Comment by rayiner

1 year ago

By 2075, Medicare and Social Security will reach a over 14% of GDP combined, up from around 8% today. To pay that, we'll have to raise taxes by $1.75 trillion using today's GDP figures. That will require just about doubling payroll taxes from the present level.

That's probably an underestimate. As population shrinks, GDP will shrink as well, unless we have large gains in productivity, which have stalled. It's not clear to me that the projections about SS/Medicare as a percentage of GDP account for the effect of GDP shrinking due to population decline. CBO assumes a stable population through 2060, using quite arbitrary assumptions about immigration: https://www.cbo.gov/publication/60875.

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rayiner

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toomuchtodo  1 year ago

I agree with your observations. The future will not be as bright as the past, the population boom was already squeezed for the gains. Immigration at the levels needed to change this are unpalatable to most electorates, and with total fertility rate dropping across the world, it's important to be mindful that net migration to Earth is 0 (slide 39). As the economic future deteriorates due to the ever increasing drag of these obligations, I'd expect total fertility rate to continue to decline at present rates (if not slightly accelerate). This creates a self reinforcing feedback loop. A "Demographic Doom Loop" [1].

Happiness is reality minus expectations.

[1] https://x.com/KenRoth/status/1753526235173450213 | https://archive.today/rY4WG

  • rayiner  1 year ago

    All that said, I agree with your general point that the situation with the welfare state is probably fixable, if we don’t enter a doom loop. It’s just more burdensome than lifting the SS cap.

    I’m more optimistic about non-western countries. I suspect descendants of Puritans will be a historical curiosity in 2500 but I think Muslims and Mormons will still exist.

  • variadix  1 year ago

    The welfare state has to collapse before people realize children are their retirement plan, and that there’s no guarantee the government will take care of them in old age.

WalterBright  1 year ago

Why does nobody ever factor in the gigantic growth in government?

  • myrmidon  1 year ago

    "The government" is not actually accruing wealth in pretty much any western democracy-- in fact the exact opposite is happening everywhere.

    To me it seems clear why government budgets have increase so much. Since the emergence of modern nation states, government responsibilities have grown tremendously, and mostly for good reason:

    - Infrastructure basically went from dirt roads to highways/railways/airports

    - Tremendously higher benchmarks for services/regulation (education, pensions, food safety, crime prevention, drinking/groundwater quality, lead pollution, mining/heavy industry regulation, healthcare/-regulation)

    A lot of those things are new enough that I would argue we are still stabilizing on their total costs, and current government budgets (high AND red literally everywhere) are basically humanity finding out that all those things are not free.

    But I would also argue that for a big majority of people, this is still a rather decent deal; I would rather pay current (or even higher) levels of taxes than to suffer from lead poisoning, have children crippled from quackery/insufficiently tested medication or needing to pay protection money to the mob.

    But I'm quite curious: What do you think is the problematic part of government growth? Do you think that Doge, specifically, is successful in identifying and quelling it?