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The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

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Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#21

Post by slv77 »

RobertoG wrote: post #3

I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a problem. What I don't get is how both can be a problem at the same time.

Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when:

- Inadequate savings for the median retiree

- High levels of wealth inequality

- High levels of foreign debt

In that case the wealth transfer mechanism is broken. Those that are old are reducing consumption while those that are young can't generate income to replace it while those holding all the wealth (savings) scramble to avoid defaults (and risk) in a rapidly slowing economy.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#22

Post by RobertoG »

mac01021 wrote: post #17
RobertoG wrote: post #3

I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a problem. What I don't get is how both can be a problem at the same time.

Imagine a desert island with three inhabitants: W, P, & U. W climbs trees every day to fetch coconuts and then swims them across the channel to a neighboring island where she barters them away for drinking water and then swims back with jugs full of water. P used to help W with the tree climbing, but is now too old to do the work. However, he long ago made a deal with W, and she's a man of her word, so she keeps him…

Imagine a desert island with three inhabitants: W, P, & U.

They are primates descending from groups inhabiting the savannah.

As all the groups of this kind, they take care of the group whenever there are enough resources. If they are not forced by harsh circumstances, they don't leave to die of hungry the old. In the improbable case that one member of the group doesn't know how to do almost anything, somebody (maybe the older and experimented P predicting that he will be too old for working someday), will teach him how to do it so the economic welfare of the group improve.

In the other hand, imagine now that the group is made of Homo Economicus. Wait, why are we imagining this? Such creature doesn't exist.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#23

Post by anovikov »

onion2k wrote: post #15
anovikov wrote: post #4

How can a shortfall happen, technically? I mean, why not just print enough money to inflate it, to cut real values of pensions to make ends of the system meet? After all pensioners aren't likely to riot.

After all pensioners aren't likely to riot. I would highly recommend reading The Road To Serfdom ( https://en.wikipedia.org/wiki/The_Road_to_Serfdom ). It details precisely why a right wing government needs to invest in welfare and social care for this exact reason; when a government fails the poor (or the poor's parents I imagine) they have a tendency to rise up and kill all the rich people.

That relates to young poor only. Older ones won't revolt. That may be a problem with youth unemployment for example, but not with pension system.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#24

Post by QuarterReptile »

RobertoG wrote: post #3

I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a problem. What I don't get is how both can be a problem at the same time.

I think you're simplifying the relationships too much. First of all, you can't very easily make more qualified workers because you promised too much to too many pensioners. Those pensioners are counting on promises from their too-big-to-fail governments. Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions. Once you're in the trap, it's not as simple as pensioners employing more unemployed people to make sure they get their pensions.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#25

Post by slv77 »

petra wrote: post #9

I don't get something: if the point is to assure pensioners a pretty similar life quality to the one they have today, with shouldn't be that by 2050 it would be easy and cheap ? How does that go into the calculations , if att all ?

Effectively your arguing that productivity growth will effectively bail us out of our high levels of debt and pension obligations (which are another form of debt) and there are more than a few that have argued the same.

The challenge is that productivity gains have been slowing. Computers and the internet are now fairly mature technologies and aren't driving the productivity gains we saw in the 80's and 90's. Also as people age the economy is shifting from goods and services that can be highly automated (entertainment) to those that cannot (nursing home care).

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#26

Post by fivestar »

QuarterReptile wrote: post #19
ourmandave wrote: post #12

Paging WI Governor Scott Walker. http://www.politifact.com/wisconsin/statements/2015/aug/14/s...

Most discussions about "fully funded" safety nets go something like this. It's the reason, so far as I can tell, why Republicans talk about social security being trillions in the hole while others point out that the money in the fund is more than sufficient. The same principle is responsible (along with other things) for suburban growth in America. The reason is that republicans are referring to accrual accounting, w…

The smugness practically drips from your pores. It's not government building those houses out in the cornfields, it is the monied developers who capture local governments and bribe them into letting them build those cracker boxes.

I live in an 80s suburb and while I can see that the newer ones are even worse, I prefer to avoid telling others how they should live their lives. For example, urban high rises are just human filing cabinets and it's just so Soviet to pack everyone into cities. I have lived in urban areas, rural areas, and where I am now, and I can tell you that where I am now is the most comfortable--it is reasonable density, I am not concerned about being mugged, and groceries and entertainment are close at hand. But yes, Americans have been screwed over by developers and shitty politicians, what else is new?

I don't get all the hyperventilating that some people do over low birth rates. You're right: Infinite growth is not going to happen, it's blatantly obvious. So what if low birth rates break their system? Their system sucks! Maybe that's what you were saying. The answer is certainly not importing the bulk of the third world into our communities, that's bullshit, too.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#27

Post by RobertoG »

QuarterReptile wrote: post #24
RobertoG wrote: post #3

I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a problem. What I don't get is how both can be a problem at the same time.

I think you're simplifying the relationships too much. First of all, you can't very easily make more qualified workers because you promised too much to too many pensioners. Those pensioners are counting on promises from their too-big-to-fail governments. Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions. Once you're in the trap, it's not as simple as pen…

It seems to me that if a government can make good its promises to pensioners it's only related with the productive capacity of the economy at the moment of paying. So, related to investment in infrastructure and education now, not so much to saving schemes.

"Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions."

My understanding was that pensioners would spend the money in the economy, so they are not funneling away from nothing.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#28

Post by fivestar »

onion2k wrote: post #15
anovikov wrote: post #4

How can a shortfall happen, technically? I mean, why not just print enough money to inflate it, to cut real values of pensions to make ends of the system meet? After all pensioners aren't likely to riot.

After all pensioners aren't likely to riot. I would highly recommend reading The Road To Serfdom ( https://en.wikipedia.org/wiki/The_Road_to_Serfdom ). It details precisely why a right wing government needs to invest in welfare and social care for this exact reason; when a government fails the poor (or the poor's parents I imagine) they have a tendency to rise up and kill all the rich people.

Show me one example since say, 1980.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#29

Post by RobertoG »

slv77 wrote: post #21
RobertoG wrote: post #3

I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a problem. What I don't get is how both can be a problem at the same time.

Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when: - Inadequate savings for the median retiree - High levels of wealth inequality - High levels of foreign debt In that case the wealth transfer mechanism is broken. Those that are old are reducing consumption while those that are young can't generate income to replace it while those holding all the weal…

"[..] a structured transfer of wealth from the old to the young"

Do you mean from the young to the old?

How "inadequate savings for the median retiree" create unemployment?

I can't think of the mechanism. Do you mean a deficit of investment in the economy from the savings?

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#30

Post by fivestar »

RobertoG wrote: post #14
treerock wrote: post #13

Earlier quoted context omitted.

Pensioners are also "people without a job".

But I though that the problem with pensioners was that there was not enough young workers for maintain them, am I wrong? excess of pensioners => not enough workers unemployed people => excess of workers

The calculus is all broken. The Boomers voted themselves lavish benefits and decided (as always) to screw everyone else. Now we're finding out that "everyone else" can't hardly pay their own bills much less keep all the asinine promises. Something has to give, someone has to end up being the bagholder. Usually that's the younger generation. However, this time, the younger generation has already been fleeced down to the clothes on their back--there is nothing left to skim there. What is going on now is the search for bagholders. I suspect it will be the Chinese, but we'll see.
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