In Hong Kong, Grandma Has to Find a Job
bloomberg.com
bloomberg.com
Both of my parents are from Chinese families and grew up in Malaysia. Dad is one of eleven siblings and Mum is one of eight siblings. Back then, it wasn't from the government welfare, it was for the kids to look after the elderly parents. Of course, several things need to be in place for this to play out. The kids needs to be working in a relatively well paid job, the kids needs to have quite a smallish family, the kids must also subscribe to the same mindset as well. Some work out, but the majority does not work out as the mindset of the younger generation starts to shift.
Looks like your folks went for the "Human Pyramid Scheme" instead of expecting the government to pay for their old age. But yes, 'Human Pyramid Scheme', it is frightening!
You can see this playing out in China right now.
Since one can't predict with any confidence how long one will live beyond 'probably 50-110 years if I don't get hit by a car', retirement savings is much easier when there is a government-provided income floor in case of mistakes in retirement planning. Otherwise, how do you choose between saving enough that you're 80% or 90% or 95% or 99% or 99.9% sure that you'll have enough income for the rest of your life? And if you wish to buy such insurance (an annuity) in the private market, how do you spread risk so that you don't face risk that the company will fail? And how do you make sure that any financial adviser you have doesn't exploit you as you decline mentally?
Or do you just save single penny possible and never consume anything? Buy an apartment building and hope like hell your neighborhood doesn't decline? Buy a portfolio of widespread rental houses and try to manage them when you're 85 and have cancer? Hope your children are loyal? Or spread risk by having 6 or more children?
Historical experience suggests the outcome of attempts to leave such complexities to individuals is widespread poverty amongst the elderly.
And that's not even getting into the question of whether we have a global savings glut. Safe investments are getting awfully expensive, with negative interest rates on some government and corporate bonds being sighted lately.
Insurance companies who sell annuities are have credit ratings, and some have been around for quite a while. Metlife was founded in 1868, Prudential 1875, or of course Lloyd's of London 1688.
Mental health decline is of course a concern. If you trust your children, or a younger relative, it's a good idea to give them durable financial power of attorney ahead of time.
There's no disputing that a social security scheme, or a paternalistic compulsory saving scheme can decrease poverty in the elderly, especially if people are hyperbolic discounters, but it also has downsides.
1) There's a risk that a compulsory saving scheme can be nationalized by the government, as it happened in Argentina for instance.
2) In social security schemes, the money is typically invested but rather spent directly by the government. The hope being that the future tax base can pay for the liabilities. The model has proven unsustainable and eventually requires that government resort to inflation, fiddle with the retirement age, or cut benefits.
3) The money paid into and out of social security is controlled by the government, which gives it a lot of political power. Governments often use their money for nefarious purposes such as wars, cronyism, corruption, etc. Giving them more control can be a bad thing.
4) There are moral concerns with forcing people to participate in a financial scheme against their will.
Money has to be lent to be saved, of course, someone has to spend it somewhere. If your country has an overly high savings rate because of a poor social security system, it's going to hurt one way or the other.
I think having a high savings rate, all else equal, is actually a boon. Low time preference means that more ambitious, longer term projects can be realized. This raises the wealth of the population overall, further increasing the fraction of money that can be saved, and creating a virtuous circle of civilization.
By not eating all the food they had and saving it, the first humans were able to not go hunting/gathering for a while, and dedicate that free time to building better tools. Those tools further increased the productivity of hunting/gathering, and enabled them to save an even greater portion of their food, freeing even more time to build even better tools, etc.
A high savings rate is a boon like zero inflation is: both are economically disastrous. You need to encourage people to spend, otherwise those companies can't make money, they won't invest...and you get into a death spiral recession or depression!
Truth is: spending is as important as saving, go too far in either direction and you're screwed. Economics is all about balance.
This could be said about the US too.
The article kindly submitted here mentions an issue of age imbalance in the population. "The Organization for Economic Cooperation and Development and World Health Organization forecast Hong Kong will have the highest share of population aged 65 years and over in Asia by 2050 with 42 percent, outpacing Japan's 39 percent." That's an exceptionally skewed age ratio for any place in the world. If people cease working at age 65 in such a place, a large proportion of the population (both children and the elderly) have to be supported by a not very large proportion of the population at working age. That's difficult to do whether support for the elderly comes from their own children or from taxpayers in general.
What's happening in many countries, of course, is that people are living far longer into old age than they imagined they possibly could decades ago.[1] Life expectancies at adult ages (say, 40, or 65) are increasing steadily all over the developed world. If people retire at the same age as decades ago, in much better health and with many more years of remaining life ahead, it's not surprising that their personal savings may run out. The response is to keep the proportion of working years over a whole lifespan a more or less constant proportion of healthy life years.
[1] http://www.nature.com/scientificamerican/journal/v307/n3/box...
Ignoring that this is anecdotal, but you're comparing across generations, upbringings, etc.
Our society is prolonging the lives of our weakest members, not our strongest. We've got centennials whose only visit to a hospital has been for childbirths.
My grandmother has outlived her fraternal twin by over a half century, plus a couple other siblings. My mother hasn't outlived any siblings.
Our grandparents are of a generation when vaccines were just beginning, and our parents are mostly of the generation where they were well in place and widely used. My grandad was born before penicillin was discovered.
Comparing between generations isn't possible, because we compare between vastly different medical practise. It's highly improbable that a child born at 30 weeks will live as long as a child born at 40 weeks.
A less healthy individual is more likely to take retirement early due to poor health. It's then poor logic to go on to claim retiring makes you less healthy.
Poor health makes retirement more likely. No one in ill health who could retire is going to work into their deathbed when they can retire and spend more time with their family members and doing their hobbies.
One of my neighbours retired after her kids finished school and moved out. She's in far better health than her husband who worked until retirement age. So anecdotes are really irrelevant. He survived the Russian invasion of Prussia.
If work related stress shortens your life span, and even isolated high stress incidents are correlated with shortened life span. What effect does having your farm commandeered by German Artillery and then shelled into rubble by Russians have on your lifespan? My guess is, not good.
I see old people begging because lack of jobs - that's native Swedes, not just EU-migrants these days. Didn't see that 10 years ago.
http://www.etc.se/inrikes/utforsakrade-johan-maste-tigga-iho...
Johan isn't alone. Go by the Göta Lejon theatre entrance, you will see Swedish homeless sleeping there. There of course also EU-Migrants nearby in the subway, but you can make out the difference I am sure.
Swedes sleep in their bubbles, thinking everything will be awesome while the government is going bat-shit crazy with (islamic) blasphemy laws, insane migration and allowing Jihadis into the government. Good luck with the pension and and credit-bubble.
Just read that Sweden gave asylum and permanent residency to an ISIS-rapist who tortured a man on camera. They even had a confession.
This says a lot about why you dislike the immigration-friendly Sweden of today. I have no desire to engage in a debate with a racist. I hope that the people on HN sharing your views will remain few.
As for the last point, it looked to me as though the implied reasoning was "Person with roots in the middle east = Jihadist", as this is also a frequent way to reason among real racists. If this was not the intention, which seems unlikely given the next post, I apologize for drawing a rushed conclusion. I have not seen anything indicating that we have elected any jihadists in our government, only people with roots outside Scandinavia. I follow several different media daily. I do not live in a bubble.
I also worry that sometimes the 'r' word gets thrown around too much and starts to lose meaning after awhile (and 'racist' starts to become an all-encompassing term that doesn't actually mean anything), which is why I'm asking.
I do not wish to quote that post, but you can find it in their history after enabling the "showdead" option on your profile.
I would say we should be fixing broken countries, not helping some 1-2% of those countries to immigrate. It doesn't solve any problems for the rest 98% in those countries; and can take receiving countries on the verge of breakdown too if they fail to integrate those immigrants.
http://www.ibtimes.com/which-governments-are-most-generous-c... http://www.thelocal.se/20141130/sweden-fifth-largest-ebola-a...
I'm a Kurd/Iranian, with immigrant and muslim parents. I grew up in Husby as made famous by http://en.wikipedia.org/wiki/2013_Stockholm_riots I guess anyone who don't share your opinions are "racist".
Swedes sure love to water down that word, "racist". Try being a Kurd in Turkey or an apostate in an islamic country, then you will learn what racist means.
Five-ish years ago I was living in Singapore too but I don't recall ever seeing it there, especially nothing compared to Hong Kong.
However, I meant the actual labouring. I saw a lot of elderly people working McDonalds and cleaning tables. By elderly, I mean 70+.
Parents discourage their children from engaging in potentially risky activities (eg. entrepreneur, startups, etc) because that puts their (the parents') future well-being in substantial jeopardy.
The weight of that jeopardy is best conveyed by the fact that there are ~300 families in Singapore that are receiving welfare, and each of those are handled on a case-by-case basis.
Caveat -- my understanding is based on the information provided by a friend living in Singapore, working in the tech industry, having spent some years trying to engender a startup culture. Apparently things are changing now, but that's the (recent) history.
HK is doubtless more complicated.
Robots and automation may actually be the way we can get off the addictive economic treadmill of having the you g pay for the old by an ever expanding population. It is unsustainable.
They have already done so through increased worker productivity, but may ultimately replace young people as the "breadwinners" for those who can't or won't work.
This is to be welcomed, as we can economically support a shrinking population that grows wealthier over time. The traditional refrain of wealth redistribution being from "productive" members of society to the non productive will be upended. Many people will be consumers, producing things most people won't pay large amounts of money for.
I don't think there's any doubt the Hong Kong government needs to do a better job with affordable housing, but I also don't like the fact that my nephew was born with a $20K debt while 50% of my mother's pension is being payed by taxpayers.
Inter-generational debt can and does destroy both societies and governmental systems. I'd argue that over the next 40 years, it's probably the biggest problem the western democracies are facing.
I didn't want to dive too much into the political side of this, but I found your comment to be a little too flip given the nature of the topic. One of the major advancements in civilization was the idea that parents _cannot_ pass their debts down to their children. That worked great for many decades, but we seem to have found away around that by collectivizing it. Not good.
This is more like the wheel rather than syphilis. Something created by humans to serve a purpose, that endures because it continues to be useful.
> One of the major advancements in civilization was the idea that parents _cannot_ pass their debts down to their children.
With welfare, it's not parents' debts being passed on to their children. Its the childrens' obligation to begin with.
I see it more like a implementation of a way to allocate resources throughout a society, that increasingly becomes suboptimal over time as the incentives to participate in such an arrangement (not to be read/interpreted as agreement) will become less distributed among individuals.
One would think that with the technology we have at our disposal, societies wouldn't have to rely on co-opting parties that didn't ask to be born where they are told, "it's your obligation", when distributing resources for sustenance and quality of life.
If we can provide food, shelter, and energy to the elderly in an automated fashion, how can there be no retirement?
Since that aspect of human nature seems to me impossible to change, my attitude is to try to live with both benefits and obligations I have "inherited".
But that is by choice of those who choose to give birth to those people, not those who are born. You bequeath those benefits onto the recipient (both as a society and as parents) by creating/sustaining the environment into which they're born.
> Since that aspect of human nature seems to me impossible to change, my attitude is to try to live with both benefits and obligations I have "inherited".
I as well, even though I might have disagreements with it. I don't have any qualms about the amount I contribute into social security yearly (My income surpasses the max contribution limit), nor that I have to support both of my parents because of their poor life and financial choices.
The only recourse I have is to ensure that any children I have are as burden-free as possible. I'm not just giving them the gift of life, but the gift of freedom, which is equally priceless.
I'm speaking about the world we currently live in though.
Their lack of tax diversity is also one of the main reasons why housing is so damn expensive, because the government make money there.