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Comment by rayiner | Hacker News Reader

By 2075, Medicare and Social Security will reach a over 14% of GDP combined, up from around 8% today. To pay that, we'll have to raise taxes by $1.75 trillion using today's GDP figures. That will require just about doubling payroll taxes from the present level.

That's probably an underestimate. As population shrinks, GDP will shrink as well, unless we have large gains in productivity, which have stalled. It's not clear to me that the projections about SS/Medicare as a percentage of GDP account for the effect of GDP shrinking due to population decline. CBO assumes a stable population through 2060, using quite arbitrary assumptions about immigration: https://www.cbo.gov/publication/60875.

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I agree with your observations. The future will not be as bright as the past, the population boom was already squeezed for the gains. Immigration at the levels needed to change this are unpalatable to most electorates, and with total fertility rate dropping across the world, it's important to be mindful that net migration to Earth is 0 (slide 39). As the economic future deteriorates due to the ever increasing drag of these obligations, I'd expect total fertility rate to continue to decline at present rates (if not slightly accelerate). This creates a self reinforcing feedback loop. A "Demographic Doom Loop" [1].

Happiness is reality minus expectations.

[1] https://x.com/KenRoth/status/1753526235173450213 | https://archive.today/rY4WG

All that said, I agree with your general point that the situation with the welfare state is probably fixable, if we don’t enter a doom loop. It’s just more burdensome than lifting the SS cap.

I’m more optimistic about non-western countries. I suspect descendants of Puritans will be a historical curiosity in 2500 but I think Muslims and Mormons will still exist.

The welfare state has to collapse before people realize children are their retirement plan, and that there’s no guarantee the government will take care of them in old age.

There is no guarantee your children will take care of you. Walk through any nursing or care home and speak with residents, ask the last time a child saw them.

One quarter of adult children estranged from a parent - https://thehill.com/blogs/blog-briefing-room/4104138-one-qua... - July 19th, 2023

> There is no guarantee your children will take care of you

On the flip side, for those childless, it's completely guaranteed none will.

> One quarter of adult children estranged from a parent

That sounds like a 75% success rate.

doubtful 75% is all high quality. The one quarter is probably all really bad, then some of that 75% is bad enough that it won't make much difference. Probably 25% is so into their parents that they will actually take care of them.

Why does nobody ever factor in the gigantic growth in government?

"The government" is not actually accruing wealth in pretty much any western democracy-- in fact the exact opposite is happening everywhere.

To me it seems clear why government budgets have increase so much. Since the emergence of modern nation states, government responsibilities have grown tremendously, and mostly for good reason:

- Infrastructure basically went from dirt roads to highways/railways/airports

- Tremendously higher benchmarks for services/regulation (education, pensions, food safety, crime prevention, drinking/groundwater quality, lead pollution, mining/heavy industry regulation, healthcare/-regulation)

A lot of those things are new enough that I would argue we are still stabilizing on their total costs, and current government budgets (high AND red literally everywhere) are basically humanity finding out that all those things are not free.

But I would also argue that for a big majority of people, this is still a rather decent deal; I would rather pay current (or even higher) levels of taxes than to suffer from lead poisoning, have children crippled from quackery/insufficiently tested medication or needing to pay protection money to the mob.

But I'm quite curious: What do you think is the problematic part of government growth? Do you think that Doge, specifically, is successful in identifying and quelling it?

> "The government" is not actually accruing wealth

I tend to agree with that. But there's no doubt it is dissipating vast amounts of wealth.

> it seems clear why government budgets have increase so much

There's a vast amount of waste in government spending, and waste as a result of heavy regulation. If you're really interested,

https://www.theatlantic.com/magazine/archive/2009/09/how-ame...

I do agree with you that there is a lot of overhead and waste in the healthcare industry and government in general.

But this insight is, to me, just not really actionable.

Almost every large organisation seems to end up with a good amount of bloat/overhead sooner or later, and this even includes former super-lean and super-focused enterprises (Intel, Google, AWS, ...), so I don't see how you could ever sidestep this problem completely with the government.

Just cutting regulators and government responsibilities in general also seems a really bad idea to me. Reading that article, how many of its complaints would be solved by fully deregulating and letting the market take care of things?

1) Avoidable infections exacerbated by laziness/cost cutting

2) Lack of price/cost transparency

3) Healthcare costs being wasted on advertising/middlemen

4) Doctors specializing in fields that pay well instead of the ones that are most needed to improve health outcomes

I'd argue that none of those would be improved by switching to unregulated private healthcare, and a bunch of them would very likely get worse.

Another thing to consider when cutting regulation are huge possible negative externalities in general.

Just take leaded gasoline as an easy example (because the bill for CO2 emissions is not in yet). The industry basically "self-regulated" until the 60s (and only because it became infeasible to continue hiding lead toxicity by paying or threatening scientists, which it had done for the previous decades): Total costs/damages were enormous-- probably millions of lifeyears lost, but industry/shareholders did not pay a dime after reaping the profits.

How could drastic cuts in regulations avoid disastrous outcomes like that?

Every large organization does indeed accumulate bloat/overhead sooner or later. For a profit making company, this means it loses its competitiveness and then falls. For government, this means it gets a bigger budget.

The leaded gasoline example is also a disaster. That does not generalize to every regulation being good. For example, regulations prevent victims of the Palisades fire from rebuilding. For another example, rent control.

Reading the article, the bit about Lasik eye surgery resulting in major reductions in cost is pretty illustrative.

Some years back, Frontline did an episode on dental care fraud. It seems the government set up a program to pay dentists to do major dental operations on poor people. Clinics then set up solely to do major dental operations on poor people, and raked in the government money. The trouble was, those people did not need dental operations. Frontline's "solution" was to propose heavy regulation. That won't work, either, because medical fraud to get government money is rampant and pervasive.

You might also consider the software business, which has pretty much zero regulation. It is also a gigantic engine of prosperity in the US, despite having driven costs down to literally zero. There have been many proposals to regulate it, but fortunately none have managed to do so.

> For a profit making company, this means it loses its competitiveness and then falls. For government, this means it gets a bigger budget.

I would argue that with companies, the expected outcome is that they accumulate and then stabilize at a "typical" level of bloat. For software, Google is a good example: Much more bloated than they used to be, but still competitive enough, and looking stable.

Governments also have some ways to de-bloat, mostly from internal and external pressure (like Greece).

I think that consistently getting services at no-bloat prices is just not realistic in general over longer timeframes; Netflix, Google, Uber, Amazon, ... give countless examples of excellent early price/quality ratios that got inevitably worse over time.

My hypothesis is that for our current understanding of what a government is supposed to provided (which did expand significantly since WW2, but mostly for good reasons) we have now reached a "bloat-stable" budget, and there is just no "easy" way to slash this budget without hurting the services (even though in a hypothetical bloat-free environment these could be provided for less).

Here is interesting data which seems to kinda support my point, with government spending as GDP percentage for the US, Germany (less GDP/capita) and Switzerland (more GDP/capita): You can see budgets rising post WW2 across the board, and then stabilizing in the 30-40% range (slightly higher for the poorest country, which makes sense). I would have honestly expected to see those trending up even for the last decades (which they don't really) and Covid was also less prominent than I would have assumed:

https://ourworldindata.org/grapher/government-spending-vs-gd...

Google is currently in big trouble because AI is taking away their advertising business.

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