Social Security and the Demography Bomb

A friend of mine, Russ Cage aka Engineer-Poet, comments on my essay
Demographics
and the Dustbin of History
:

People used to have children to take care of them in their old age.
Social Security took care of this by socializing the benefits, but all
of the costs still fell to individuals; worse, taking time out of the
workforce to raise kids reduces your Social Security benefits.
Rational actors will stop having kids to have a good retirement.

He’s right, and this applies to all public pension schemes.
It’s a very simple, very powerful mechanism. When you subsidize old
age, you depress birthrates. The more you subsidize old age, the more
you depress birthrates. Eventually…crash!

It’s not just Euro-socialism that’s going to get trashed by
demographics, it’s the U.S’s own welfare state. It might take longer
here because our population is still rising, but it will happen.

Now that the effects of income transfer on demography are no longer
masked by the Long Boom, this is going to become one of the principal
constraints on public policy.

Blogspot comments

3 comments

  1. Hey! I like your post “Social Security and the Demography Bomb” so well that I like to ask you whether I should translate into German and linking back. Answer welcome. Greetings Schlauchboot

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