> you could start out as a file clerk with a high school degree and work your way up into middle or even upper management (at least if you were white and male).
That upwards mobility depends on one thing: that old people drop out of the workforce either by death or by pension, so that young people can rise up the ranks.
Now, given that people in their 80s need to work (!) to survive, this "generational contract" is broken. People are stuck with shit jobs until well in their 30s, so how are they supposed to procreate or save for their own retirement?
This is the lump of labour fallacy. Rest assured that life will be harder for young people if a sizeable portion of the population is old, out of the labour force, and needs to be supported by a rising share of taxes from a small number of young workers.
We should hope that older works stay in jobs as long as they're able. The coming demographic bulge isn't pretty.
The old people in America now own the majority of the assets. If they transfer those assets to the young in exchange for work, things will get better. If the old are split into those that have a huge amount of money and spend a little percent of it in retirement, passing the rest onto their heirs, and a large number of old people that need to keep working just to survive, locking out the young people from moving up, there will be trouble. Unfortunately it seems like the latter is happening at the moment.
At a global scale, ownership of assets isn't really savings.
Imagine an island society, with a bunch of 40 year old workers. You own the company that gets all the profit from their labour. So, you have a real resource, which you could trade with other places.
Now of course this island has no children. How do you feel about your investment once the workers reach age 80. It wouldn't produce very much. In fact you'd need to put resources in just to keep your island ex-employees alive.
But that's an extreme example. Let's suppose that 20% of the population is only 20 instead of 40. When the current 40 year olds hit 65 and retire, the younger generation will be 35 and can support them. What happens to your profits?
They will probably still either collapse or near collapse. You had 100% of people in the labour force, now you have 20%. This poor 20% not only has to support themselves, they must support the 80% idle old. And that's before any surplus is generated for your profit as owner.
So, your savings in the form of ownership of the island weren't very useful. It just dies out.
Could you saved otherwise? Not really. To a limited extent you could store the outputs of the island. We do this currently with grain reserves, oil stockpiles, etc.
But most of the stuff we consume are produced in the same year. You can't save real goods, only ownership of entities.
So if the entities all have a shrinking labour force, they aren't worth as much. The old people in the us won't have meaningful assets with which to pay for their care.
(The one exception is a small old country that owns rights to part of the output of other countries which are younger. There's also an exception for automation, if the companies owned by the old are massively more productive per worker by the time the demographic bulge retires)
You're making the mistake of those who think that money itself as wealth, as opposed to a medium to exchange for wealth. Money is mostly fungible, but in edge cases it just can't buy certain things.
Savings are invested into creation of long-lasting capital goods that are just as real as grain reserves or oil stockpiles, and that yield a positive return over the original investment - companies being "massively more productive per worker" isn't the exception, it's (hopefully) the rule. Yes there is risk involved and some investments won't work out, but that's why you diversify and make conservative assumptions. (Now if the economy was projected to stagnate in the future, you might have a bit of a point. But since our economy is growing, even "paper" wealth like government bonds can easily yield a positive return.)
Wouldn't all of that be true for my island society too, as long as the population was stable?
Such a society would nonetheless face much difficult if the worker/retiree ratio changed from 100:0 to 20:80. That's true regardless of individual productivity level: case two is harder than case 1. Regardless of capital stock such as ports, rail lines, buildings, etc
> and needs to be supported by a rising share of taxes from a small number of young workers
And here is where it gets funny. I wonder how pension systems would look like if they were supported by the billions of dollars that especially FAANG but also other huge megacorps such as IKEA, McDonald's, Burger King "creatively avoid" in taxes. Or if minimum wages were set so high that a pension built on a life of minimum wage were enough to live on in old age (this is a problem that currently runs high in Germany, as many old people have not enough pension to get by and so require social welfare)?
This still doesn't work. Monetary savings aren't real goods. Retirement is funded from current production. If the labour force participation rate drops, then a greater percentage of current production is needed for retirement.
And corporate taxes are just taxes on people, in the end (the owners of the shares). If there are fewer people working and more people to support, things just get harder, absent large productivity increases or immigration of young workers.
It’s unacceptable that social services are a zero-sum game between those employed and those not employed, while employers cut margins and funnel out basically all profits - the famous „socialize the losses, privatize the profits”. I hope FAANG, McDonalds, IKEA, Deutsche*, automotive companies, fossil fuels companies, investment funds, and whatnot will get the feel of cold talons of the social justice.
> I hope FAANG, McDonalds, IKEA, Deutsche*, automotive companies, fossil fuels companies, investment funds, and whatnot will get the feel of cold talons of the social justice.
It's not like the people running these corporations are all evil and out to ruin people's lives. People behave based on the incentives laid out in front of them and the current combination of capitalism and laws incentivizes the behavior we are seeing.
> People behave based on the incentives laid out in front of them and the current combination of capitalism and laws incentivizes the behavior we are seeing.
True, but the same people also largely support programs and politicians that preserve or extend those incentives. They're not innocent bystanders.
"I wonder how pension systems would look like if they were supported by the billions of dollars that especially FAANG but also other huge megacorps such as IKEA, McDonald's, Burger King "creatively avoid" in taxes"
Pension systems own the FAANG companies. For example, in the US, CalPERS manages a third of a trillion dollars. Two thirds of that is in equities such as Apple.
That upwards mobility depends on one thing: that old people drop out of the workforce either by death or by pension, so that young people can rise up the ranks.
Now, given that people in their 80s need to work (!) to survive, this "generational contract" is broken. People are stuck with shit jobs until well in their 30s, so how are they supposed to procreate or save for their own retirement?