← Back to context

Comment by toomuchtodo

2 days ago

Let me expound so I can be exceptionally clear. I fall firmly in the "billionaires should not exist" bucket. They are a bug in the economic system. Bernie Sanders is my North Star from a policy and nation state social system perspective (its also more financially efficient, but I digress). I do not blame workers for our current fiscal crisis predicament.

Pensions are not stealing from the future. When done properly, invested prudently, and managed to a fiduciary standard, they are an effective mechanism to invest those worker capital earned at that time into productive investments to provide returns in the future when those workers approach retirement. Through the 401k attempt, we have shown this policy to be a failure. The human cannot be relied on to financially prepare for retirement, this must be done with systems and at scale.

When I say "stealing from the future," I mean where pensions were promised and now they're being marketed as "too expensive" when what would've gone into pensions over the last 40 years was vacuumed up by the very wealthy through management compensation and shareholder returns. I mean sovereign debt that has been issued, to be paid back by future workers who in no way consented to having to work to pay that debt back. I mean infrastructure and climate expenses that will rapidly approach $1T/year in costs, because we did not have the will to pay for these things today.

Capitalism stole from the future, and it will never be enough. Someone is going to be left holding the bag, and everyone is going to be unhappy the future is not as bright as the past was.

(i am once again asking you to think in systems)

McKinsey: Dependency and depopulation? Confronting the consequences of a new demographic reality - https://news.ycombinator.com/item?id=42052544 (401k failure citations)

3 comments

toomuchtodo

Reply
trgn  2 days ago

> Through the 401k attempt, we have shown this policy to be a failure.

401ks are a terrible on their own. It has thrown everybody for the wolves and tied people's financial wellbeing to the vagaries of the market. But there's still a flipside. Pensions should not be used to provide a level of income to maintain a lifestyle (cue anecdotes of boomers packing up and leaving for florida). Pensions should be to provide a baseline level of financial support for the essentials, perhaps a little above, say like social security but a little more. But they are not that, generally speaking. Retiring at 58 with 80% of wages - or whatever absurdities sometimes occurred - _is_ theft from the young.

  • toomuchtodo  2 days ago

    It should be like a layer cake. Social Security on the bottom, this keeps you from destitution. It is insurance, not an investment. Pensions are the next layer on the cake. This provides additional income from investments made during your working career, with employer contributions mandated, and with it very difficult to touch this before retirement. Australia's Superannuation system [1] is my mental model for this. You have to have strong governance around reasonable returns and payments to prevent from the absurdities you mention. It is not tied to a single employer. The final cake layer should be personal savings and investments made by someone.

    This derisks everyone's risk of the usual human failing (lack of financial sophistication, adverse events, etc), while enabling those who want to invest above and beyond a mechanism to do so. Right now, it's Mad Max with some Social Security scraps [2].

    [1] https://en.wikipedia.org/wiki/Superannuation_in_Australia

    [2] https://www.gao.gov/financial-security-older-americans