Population Bust

A hundred years ago, the main way of planning for your retirement was to have children.  Often, this was a case where the parents' farm would be handed off to one of the children and the parents would live there.  With the population moving to cities, this scheme no longer worked.  Elderly in poverty became a clear issue and Social Security was suggested as a solution.  The idea was that the government would force everyone to save for retirement, setting aside a portion of each paycheck to be returned after age 65.

Ida May Fuller had worked as a school teacher and legal secretary.  She began paying into Social Security in 1937.  In 1939, at age 65, she retired.  Though she didn't expect much from this new-fangled system, she did apply for her retirement benefit.  Her first check - which also happened to be the first one issued by the Social Security Administration - was for $22.54 ($471 in 2022 dollars).  It should be noted that her total contributions were $24.75.  Her first check paid 91% of the funds she had paid.  Ida lived to be 100 years old, dying in 1975.  During her retirement, she collected $22,888.92 in benefits ($478,000 in 2022 dollars), or 925 times the amount she had paid.  Here is one of the greatest investments ever.  Of course, as with all Ponzi schemes, early investors always get the best returns.  It should also be noted that Ida May Fuller was never married and had no children.  So who paid her benefits?

Again, one of the reasons to have children was to provide for one's dotage.  But with Social Security, the government would - like in the case of Ida Fuller - force other people's kids to pay for the retirement of those who didn't have kids.  Ida barely contributed to her retirement account and did not provide workers for the next generation.  During her life, she didn't have to spend time or money on raising those who would pay for her retirement.  It was the best of both worlds!  Enough people have figured out that their retirement will be paid by someone else's kids that we are now in a population bust.  Europe, having adopted these policies earlier, started down the path of bringing immigrants to fill in the missing generation.  That the immigrants haven't assimilated and don't seem interested in assimilating is a different problem.  The US has also gone down the immigration path to boost the population and keep those Social Security benefits flowing.  It too has found that the immigrants aren't so keen to assimilate.  Rather than the melting pot of old, it is now the tossed salad of Balkanization.  Japan, also suffering a population collapse, has not resorted to immigration but rather is investing heavily in robotics.

The government-run retirement system contributed to a drop in fertility which then led to a call for immigration which has brought Balkanization and cultural collapse.  The West is committing suicide through these good intentioned cradle-to-grave programs.  What to do?

Sadly, this is insolvable.  Social Security cannot be repealed.  The most reliable voting demographic won't allow it.  It must collapse of its own insolvency, which is unlikely to come before the tipping point of cultural collapse.  A cohort of young immigrant workers will rise up against the oppressive taxation that supports the retired elite.  If this happens to several European countries before it happens in the US, there may be the political will to reform the system.

In some distant future, a James Madison-like figure will talk about the failures of a government-run safety net and explain why it is explicitly forbidden in the founding documents of the next great republic.  Then again, Jefferson had already argued that the government that governs least, governs best.