Back in the “olden days”, if you wanted to be taken care of in your dotage you had two options: have lots of money or have lots of kids. You were either going to hire people to take care of you, or have people to take care of you. Neither of these options is particularly easy.
If you ignore inheritance, lotteries, and outright theft, having a lot of money requires hard work and the self-discipline to spend money on assets rather than expenses. If you ignore live-in-nannies and Swiss boarding schools, having lots of kids requires hard work and self-discipline to actually parent your children.
Even though the two options were hard, people historically chose one or the other. Why, because it was pretty obvious that these were the only two choices. Sure there were people who didn’t do either, but they provided pretty visible examples of failure for younger generations to learn from.
Enter social security, retirement benefits, and Medicare.
Now here’s quite a trick. The government will take care of you in your old age, and you won’t have to make these sacrifices! You’ll pay in a relatively small amount of your earnings throughout your career, and when you’re old, you will be able to retire. You might not be able to “put on the Ritz”, but you won’t be destitute either. Best of all, you can enjoy your money your whole life long.
There’s no trick – just a lie. The reality is you’re having other people’s kids take care of you in your dotage. Not directly of course, that would just be awkward! But indirectly, so it isn’t awkward! The social security structure in the
It didn’t take people long to adjust; families got smaller and smaller. After all, there was no longer a direct need to have a big family. Instead, people began to worry about “not being a burden” on their kids.
The fundamental underlying truth didn’t change though. You still need lots of money or lots of kids. It’s just that the social security structure hides this truth. In software, this is described as “adding a layer of indirection.” There’s a saying that goes, “you can solve anything in computers by adding indirection, except performance.”
By hiding the truth, we have changed the nature of things in a handful of ways, none of them good.
- At least two, and maybe three, generations of people don’t know that this is the truth.
- We encouraged the entire Baby Boom generation toward selfishness and consumerism (since the major reason to have a large family or exercise fiscal responsibility appeared to go away).
- We’ve encouraged the Baby Boomers and their kids to think they are entitled to retirement and old-age benefits. After all, they paid in to the system, didn’t they!
- We’ve created a demographic bubble that is going to have enormous impact on our economy as the kids the boomers didn’t have don’t show up to work.
Our nation is going to have a tough go of it for the next twenty years or so. We’re certainly not going to be able to dodge or block this particular punch. What remains to be seen is whether or not we’ll learn from it.