Social Security and the Demography Bomb
<p>A friend of mine, Russ Cage aka Engineer-Poet, comments on my essay<br />
<a href="http://esr.ibiblio.org/index.php?m=200212#18">Demographics<br />
and the Dustbin of History</a>:</p>
<blockquote><p>
People used to have children to take care of them in their old age.<br />
Social Security took care of this by socializing the benefits, but all<br />
of the costs still fell to individuals; worse, taking time out of the<br />
workforce to raise kids reduces your Social Security benefits.<br />
Rational actors will stop having kids to have a good retirement.
</p></blockquote>
<p>He&#8217;s right, and this applies to <em>all</em> public pension schemes.<br />
It&#8217;s a very simple, very powerful mechanism.  When you subsidize old<br />
age, you depress birthrates.  The more you subsidize old age, the more<br />
you depress birthrates.  Eventually&#8230;crash!</p>
<p>It&#8217;s not just Euro-socialism that&#8217;s going to get trashed by<br />
demographics, it&#8217;s the U.S&#8217;s own welfare state.  It might take longer<br />
here because our population is still rising, but it will happen.</p>
<p>Now that the effects of income transfer on demography are no longer<br />
masked by the Long Boom, this is going to become one of the principal<br />
constraints on public policy.</p>
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