Hacker News Reader

Comment by anovikov | Hacker News Reader

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.

View on HN

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.

> It details precisely why a right wing government needs to invest in welfare and social care

I was gobsmacked when I read this, as most of the Hayekians I know argue to let the poor/weak fend for themselves, as it would be better to let the weak perish than to steal from the strong to protect them. I may actually have to read it now!

Also, I feel it's unreasonable for those without property to respect property rights if they gain no benefit from doing so (other than not being a victim of State violence).

Hayek was one of the first to suggest a Universal Basic Income would be a good idea. That would be quite a strange notion if he thought the poor should be left to fend for themselves (at least economically).

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.

So, the function of a government is to keep the people happy enough so they don't rebel. Good to know. That's illuminating (1)

1. I mean in the clarity sense, not in the 'Illuminati' conspirational sense. Well, wait, why not both?

Show me one example since say, 1980.

> Show me one example since say, 1980. Also, it has to be in this room!

At this scale, it's not just about money. You have to think about social structure as well. Suppose we did inflate the heck out of our currency and hand it all to our retirees. What would that do to the economy? Well, it would make it so that you'd make a lot more money serving old people, be it for their needs or their wants, than doing other things that people current profitably do. It rearranges the entire economy, in ways that are not necessarily sustainable in the long term. For instance, just as a limit exercise, you can't afford everyone go into geriatric care and stop growing food because food is no longer profitable enough. You can't actually get to that point because everyone would starve, of course, but you can get seriously deep into that sort of misallocation at smaller scales. (More realistically, "should I go into a STEM career or go work at the old folk's home?" Of course you can't get 100% to the latter but you can reallocate a lot in that direction.) Individually the economy doesn't care if one person goes into engineering or goes to work for retirees, but at scale that matters a lot.

The real problem with these pension promises isn't just that we're promising money we don't actually have... the problem is that we're promising a quality of life we can't sustain. We can't give every retiree a life that matches their pre-retiree life in most material ways (perhaps minus a mortgage), and promise them all the best health care that they could possibly want, and promise them that they can retire into this at 65 and keep all these benefits no matter how long their life span may improve, and that no matter how the social winds may blow in the future or how the economic winds may blow in the future that these benefits are written in stone. This ultimately isn't about the money, it's about what they expect this money to be buying them. No amount of accounting tricks can fix these problems for real; focusing too much on "dollars" obscures this fact.

The entire concept of fixed benefits in the future is a lie. It was always a lie, even if some people have managed to cash some in. The future is not predictable enough even before we consider people trying to game the predictions themselves or changing their behavior in light of the predictions.

Because that solution doesn't give money to manage now, to the bosses of "Jacques Goulet, President, Health & Wealth at Mercer, the lead collaborator for this initiative".

Many pension obligations are inflation indexed and high levels of inflation distort the economy. At some point producers start hoarding raw material (or leave it in the ground) because it's more profitable to do so in the long run. This is currently what Venezuela is experiencing and rioting is the outcome.

They won't riot but they will vote.

Pensions don't riot, they vote.

Reply on news.ycombinator.com