said about insurance. Therefore I think that young people should
boycott pension funds. The system is not working for us, so we should not pay
into it. We must continue to pay taxes because of legal requirements, but all
other financial services are biased towards an older generation. The worst
part is the inequality that will come when the older generation finally pass
on their inheritances. Some people will be very rich. My parents promised me
that I will not receive any inheritance. So I will be poor. The instability
and debt is likely to lead to a war. It wouldn't surprise me if the USA
decides to fight China about the huge debt they owe the Chinese. And who will
die in the war? Young people.

Is this whole thing one big joke? You got me, you are trolling with sarcasm
right?

Millennials are scary...

~~~
Retra
Maybe it is entitlement. You get out of school, struggle for 15 years, and
have absolutely nothing to show for it but a heap of debt. Then you look
around the world and see that success isn't a reward for hard work, it's a
reward for being born wealthy and connected. If you don't own land, you're
screwed. It's expensive, and old people love hoarding it.

Millennials are scary? Do you know who the President of the United States is?

~~~
charlieflowers
The government is who has screwed you over. By offering student loans, the
govt (perhaps accidentally) inflated the cost of college to insane levels.

Continuing the flawed system is not accidental, because having a generation in
lifelong debt is convenient to those who control wealth.

But I doubt it's your parents who are to blame. It's yet another failure of
our government to look out for the best interests of its citizens because it
gets swayed by greed.

~~~
Retra
Fuck that. The government paid for most of my college and living expenses
during, without incurring any debt (MGIB.) I'm getting screwed over by the
combination of medical expenses and rent.

------
lpaone
I have a theory that may not be popular around here. I also probably have not
thought this through and researched it enough, but I will throw it out there
anyway. I would love to have it torn to shreds by someone who has studied
economics or more likely this is something that has already been extensively
researched.

It seems to me that real sustained economic growth cannot happen without
population growth, at least the way things work right now. Efficiencies gained
through technological innovation and financial manipulation cannot sustain
growth indefinitely, they just smooth out the bumps and with population growth
help increase the rate of economic growth. And without economic growth, we are
going to keep running into these issues and others brought up in the article.

Look at Japan, no amount of economic/financial manipulation has really helped
them. Their main economic issues stem from the fact that there are not enough
young people.

Aside from epidemics/catastrophes, there has almost always been sustained
population growth through human history. It is in our nature to multiply and
expand. I feel this is why so many people are fascinated with space and space
colonization.

The current demographic trends in western society is unprecedented and in my
estimation, I do not think it will end well unless someone finds another
solution, or these demographic trends are reversed.

Feel free to rip apart my theory. I would love to hear what someone with a
better understanding of this area has to say.

~~~
klodolph
Exponential population growth is fundamentally unsustainable. Given a
population growth rate of about 2% per year, like it was in the 1960s, an
average mass of 60 kg per person, current world population of 7 billion, and a
total mass of the universe of 3x10^52 kg, we can calculate the amount of time
before humans consume the entire universe, including dark matter. It's a
little under 5000 years, far shorter than the record of human history.

So, this is a fact: we cannot grow exponentially for very long. Also a fact:
humans have survived the vast majority of human history with near zero
population growth, if we consider human history to be 200 millennia old and
population growth to be a factor of a million during that time, average growth
is 0.007% per year.

Economic growth is also the wrong thing to measure. Surely something else,
like quality of life, would be more appropriate. You say that "no amount of
economic/financial manipulation has helped [Japan]" but does Japan really need
help, or are their citizens enjoying a relatively high quality of life?

~~~
vacri
> _Given a population growth rate of about 2% per year, like it was in the
> 1960s, an average mass of 60 kg per person, current world population of 7
> billion_

Economic growth in developed countries is driven by population growth, and
this is why they all have a decent amount of immigration, to sustain that
growth. In developing countries, they can grow by development - adding more
subsistence farmers doesn't really grow the economy.

Australia has just taken the record for the longest period without a recession
(26ish years), and this has been done on the back of immigration - since 1999,
we've increased our population by a quarter, and our birthrate is only
replacement-level. Population growth in developed countries != population
growth globally.

~~~
daemin
I'd say a lot of the growth has been by exporting dirt and food to China and
other Asian countries. This made Australia resistant to the GFC crashes
because our raw materials were in great demand. It was also regardless of
immigration as other countries with similar levels of immigration did not have
the same economic success.

~~~
vacri
Mining is only 7-8% of our economy. We survived both the GFC and the recent
years of mining downturn. Mining isn't a small part of it, but it's not really
the key player in our economy. Agriculture is much bigger, but still, the
reason why we import so many humans[1] is to keep our economy growing.
Immigration isn't the only thing that can affect an economy, but with an
ageing population, bringing in new youthful blood helps keep the workforce
growing.

[1] The only large Western nations with higher immigration rates are Spain
and, surprisingly, Norway.

------
chrismealy
Some days it's robots taking all the jobs, other days it's who's going to take
care of all the old people. Come on people, just pick one.

Unless you count hoarding canned food, you can't really save for the future.
You can acquire claims on income in the future by buying stocks or bonds or
whatever, but that income will have to be produced in the future, produced by
young people working. Old people have always been taken care of by young
people. The illusion of the financial system can't change that. There are
relatively more older people now than there used to be, but on the whole
that's a good problem to have, because people are living longer and have more
control over their lives. The best way to deal with an aging population is to
guarantee a decent standard of living for the young, so people don't have to
wait until they're pensioners to enjoy income security.

~~~
rayiner
At least in the U.S., we can rationally worry about both things at the same
time! Social Security is bankrolled by a tax on labor income. Robots, however,
produce capital income. We could easily be in a position where millennials
have limited employment because of automation but nonetheless carry the burden
of supporting the baby boomers in retirement.

~~~
averagewall
You seem to be contradicting yourself. Unemployed but working to support old
people? That's employment. Not all jobs have to be in factories. Why can't
elder care be a booming industry that sucks up all the unskilled labor left
behind by automation? The customers are the very people who can afford it the
most.

~~~
trelltron
You don't understand the premise. The Parent is pointing out that taxation of
working people is used to fund the care of others. Low (human) employment
breaks that system.

Having a large pool of potential workers is meaningless if there is no money
to pay them for the work, or to pay for the other necessary elements that go
into that kind of care.

~~~
collyw
Lets face it, there is plenty of money about, the problem is that much of it
is is being stashed in offshore tax havens.

------
AnthonyMouse
A promise from the government to pay you something in 30 years is inherently a
promise to take the resources from your children, because there is nowhere
else for it to come from. It doesn't help anything to have the government hold
its own bonds; then your children inherit the debt instead of the unfunded
program. It's the same number of dollars no matter what you call it.

And you don't want governments holding other investment assets because the
government choosing what to invest the money in would be the world's strongest
corruption magnet.

> Rather than reducing high borrowing levels, policy makers use financial
> engineering, such as quantitative easing and ultra-low or negative interest
> rates, to maintain them, hoping that a return to growth and just the right
> amount of inflation will lead to a recovery and allow the debt to be
> reduced.

This is a misapprehension of the relationship between debt and inflation.
Inflation _is_ how you reduce the real value of the debt. It's effectively a
tax on dollars, and it reduces the debt on both ends: If the government
creates new money then it can spend that instead of borrowed money, and if the
value of the dollar goes down then the value of each outstanding dollar of
debt goes down.

But none of that changes the problem with retirement benefits because, again,
the government holding its own bonds is self-canceling. The only thing
inflation might "help" there is to allow a reduction in real (inflation-
adjusted) retirement payments without a nominal cut.

If you want the same real benefits then you need to collect that number of
real tax dollars, and if you won't or can't collect that number of tax dollars
then you have to pay lower benefits.

~~~
pmontra
> A promise from the government to pay you something in 30 years is inherently
> a promise to take the resources from your children, because there is nowhere
> else for it to come from.

Not a big deal: those people helped their parents, their children will help
them. It's fair and it's what happened for tens of thousand of years: people
knew they must have children because without children they'll be pretty much
without any support when old. However it works when the number of children is
substantial. It can't work with 2 or 1 children per couple and that's where
most of the western world is now.

~~~
mjevans
Yet increasing the population will also lead to either war, or the destruction
of the environment to the point where none can survive.

~~~
pmontra
Yes. That's one of the many reasons why we're at those levels of natality now
and why that kind of hand waving problems to future generations is becoming a
problem. I was not advocating for having 4+ children.

------
tomohawk
I had a conversation with a retired person. They were upset that they had to
pay taxes to support schools. Yet, they expected me to pay for their
retirement in a system that I'll likely never see a penny of. This retiree had
an income well above the median, and was at the same time getting full social
security benefits.

Regardless of age, people will take and take if they're allowed.
Unfortunately, we've built "safety nets" that enable this behavior.

~~~
clarkmoody
This is a fundamental problem of democracy: a voting minority uses the
government to extract wealth from other portions of the population.

Just look at the comments in this thread. Tons of "us" vs "them" when talking
young vs old. We would not be divided without the government exacting the will
of the voters on portions of the population for the benefit of others.

Instead of uniting us, democracy divides us.

------
skybrian
I'm skeptical of purely financial measures of this. It would be nice if we
could distinguish between purely financial "savings" versus real-world actions
that might actually make things better in the future.

For example, there's such a thing as perishable resources. You can't "save up"
labor; if people are unemployed now (and not doing something useful like going
to school), that doesn't mean there will be more labor available in twenty
years; it's just gone. Sunlight or wind power not used now is gone; it can't
be saved for later. And even the things that can be saved often have storage
or maintenance costs.

Finance makes it seem like you can save for your retirement or pass on wealth
to your children, and that's true for individuals but only to a limited degree
for society as a whole; the labor you use in twenty or forty years will come
from younger people who are working then. Call it a ponzi scheme if you like,
but this is the only way it can work.

On the other hand, natural resources are the opposite; oil or natural gas can
be left in the ground as long as you like, and it's cheaper to leave it where
it is than to do anything else with it. There are also long-term investments
in people (education in particular) that could pay off later with a better
educated workforce. Instead of deferring infrastructure maintenance, we could
do it before it's needed, possibly freeing up future labor to do something
else. Scientific research done now can come up with new techniques that will
always be useful.

------
mcv
A couple of years ago there was a discussion in Netherland about increasing
the retirement age from 65 to 67 because babyboomers were about to retire and
the working population that would pay for it would shrink. (Also because
people live longer; increasing retirement age is not unreasonable in itself.)

But because increasing retirement age just in front of people who were just
about to retire would be too big a shock, it was decided to increase it slowly
over a period of years. The end result is that all the babyboomers can still
retire at or near 65, but it's the younger generations that have to keep
working longer to pay for the boomers' retirement.

In the mean time, the mortgage crisis has undermined pension funds, which in
some cases meant everybody had to chip in extra so the babyboomers could
retire the way they were originally promised.

I have no idea where this is going, but I'm glad my retirement savings are
actually my money rather than part of a fund that can be plundered or
mismanaged by others. Dutch retirement funds are among the strongest in the
world, but these past couple of years have seriously hurt people's trust in
them.

I'm all for solidarity, but the solidarity has been a bit one-sided lately.

~~~
greedo
Just because it's "your money" now, doesn't mean it will stay that way
permanently. In the US during the last decade, there's been talk of plundering
401k accounts...

~~~
mcv
That's exactly what I'm talking about. When it's my money, that plundering
becomes theft. When it's not actually my money until it's paid out, I have
less control over it and rules may be changed so it can be plundered.

In the past I've heard plenty of stories about American companies looting
retirement funds in ways that would absolutely be illegal in Netherland, so
even if I'm part of a big fund, I'm probably better protected than an
American. But even that protection might not be enough if I can be required to
pay extra.

------
groby_b
I wonder if anybody ever has thought of a solution... why, we'd need massive
growth (to increase the tax base), a reduced population, and the ability to
completely eradicate some debts. As if you were removing the people who lent
you money in the first place.

You know what fits that description? A bit of war. And that's exactly where
we're heading. (Middle East is not going to get better. Refugee numbers will
become staggering as climate change destabilizes even more countries. Russia
has its eyes on Ukraine and the Baltic states. Europe is militarizing to
counter that. Pakistan/India is about the same as it ever was - so, precarious
balance, with nukes on hair trigger. China would like nothing more than a
Greater Asian Co-Prosperity Sphere. North Korea is about as bonkers as the US)

~~~
perilunar
Yeah, but we want to reduce the population old people, not young people. Maybe
an intergenerational war.

~~~
tremon
Strictly speaking, we want to reduce the ratio of nonproductive vs productive
people. Culling the old is not the only way to do that, and certainly not the
best.

(edit: and we definitely need better language. "nonproductive" need not be
synonymous with "having an income to support oneself", since there's still
many productive activities that are not rewarded monetarily)

~~~
thriftwy
Even productive old people can't bear children.

Even non-productive young people can bear children.

If you "cull" young people (by war) you make the problem worse by having even
smaller working-age population later.

Of course you can lose and have incoming invading horde which may solve the
problem, FSVO "solve".

------
mathattack
Here's the thing... It is very hard to tell now if we've gotten our money's
worth for the debt. Many things are much better today than 50 or 100 years
ago. Longer lifespans, better health care, less pollution.... Was it worth the
debt? Hard to say.

Also - debt is just one person owing money to another. Yes someone today
funded their consumption at someone else's expense. But guess what - someone
tomorrow will get the dollar back to consume it. We can argue that as a
country we will be paying for the consumption of others in the future, but is
that so awful for the world's richest place?

(And please note - this rant comes from someone who believes we should live
within our means and balance the budget)

~~~
seanmcdirmid
We can't really "balance" the budget though, as there are just too many
savings needs and the USA has become a debtor of last resort (which in turn is
why the dollar is so strong and widely used). Money you need tomorrow can't
really be saved under a mattress, someone has to "spend" it today, hopefully
on something productive that will provide enough value tomorrow to pay it
back. Saved money must produce growth, it has to be invested in someway, even
if it is just invested in ultra safe but low interest government bonds and
treasuries.

If everyone lived within their means, but still needed to save money, we'd all
be screwed. These are wild imbalances one sees in china, where the lack of a
safety net and sky high housing prices means one must save much of their
income, dragging down consumption and leading to easy money for SOEs, who then
often spend it unproductively.

~~~
pitaj
By balancing the budget we wouldn't be getting rid of debt, we'd be stopping
the growth of debt. Ideally, debt should grow at the rate of inflation, but
there can be some large spending times and some low spending times. Debt
shouldn't be larger than a significant portion of the economy.

~~~
seanmcdirmid
We already have mechanisms to control debt accumulation: raise interest rates
if we want to borrow more and lower interest rates if we want to borrow less.
Interest rates have been rock bottom, negative if inflation is considered, and
the US government has been practically paid to borrow via Treasuries.

> Debt shouldn't be larger than a significant portion of the economy.

Are you referring to just public debt? It really depends again on saving
needs. It really isn't that simple. Debt in itself isn't bad, default on debt
is bad. If you had to choose between debt and a depression, unless you are
Hoover, you will choose debt.

------
mythrwy
Home values appreciating out of proportion to salary increases are another way
this is occurring. Discussed a couple of weeks ago.

It's great someone who works as a bus driver bought a home 40 years ago and
it's now worth a mint. For that person. For the young person wanting a home
now it's a very bad situation.

~~~
techsupporter
I read an interesting comment thread on a Seattle-oriented forum the other
day: It was a thread about some landlord something or other--the topic isn't
all that important, just that it brought up the classic landlord-versus-tenant
debate--and someone made the comment that a sizable contingent of landlords in
Seattle are one- or two-unit (usually standalone house or townhouse, but
sometimes condominium or duplex) owners renting out places where the landlord
previously lived. The point was that tenants should be more predisposed to
give "landlords" as a group a break because many landlords aren't corporate
real estate trusts.

A person replied to take issue with that statement and made a what I thought
was a good point. He or she pointed out that all of those houses that are
being owned by a small-time landlord and subsequently leased out are houses
that are out of the pool of available properties for people to own and,
possibly, redevelop into more dense or different housing styles. Ownership and
renting in this way contributes to the upward spiral of housing prices: a
person has owned a house in an area for a while and then moves out. Instead of
selling, that person rents out the house while, in all probability, having
purchased another house in the same area. As the first house's mortgage is
paid down by outside rent, the small-time landlord has even less incentive to
sell because, hey, "free"[0] money. Lather, rinse, repeat for an entire metro
area and it's just as good a contributor to tight owned housing availability
as the specter of foreign investors swooping in or people moving from other
regions of the United States. And it reduces the pool of houses that could be
used for someone to buy[1] into a market.

0 - I know that being a landlord incurs costs and that not all landlords,
especially small landlords, make money on the deal but many obviously do
because to do otherwise would be financially foolish.

1 - There's a really good argument to be had about whether or not ownership of
one's residence is a good thing for society at large. I happen to think that
yes, it is, but that the pool of "culturally acceptable residences" must be
expanded beyond "detached house with fenced yard, large driveway, and
bountiful on-street parking directly in front of the structure." Point being,
people want to have stability in where they live and there's a wide gulf
between "5,000 square foot minimum lot size" and "downtown condominium high-
rise" that is not being served in many metropolitan areas.

~~~
Frondo
Can you provide the link to that thread/comment? It sounds like they've made
the argument I've been trying to make to my peer group (and their parents, who
explicitly encourage this "buy a house/never sell it, but rent out/etc"
behavior)--but have done so elegantly.

I'd love to see how they put it, so I could explain to others why these
schemes to "invest" end up hurting the city when they play out at large.

~~~
techsupporter
I went looking but can't find the thread again. It was on the Seattle-themed
subreddit so there's a better than even chance that it was yanked by one of
the overbearing moderators there.

------
polskibus
Rent-seeking is getting stronger and stronger because money is getting cheaper
and cheaper. Those with good credit lines get ahead of the poorer ones and
force them to pay them rent. I wonder if a reset like 2007/2008 is coming.

~~~
zanny
I think this is much closer to the issue. It is not about solvency of the
global economy as a whole - that is absurd, there is so much loose capital
floating around in corporate coffers and the stock market and HN is just a
testament to how relatively loony ideas can still get millions in rounds.

The real issue is the dramatic wealth divide that has been growing worse over
time, which bleeds into capital ownership by the rich as a means to extort
rents from the poor. It doesn't matter what generation you are from - these
debts exist not just to pay for past generations but to keep the current ones
under foot of the wielders of the capital. Debt isn't just some evil force
from the shadows, it is a business run for profit as the ultimate rent
seeking, and is wholly intentional.

------
kartan
Short term thinking pays off and has been favoured by evolution, so human
beings have a strong bias to choose short term benefit over long term gains.

Local maximums, or even cul-de-sac paths that are good in the short term but
fatal in the long one, are chosen by short term gain maximization.

To overcome this bias, we need better education of the general population -
the ones that vote and choose our future - so they understand the situation.

About pensions, it is ridiculous to compare "working people"/"pensioners". The
correct comparative is "production capacity"/"pensioners needs". Comparing the
output of an employee from 1970 with a 2050s one (the future they talk about)
makes no sense.

About climate change, and general environment protection, the article is spot
on. We ripe the benefits while future generations pay the cost. That's the
only reason we destroy so much to get so few, because we don't pay the cost.

------
rayiner
I'm as salty about baby boomers as the next guy, but it's a bit ironic that
millennials don't realize that they'll be screwing the next generation over
even harder. We are in the position we are in now largely because baby boomers
didn't have enough kids to support them in their retirement.[1] But
millennials are having even fewer kids. When millennials in western countries
can no longer work, who will take care of them? Can they count on an endless
supply of young immigrants raised and educated on foreign taxpayers' dimes?

[1] In the past, people had children so someone would be around to take care
of them in retirement. Financialization of that process decouples the specific
children from the specific retirees, but does not otherwise change the basic
dynamic that there has to be a working generation to provide for the retired
generation. You can't eat money in your 401k.

~~~
bluthru
>When millennials in western countries can no longer work, who will take care
of them?

What does this question even mean? There isn't a 1:1 ratio of nursing aids to
nursing home residents.

>But millennials are having even fewer kids.

Thanks to the world the Baby Boomers helped create. Real wages have flatlined,
careers being sold as more meaningful than families, and horrible maternity
and paternity laws. Meanwhile, the wealth that a responsible couple generates
is subsidizing the unemployed person who is on their fourth child. We
basically live in a society that has inverted natural selection. That includes
flooding the first world with people from the third world and pretending that
we're all interchangeable and that the social conflicts created by
multiculturalism aren't real.

~~~
metalliqaz
I'm going to go out on a limb and assume that both of us live in the "first
world", as you say. Where is the flood of third world people? I have never
seen this "flood" in my 35 years wandering around the US.

~~~
bluthru
[http://i.imgur.com/nKcVpVU.png](http://i.imgur.com/nKcVpVU.png)

------
freeflight
This is especially bad in Germany where the introduction of the Euro pretty
much split the earning population in two.

Around 1990 the average retirement age in Germany was 60 years, retirees also
got way more money (they still do) because back then people still earned
proper wages and the retirement is based on prior income.

Since the introduction of the Euro real wages in Germany have kept on
stagnating while living costs kept rising and live expectancy also increased.

This has lead to the absurd current situation where (old) retirees make up the
bulk of the upper-income levels in Germany, while younger generations are not
even sure they will be getting any retirement at all down the line, as German
government keeps increasing the retirement age (67 years now, estimated target
being at least 69 years) while decreasing the amount of retirement money
people actually get.

The worst part is that a lot of this is based on the naive assumption that
life expectancy is gonna keep on increasing and people can stay "productive
for longer", like we are all gonna be able to work till 70+ by 2030. But
nobody answers the question that actually matters in that regard: Where and as
what are all those people supposed to work?

And why should any businesses hire a 60+-year-old guy vs hiring from a flood
of overqualified, eager, and cheaper young folks?

------
shubb
A large part of this article discusses future liabilities, but makes no
mention of growth.

For instance, it says total UK liabilities are 1000 times gdp, but past gdp
growth over the same duration those liabilities are amortised over is 3000%.

Past performance would suggest this seeming over committed will simply be
eclipsed.

There is no guarantee gdp will keep going up, either globally or in particular
countries, but it does indicate that, growth is the way out and we should
places our bets there.

As recent small state low tax economic policy has failed to deliver growth
like we saw under bigger state higher tax policy, maybe we'd be richer if we
reverted to that.

~~~
bambax
Growth is exactly like Jesus. Some people strongly believe it will return,
despite strong evidence to the contrary.

And we're all cargo-culting around it, changing laws, reducing taxes, opening
borders to lure it in, like if growth was a wild animal afraid of fences.

Meanwhile, old people live the good life of having revenue without doing
anything productive. Good for them, but I'd resent them less if they didn't
vote for Trump, May, Le Pen.

~~~
shubb
Now that's a little pessimistic.

Look at the graph:
[http://www.ukpublicspending.co.uk/spending_chart_1950_2010UK...](http://www.ukpublicspending.co.uk/spending_chart_1950_2010UKb_11s1li011lcn__UK_Gross_Domestic_Product)

Exactly what would make the next decade special compared to the last 5? If
lack of growth is unusual then expecting it to return would seem rational.

Have faith brother!

~~~
cjg
This log version might be better:
[http://www.ukpublicspending.co.uk/spending_chart_1950_2010UK...](http://www.ukpublicspending.co.uk/spending_chart_1950_2010UKb_11c1lo011lcn__UK_Gross_Domestic_Product)

You can see the S-shape in the curve. We hit peak growth in the 1970s and it
has been slowing since.

------
Qantourisc
I don't know who to blame here: the people for allowing this mismanaged of
future problem, or the politicians doing the mismanagement.

As I just said this morning: "The reason you have to work longer before you
get to retire is because the state failed to save and put aside the money
required. And they have known for years this was coming." Lets hope we do
better on global warming or other catastrophes.

~~~
papabrown
Who is to blame?

Part of the original article is a lie (at least as how it pertains to the US).
The social security system will eventually be unable to pay out at current
rates. But notice how nobody worries about whether we'll still be able to
spend 10x what everyone else spends on the military?

A lot of this is about how we plan on spending our money. The current argument
is framed as "if we don't change anything, this might happen" but the change
everyone focuses on is the change in how much money goes towards satisfying
the retirement savings.

You notice nobody suggests buying less aircraft carriers or scaling back the
military? Instead it's all about not reducing any other spending. Putting the
spotlight on one particular form of spending and then declaring that if it
can't pay for itself due to demographic changes, we should scare the shit out
of everyone and privatize it and pour trillions of dollars into Wall Street.

~~~
freeflight
>Instead it's all about not reducing any other spending.

I'm even more amazed how many people think the welfare budget is supposed to
stay fixed, not accounting for any growth in population at all, while military
spending, going over budget, is considered the most normal thing in the world
and leads to an increase in military budget.

~~~
papabrown
I've always considered myself a fiscal conservative. Not the "let's cut all
welfare" type of fiscal conservative but the kind who says, "Ok, we just found
out that the Pentagon can't account for billions of dollars worth of
equipment. Let's figure this out and try to use taxpayer money as efficiently
as possible."

I think if you cut all of the waste and abuse and held agencies to certain
targets (i.e. 90% of taxpayer funds earmarked for education have to make it to
the classroom level) you would free up enough money that you could actually
create poverty programs that solved poverty. You could improve education
without paying more for it. You could smooth out demographic shifts that
challenge the social security system.

The government is a big money sucking machine. It's not that we aren't paying
enough taxes, it's that they're being spent irresponsibly.

~~~
freeflight
>I think if you cut all of the waste and abuse and held agencies to certain
targets (i.e. 90% of taxpayer funds earmarked for education have to make it to
the classroom level) you would free up enough money that you could actually
create poverty programs that solved poverty.

You might not realize it, but that view is very similar to planned economies
by a central government, just like in the USSR.

If you assume government agencies are merely inefficient (sure they are,
barely anything is perfect) and you start dictating efficiency targets, you
gonna get pretty much the same result as the USSR got: Lot's of corruption for
the sake of keeping appearances of high efficiency intact.

Imho the solution can't be mere better micromanagement, that would assume up
till now people have just all been too incompetent, which is, of course, an
appealing thought because it makes it easy to point fingers and makes the
solution looks so simple (if the lazy people would stop being lazy then
everything would be fine!), but it's also a pretty generalizing thought and as
such I don't think it represents the issue in its completeness.

An argument could be made for "simplifying government". That's where something
like a universal basic income, ideally linked to GDP, might actually be quite
useful. If a UBI is in place, then there's no more need for additional welfare
programs, as such it would allow for the removal of a massive bureaucratic
overhead.

------
havetocharge
When I was young, I used to love articles like this. Now that I'm old, I think
they are stupid.

~~~
edejong
Empty statement. Back up why you thought they were loveable and what makes
them stupid now.

~~~
mythrwy
That statement doesn't need backing up.

It is self contained, and speaks directly to the nature of human opinion.

~~~
edejong
But it doesn't add any depth to the discussion. I'm sure everyone has specific
positions on how the article makes them feel. However, HN is about getting to
know different standpoints which have a certain amount of profundity to it.
Just saying: "I like this", or "I used to like this", doesn't give any
substance.

~~~
mythrwy
As I understand the statement's intent, it has layers of depth and is
concisely profound.

It speaks directly to (IMOP) the root of the problem the article talks about.

~~~
edejong
Well, I can think of a couple of reasons why the OP thought it is stupid now:

\- He understands the article is preaching to the choir.

\- He thinks the article does not take into account the total flow of capital.
His better understanding of economics makes him understand this now.

\- The article does not cite any sources.

\- It (apparently) is a common theme that older plebians tend to vote more
conservative. Perhaps he is referring to his changing political position.

\- Without dialogue, these articles are fundamentally empty. They do not help
different actors come together.

\- The article is using various framing devices to make it appealing to a
certain audience. The OP currently feels exalted from this pleading to the hoi
polloi.

\- Due to the effects of filter bubbles and targeted psy-profiling, the OP has
unknowingly narrowed his vision, causing him to label the article stupid.

Which one is it? I'd like to know because I might be missing the point here.

So, my point is: I can create many layers of depth by just using my
imagination. But that doesn't add anything to the discussion. I could say I'm
a post-post-modernist or a holistic a-structuralist, which might capture some
depth and raise some questions, but it does not allow for any kind of true
dialogue.

~~~
mythrwy
Young OP thinking different than old OP is an important contextual modifier
that excludes most of those options as reasonable though.

But everything isn't an argument (er, I mean "dialog") so feel free to be as
right as you wish to be.

Allowing people to express themselves and taking the time to consider the
meaning behind the expression is both polite and can be quite enlightening (as
well as entertaining). If you are constantly arguing or saying things like
"source?" for a personal point of view (perhaps because you differ in
viewpoint or feel a position you hold is being attacked) you miss both of
these benefits.

When I was young I thought razor whit logic and proving verbal correctness
somehow trumped experiential reality. But now I am old I think differently.

------
Tepix
Why are pension funds not changed (gradually) so that i get my own money back
(+interest) instead of paying the pension for current retirees?

It's blatantly obvious that not changing the system will lead to issues as the
populace grows older.

~~~
kuschku
That’s how they worked originally. WWII killed that concept. Now in the past
decades people switched to private pension funds, which do that, but that
doesn’t fix the inherent issues with the system.

------
tu7001
Apparently, we are too stupid to maintain civilization...

~~~
ucontrol
While your comment may seem simplistic, as years pass and as I study human
history in more depth, I'm afraid that I'm beginning to nurture that exact
sentiment as of late. It seems that Western civilization was not an
inevitability, but a lucky roll of dice (or unlucky, depending on who you
ask).

On average, we are not as intellectually capable as our civilizational
accomplishments may indicate, quite the contrary. Seeing the missteps that we
keep making, looking at our shortsightedness and our inability to act
collectively towards long-term prosperity.. It's just depressing.

What bothers me the most is the degree of such incompetence. It should't be so
widespread.

~~~
roflc0ptic
I know we don't on usually quote poetry on HN but there's some apropos Bad
Religion - "I've got this one problem where I live forever // I've got just a
short time to see."

The human mind is not apparently built for thinking at the scales (sizes, time
frames) at which humanity operates. The limited distribution of competence is
an amoral phenomenon - as a first approximation, I like to think about it as a
natural consequence of limited information transfer between generations.
Should or shouldn't is beside the point.

------
return0
There's also the sociocultural aspect of it. Weak and economically dependent
youth -> conservative values, avoidance of confrontation with parent
generations. There is no such thing as the rebelious spirit past generation,
and this is prominent in millenials.

------
baybal2
Put your money into a full reserve bank, there quite a few around. I have an
account with one of such. It also makes sense to open a "metal account" in
some offshore bank abroad (remember, US was prohibiting its citizens from
buying gold less than 50 years ago)

------
ryan606
The baby boom generation, as well as the "Greatest" generation before them,
have saddled our future generations with huge liabilities. Sadly, not every
younger Gen X'er, Gen Y'er, Millennial, or Gen Z'er realizes the magnitude of
the debt left behind -- and more importantly that it reflects future tax
increases or government services that won't be able to be provided. The only
hope is that the current generations will have accumulated enough personal
assets to pass along to their kids and grandkids to offset some of this
deficit.

------
fithisux
The article cites no scientific evidence (references), follows no scientific
methods and can be regarded as biased. To strengthen my point, the articles
compares 5.3 / retired in 1970 vs 1.6/retired in 2050 without taking into
account automation or scientific / technological progress. The analysis is
therefore unsound.

------
nickthemagicman
Austerity NEVER works. It's small minded and looks solely at the debt instead
of the investment.

IF we get debt for a billion dollar highway system but that highway system
helps the country make billions of dollars over the time of the loan. That is
called an incredible investment.

Greece, Kansas, Louisiana, etc have austerity governments and they are falling
apart.

Investment pays off dividends...whereas austerity kills.

~~~
Scea91
Greece is not falling apart because of austerity government but but because of
the ones before that which were the opposite.

~~~
nickthemagicman
Ok..given that's the case. There are lots of governments who run high debt
levels and aren't in that quandry.

The debt isn't the problem. It's misuse of the debt that's the problem.

Even most companys run standard levels of debt every quarter, because
borrowing is a very powerful tool IF USED CORRECTLY.

So, there's a significant distinction there, the I feel less educated and less
economically inclined people fail to grasp....

Debt can be a very positive tool if used correctly.

~~~
Scea91
I actually agree. The problem is that it feels to me that governments use debt
incorrectly far more often than companies. I believe that it is because the
current political systems reward short-sighted populistic debt more than long
term investments which are often unpopular.

As a consequence, austerity is often the only option for countries that
obtained lots of debt irresponsibly.

------
jerianasmith
I don't think old are really eating the young. To me, this intergenerational
conflict is exaggerated. As technology improves and so is human life span, we
all have to face this when we become old.

------
OliverJones
Hey, fellow older folks in the US! Wanna do your part to help deal with this
problem? Wanna do it without all the trouble of getting organized?

Use some of your wealth to pay off the education loans of a younger friend or
colleague.

------
tempodox
This effect isn't new. Before antiquity, Greece had lush forests. Then, they
cut off all the trees to build ships so they could fight their wars and
conquer the world. And Greece has been a desert ever since.

~~~
OlivierKessler
Theory which is largely challenged today.

~~~
tempodox
Where would they have taken the wood for their ships from?

------
aramas
Looking at youth unemployment rate (44%, 38%, and 25% in Spain, Italy and
France, respectively), you will find how serious this issue is. It's not only
about young people's job skills.

------
lordnacho
What should have been done was to make some precautions for the inevitable.
There was always a good chance at the start of the various welfare states in
the last century that people would live longer.

Why didn't they say "we'll pay pensions to the oldest X% of the population" or
"we'll pay x% of GDP to the oldest people, according to living standards of
the time"?

Instead we have societies where people feel entitled to be pensioned at a
specific age. And it's very hard to change that age, while at the same time
they become a larger and larger voting block.

~~~
dmoo
Ireland raised the age at which people are entitled to a state pension. It's
moving from 65 to 68. [https://www2.deloitte.com/ie/en/pages/deloitte-
private/artic...](https://www2.deloitte.com/ie/en/pages/deloitte-
private/articles/increasing-state-pension-age.html)

~~~
lordnacho
Is the proportion of people being taken care of higher or lower than when the
system came into being?

I get that a lot countries are aware of the issue, but moving a fixed age to
another fixed age does what the article says: it kicks the can down the road.

~~~
dmoo
Yes, but the road has a stop sign.

------
GrumpyNl
Not true, as long as we can keep the money printing machines working.

------
kaonashi
More like the rich are eating the poor.

------
JonCox
Nom nom nom

------
Von_Jones
Is it any wonder this is happening when the central organising feature of our
political, economic and personal lives is a huge ponzi scheme? This reality
has destroyed the possibility of changing a system to benefit all. This ponzi
scheme is the housing market: since the late 90s this has ceased to be a true
market, and instead became a pyramid scheme in which value growth and price is
based on the expectation that money will be sucked in from new investors, not
derived from the utility of house-ownership or expectation for yield. This is
the very definition of ponzi - and it governs so much of our lives. Why are
the young and the old so segregated in their voting? It's because they are
either the beneficiaries of or the 'bigger suckers' in this state-sponsored
fraud - and can be mobilised accordingly. Until the housing market is dealt
with, it will be impossible for politicians to create policies which 'grow the
pie', increasing wealth for all, rather than simply carving it up - governing
by robbing Peter to pay Paul.

The only solution I can see if for the young to organise to boycott house
purchase, but I am not yet sure how realistic this.

~~~
metalliqaz
Housing is just now starting to emerge from a huge correction. Despite all the
bullshit surrounding housing, it is still a functioning market. (meaning,
prices are set by scarcity and demand) There are still inequalities there but
it's not nearly as big an issue as the debt discussed in the article.

~~~
TheCoelacanth
> prices are set by scarcity and demand

Scarcity which is artificially limited by zoning and demand which is
artificially inflated through near-zero interest rates.

