Almost every single industrialized country has a birth rate below replacement, so there's fewer younger people to help carry the burdens. Medical care means the elderly live on and on and on, draining enormous costs as they age.
I'm not trying to be cruel, but from a pure numbers sense it makes perfect sense. Would you prefer taxes go up instead? Lessen spending on infrastructure and healthcare? Lessen child labor laws? There's no a lot of winning answers here.
And overall, the problem is just going to get worse in every country for the forseeable future. Expect to see more of this as time goes on. It's a bandaid solution though.
Tax wealth. I know that's a very hard thing to do due to the mobility and political power of capital, but we need international co-operation and just do it. That's where all the money is and where it's going at an accelerating rate.
The way this tends to turn out is that the type of assets accessible to younger/working people is taxed and the type of assets held by older/non-working people is not.
E.g. look at Ireland. Ireland has a de-facto wealth tax ("deemed disposal" - taxing the unrealized gains) on ETFs starting at the first euro, which makes investing basically pointless. Meanwhile it also has one of the lower tax levels on property in the EU.
Yes, it needs to be done in a fair manner. France used to have a tax (Impôt de Solidarité sur la Fortune) which was anybody with more than X millions of assets had to pay 75% of income tax. (I believe it was 10 millions, but I could be wrong) It wasn't perfect, but it wasn't a bad idea. IIRC it was slashed by Sarkozy right before the 2008 crisis as part of his campaign promises, and he just kept going with his tax cuts on the wealthy after 2008.
Another thing could be multipliers on property tax. For example, you would pay 0.75× of the property tax on your primary residence, 1.5× the property tax of your secondary residence, and start going exponentially on third, fourth, ... residence. Of course, there would be loopholes (like owning properties through companies), and these loopholes would need to be closed.
You could also tax buy-backs and dividends. (If a company buy their own shares, they have to pay a 50% tax on it)
There are a lot of possible implementations that could add up to each other. It's a fallacy to just point at the bad ones and say "look it doesn't work!"
The main issue is that there has been a transfer of global share income from labour to capital in the last 50 years. However we expect to pay for pensions just by taxing labour. It doesn't matter if there are less young people, because (as shown by GDP growth) they are producing more overall, but misinformed politicians use this argument because they don't understand that these folks didn't profit from the increase in productivity. We need to fairly take a share from this productivity increase and distribute it as pensions. The goal is to pay for what we promised, while relieving burden on young people.
Why would you limit to only billionaires, and why would you compare it to all spend? Try funding pensions and healthcare by taxing the wealth of the top 0.5% and it doesn't sound so impossible.
A realistic wealth tax probably caps out and around 2%, remembering that the net worth of very rich people is generally not liquid and can be difficult to mark to market. Any higher rate risks forcing the rich to have an asset fire sale, which liquidates productive assets and isn't really good for anybody. At six to seven percent you would force them to be entirely liquid and would begin to shrink their wealth, killing off the tax base in a few generations. Even this is absurdly optimistic since a globally standardized wealth tax is a pipe dream and without it you get capital flight as a result of any wealth tax at all, but let's ignore that.
To steelman this as much as possible let's say you can charge 6%. The top 0.5% are worth $30-$40 trillion in the U.S. (which is just an easy example because the statistics are available) which gives you a probably unrealistically high max annual tax revenue of $2.4 trillion. Social Security and Medicare in their current form cost $1.35 trillion a year; Medicare for All would double to triple that or more, depending on what estimate you believe.
Europeans pay for their social safety nets with very broad taxation while America instead charges negative income tax (after credits) to the bottom 60 percent of the population (even after inflation, excise taxes, state tax, payroll tax and tariffs the total tax burden is pretty slim at the bottom end by European standards). There doesn't seem to be a mathematically feasible way to give benefits to the working class that the working class doesn't pay for.
You're probably right, though U.S healthcare costs per capita are much higher than they need to be, and would be much lower in a "proper" single payer system like in Europe. In any case, a wealth tax would still help a lot with being able to fund these programs. Yes, the working class does have to pay as well, but it'd be much less if there were a reasonable wealth tax.
But yes, global co-operation to enable a large enough tax on wealth is not going to happen any time soon. A more likely scenario is that as automation develops and as the share of income that capital gets grows, the working class will end up in a position bad enough that capitalism will collapse and be replaced with something else. Hopefully with something better, but could also be worse.
And in Sweden, another "nordic socialist country", there's no tax on property nor inheritance, as well as very low taxes on invested capital. There are about 1.5x more USD-billionaires per capita in Sweden than in the US. I think there's room for some more taxes.
"Democratic Socialists" in America aren't socialists. Even Bernie Sanders doesn't advocate seizing the means of production. You can argue we use it wrong, but we can argue it's our language and we evolved it.
But I don't think even all the nominally socialist parties in Europe are really socialist either.
Realistically productivity increased by leaps and bounds over the past few decades. If leaders can’t figure out how to take advantage of that instead of taking advantage of the people then they have no business leading a country.
The solution they are applying now is a dead end, literally. It doesn’t scale, the only place it leads to is people guaranteed to die “at work”.
And elephant in the room, people in their late 60s aren’t even close to productive compared to the younger employees and if you lose your job in your 50s or early 60s you’re condemned to a decade or 2 of being supported by the family if you’re lucky.
So a person in this position is a hidden “tax” on the tax payers in the family, or on the companies who still employ them, if any still have them at that age. Countries are better off just directly taxing the companies regardless of whether they hire 70 year olds. But that won’t happen.
5) Real wages went down, in general. The productivity pay gap has increased significantly. Take a formerly stable country which is a good indicator of the progression. [0]
Getting terminated at old age is already a huge problem made worse by delaying pension. And it will get even worse as families have to subsidize their elderly even more, making it even less likely to have more (or any) kids.
The current crop of leaders put the entire burden on average Joe. Companies are insulated, always one restructuring away from solving their problem.
And then we wonder why populists win everywhere...
100% yes. My father is 67, and to be honest, he really shouldn't be working anymore. Both physically and mentally. And he is not very sick or disabled in any way. He just doesn't have the same capacity as he had in his 50s so after a 9-5 he was just recovering and going to sleep for the last few years. Terrible.
He retired last year. He didn't have an easy life. Very few jobs would benefit from his work and continuing working would have a great toll on him.
It's the same if you sum it up across the population: all the benefits that elderly consume without producing are subtracted from what young people produce without consuming.
If you want your parents to retire earlier than the population-averaged system can allow, you're free to do it a non-averaged way.
Then, as a matter of fact, he'll have to rely on someone else's kids to feed him, whether directly or through taxes.
If he voluntarily chose not to raise kids, not even adopted ones, then he placed himself at the mercy of strangers. This may or may not end well, depending on how much spare resources they have.
Yes. Looking at my country, we've applied economic liberalism without any positive results at scale. I would prefer we go back to taxing companies more, go back to taxing the rich on their assets and crack down on fiscal fraud (20B€ estimate, about 6% of the national retirement cost).
Instead the government privatizes services that used to bring a steady income and defunds hospitals, education and public research.
Incentivising to have more kids is not going to work. Things have changed. A lot of people just don't want to have children, and it isn't a financial issue.
There does not seem to be a strong correlation between countries which make it easier and more affordable to have children, and the replacement rate.
The government isn't just responsible for finance but all of society. Incentivizing kids doesn't have to just mean dangling money in front of parents. Not having government-funded media encourage lifestyles that lead to less children would be a good start.
Hopeless measures. Nothing can persuade a couple to f... for kids, except if you force a medieval-like state based on religion and women oppression. Only such states historically guarantee >2 kids per couple, unfortunately.
If a progressive state can only exist as long as somewhere else oppressed woman keep supplying human material then it's not that progressive after all.
Shouldn't expenses be proportional to population size? If not so, then spend less? Birth rate below replacement doesn't mean population size is not enough to pay for expenses, it just means it will slowly decrease, which btw is good, we are definitely too many. In nature only bi-sexual reproduction is capable of reducing population size when needed, that is a very good indicator that when resources become scarce, only those who can reduce their population size can survive, otherwise we would reproduce by binary fission.
Infrastructure can't be scaled down easily once it is built. You can't just shrink roads, water lines, electricity lines and otherwise once a population has shrunk. Nor can buildings like hospitals and fire stations. So no, expenses are not proportional.
Those costs continue, and now you have fewer young people to pay for it - and more elderly that will need assistance. It is vicious.
Some countries like the US have skirted past this problem due to immigration. Others like Japan have not have much immigration and are beginning to suffer the effects.
But every country will face it in the long run.
The cold hard fact is that when people are educated and have access to healthcare, they simply stop having enough kids to meet replacement rate - even when wealthy and when having great support systems.
Humans do not act like most species. We do not form neat equilibrium with our environment based on available resources. That kind of logic didn't apply the moment agriculture was developed.
Almost every single industrialized country has a birth rate below replacement, so there's fewer younger people to help carry the burdens. Medical care means the elderly live on and on and on, draining enormous costs as they age.
I'm not trying to be cruel, but from a pure numbers sense it makes perfect sense. Would you prefer taxes go up instead? Lessen spending on infrastructure and healthcare? Lessen child labor laws? There's no a lot of winning answers here.
And overall, the problem is just going to get worse in every country for the forseeable future. Expect to see more of this as time goes on. It's a bandaid solution though.