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French workers protest plan to increase retirement age

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Re: French workers protest plan to increase retirement age

#151

Post by lotsofpulp »

jobs_throwaway wrote: post #144
olddustytrail wrote: post #122

Earlier quoted context omitted.

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.

How does that work? The 401(k) providers are lending out the securities that their customers own?

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.

Re: French workers protest plan to increase retirement age

#152

Post by konschubert »

luckylion wrote: post #128
rwmj wrote: post #115

Earlier quoted context omitted.

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…

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 yo…

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.

Re: French workers protest plan to increase retirement age

#153

Post by phil21 »

luckylion wrote: post #128
rwmj wrote: post #115

Earlier quoted context omitted.

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…

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 yo…

> you save now so you get money later.

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.

Re: French workers protest plan to increase retirement age

#154

Post by marcosdumay »

rwmj wrote: post #115
luckylion wrote: post #105

Earlier quoted context omitted.

Isn't the UK using pension funds?

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…

> 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.

Re: French workers protest plan to increase retirement age

#155

Post by dahfizz »

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.

Re: French workers protest plan to increase retirement age

#156

Post by supernova87a »

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.

Take a look at this for example:

https://www.nytimes.com/interactive/2023/03/06/upshot/balanc...

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.

Re: French workers protest plan to increase retirement age

#157

Post by nyokodo »

justeleblanc wrote: post #98
AceJohnny2 wrote: post #87

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 w…

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.

Re: French workers protest plan to increase retirement age

#158

Post by dh2022 »

Twisell wrote: post #145
ChemSpider wrote: post #141

Earlier quoted context omitted.

That.Is.It. Simple math. France will (have to) move to 64 and later to 67. If not this year, then in a few years. Any many EU countries might even have to move to 70, Germany for sure. People live longer (great), so they also have to work longer.

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?

Because while the math is simple, the politics are very complicated. Which fills these hours of passionate TV debates.

Re: French workers protest plan to increase retirement age

#159

Post by JamesBarney »

dahfizz wrote: post #155

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.

There are very few if any institutions that sophisticated investors trust to pay back money more than the U.S. government.

Banks go bankrupt, gold changes value, cash gets stolen. Seems like the U.S. government is the best option.

Re: French workers protest plan to increase retirement age

#160

Post by lotsofpulp »

dahfizz wrote: post #155

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.

The government issuing the money can reduce the purchasing power of “your” money anytime it wants, and most governments do every year.
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