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Mon Feb 11, 2013, 10:24 AM

Immigration Is The Only Viable Retirement Plan

http://www.slate.com/blogs/moneybox/2013/02/08/retirement_planning_only_immigrants_can_save_american_retirement.html

One view about retirement in America says that population aging means we need to cut Social Security benefits. One view about retirement in America says that defined benefit pension programs are systematically underfunded and doomed. One view about retirement in America says the 401(k) experiment has failed and individuals don't have nearly enough money. Roughly speaking, I would say that these things are all true. And in fact, while there are pros and cons to all three ways of sustaining elderly people in their retired years, they're also facing the exact same underlying crisis: demographic shifts doom all retirement schemes.

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The problem a retired person faces is that while you can stockpile food, you can't stockpile human labor. And yet every modern person's consumption bundle consists primarily of services, and that's especially true for elderly people who need a lot of health care services and other assistance. So you can't just stockpile stuff for yourself, you need to stockpile a bunch of extra stuff that you can trade for labor in the future. For example, you might work and save and buy two houses. Then, when you're old, you can live in one house and let someone else live in the second house in exchange for taking care of you. That strategy works great as long as the population is rising rapidly, in which case the ratio of able-bodied workers to houses will be high so you'll be able to trade your spare house for lots of labor. But if the population is stagnant, your house isn't so valuable. If the population is actually shrinking, then one house is only going to be tradeable for a little labor. You, personally, can ameliorate this by saving enough to have two or three spare houses, but if society attempted to do that systematically the problem would only get worse.
In the real world, of course, people save through more sophisticated instruments. But the same problem arises. Stockpiling financial assets only helps if future people are going to want to buy a lot of financial assets. If the rate of population growth slows, your private savings plan faces the exact same problem as a pay-as-you-go public pension scheme like Social Security. Fewer people around to pay payroll taxes means fewer people around to sell your financial assets to. You're doomed.

What if people start having more children? It's too late for that. Even if it happens, it'll take decades for those babies to get through school and start earning enough money to want to buy financial assets. The only viable option, then, is to import adult human beings—immigrants—who'll want houses to live in, who will expand the labor supply, and who will expand the demand for capital goods. This solution won't work forever, since the trend toward population aging is global, but in the short term at least there are plenty of able-bodied adults who are eager to move here and work. Some of those able-bodied adults even have specialized skills in health care professions, and can directly increase the supply of the kind of labor that an aging America will need.


Worrying that immigration "takes people's jobs" is based on the fallacy that there's only a finite amount of work to be done.

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Reply Immigration Is The Only Viable Retirement Plan (Original post)
Recursion Feb 2013 OP
Kolesar Feb 2013 #1
Recursion Feb 2013 #2
Kolesar Feb 2013 #4
Recursion Feb 2013 #5
Kolesar Feb 2013 #7
Ron Obvious Feb 2013 #3
Kolesar Feb 2013 #8
0rganism Feb 2013 #6
Egalitarian Thug Feb 2013 #9
Lurker Deluxe Feb 2013 #10

Response to Recursion (Original post)

Mon Feb 11, 2013, 10:44 AM

1. "only helps if future people are going to want to buy a lot of financial assets"?

Then buy savings bonds. I like I-bonds.

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Response to Kolesar (Reply #1)

Mon Feb 11, 2013, 11:11 AM

2. Fixed income instruments ultimately have the same problem

No matter what we do, we will need to come up with a way to get money from working people to retired people.

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Response to Recursion (Reply #2)

Mon Feb 11, 2013, 12:52 PM

4. So, you don't put money aside for the future? eom

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Response to Kolesar (Reply #4)

Mon Feb 11, 2013, 01:05 PM

5. Cash? No

Saving retirement money as something liquid means it gets eaten up by inflation. Saving it as something less liquid means you have to have enough younger working people when you retire to buy it from you.

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Response to Recursion (Original post)

Mon Feb 11, 2013, 11:25 AM

3. Immigration...

And who's going to fund the retirement of these immigrants once they retire?

More immigrants yet?

Economists live in a world where all resources are apparently infinite.

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Response to Ron Obvious (Reply #3)

Mon Feb 11, 2013, 02:23 PM

8. We will colonize with worker robots

And send the money back to America.

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Response to Recursion (Original post)

Mon Feb 11, 2013, 01:12 PM

6. i'm thinking about Emigration for my retirement plan

the way things are looking now, if I stayed on the GOP-approved schedule, i'd retire at 75 with enough SSI to live in a refrigerator box and eat dogfood twice a day. I have some investments and a 401k but I'm not going to bet my waning years on them. There are other countries that actually give a shit about their citizens' welfare, maybe it's time to look into moving to them.

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Response to Recursion (Original post)

Mon Feb 11, 2013, 02:40 PM

9. The only viable plan is reinstatement of the social contract.

 

Immigration, like any system that depends on perpetual growth to cover a constant drain of unproductive extraction, must also fail. We can't keep ignoring the fundamental problem of our system as it exists forever.

This nation, this world, produces enough. The problem is in the distribution.

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Response to Recursion (Original post)

Mon Feb 11, 2013, 03:23 PM

10. Retirement

The main concern with retirement is the costs that you can not get rid of.

Living without working would not be that expensive, the costs of the things that you must have to survive continue to explode in price making any planning for retirement futile.

The explosion in health care costs show no sign of slowing. President Obama has put in a plan which will hopefully make insurance more mobile and make it so you can not be denied coverage, however the costs continue to climb.

The price of actually owning a house are also increasing at staggering rates. From insurance to utility bills to taxes to association fees, the costs continue to rise year in and year out. While you may have your home paid for, what your mortgage is today your cost of owning will be tomorrow.

The cost of food is also exploding and shows no sign of changing anytime soon. To remain healthy and eat foods that are not pure processed junk becomes more expensive each trip to the grocery.

Add in fuel prices, cable, internet, cell phone, and any form of entertainment and the thought of retirement becomes very stressful. Add the declining wages and the ability to even begin to save and the entire subject gets lost to futility.

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