In Japan, the Lost Generation refers to those who had the bad luck to graduate during the “employment ice age” of the 1990s and 2000s—after the collapse of the 1980s asset-price bubble. Japan’s large companies stopped giving lifetime employment. Most of the lost generation got one low-wage job after. The generation is now ranging in age from around 40 to their early fifties. They will start retiring in another decade or so, and there are serious questions about the capacity of Japan’s public pension system to sustain them through old age. Japan’s pension system is government supported via taxes. Japan by 2050 will have about one working age person per senior person. The math for the Pension system will break. Seniors will get very little support.
Japan has a two-tiered pension system. The first tier, the National Pension system, begins paying out the “basic pension” benefit to all registered residents, regardless of their jobs or employment status, when they reach 65. The premiums are the same for everyone in principle, as is the full benefit amount (based on 40 years of employment). The second tier, represented by Employees’ Pension Insurance (EPI), pays additional benefits in proportion to one’s average earnings while employed.
Germany and many other countries will have to change their pension systems as the ratio of working people to retired people gets worse and worse.
Radical life extension or some other economic and technological miracle is needed. The current situation is heading for a lot of poor, old people with less and less government support.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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Most private companies are getting rid of the guaranteed pension system. They either have none or are going to an underfund 401K scheme. The three problems with the way pensions are funded are low population growth, low wage growth, and low-interest rates.
Yep. Pensions and real estate are the big obvious problems.
Any fixed assets with fixed costs distributed across declining populations are also issues: roads, utilities, government employees.
The CBO says the US population will only grow through immigration and increasing birth rates of women in 30-49 age range
https://www.cbo.gov/publication/58612#:~:text=Civilian%20Noninstitutionalized%20Population.,percent%20per%20year%2C%20on%20average.
Immigration mostly occurs because the places people are leaving are terrible. If opportunities improve in other countries, the US population may start shrinking sooner than later.
With any luck, as an increasingly automated workplace decimates and eliminates occupations across the board, supporting people of all ages that are permanently unemployable may encompass this problem.
But, to fall back on a Captain Jack Sparrow quote, “The problem isn’t the problem, the problem is your attitude about the problem.”
Given that strong automation is likely to increase productivity by at least 1 and probably 2 orders of magnitude, the resources to do this will exist. The problem will be extracting them from owners of the automation who will insist that these people should get off their duffs and get to work if they want to eat.
Part of the problem there being that there is some reason to believe that just giving money to healthy people (who could work) isn’t necessarily good for them or society. Senior citizens being a somewhat different matter, we must then consider what effect radical life extension will have. Enabling people to have careers twice as long when most of them can’t get jobs that pay a livable wage may not be helpful.
On the other hand, with a strong dole, dependent on doing something that counts as work, even if it is what we today would think of as volunteer work, might help with that. Refusing to do it couldn’t completely eliminate the dole (starvation will never sell as right and proper, regardless) but it could drastically reduce it.
Of course, everyone would get the dole, even the very wealthy, just so no one could claim unfairness.
And yet, automation owners, resource owners, and others that still have an income, even if making 100 times what they are making today, will still scream bloody murder when they are called upon to pay taxes at twice today’s rate.
The fact that the taxpayers are still receiving vastly larger incomes than in times past will not register on most of them. But giving money to “worthless people” so they can have more than just food and shelter, will create a lot of consternation.
Would also probably need to partly shift to a consumption based tax so everyone would still be a tax payer (giving them an interest in controlling tax rates), even if it was from their dole dollars.
Only a lot of pain is likely to induce these kind of changes, however.
“Given that strong automation is likely to increase productivity by at least 1 and probably 2 orders of magnitude, the resources to do this will exist.”
Speaking as a tooling engineer, at least in part responsible for that productivity increase you’re talking about, I think you’re making a fundamental mistake here.
The workers aren’t becoming any more productive. It’s the machines that are becoming more productive. If we spend $100K to replace a tool that produces 40 parts per minute with one that produces 80 parts per minute, why would you describe that as the guy standing in front of the tool being more productive?
It’s the machine that got more productive.
I mean, in theory, there’s no reason we couldn’t eventually have a machine that just ate a hole in the bedrock under the plant, made parts, packed them, and loaded them on self driving delivery trucks, with the whole plant running lights out. It’s what we’re working towards, frankly.
If we got that working, would you say that the night janitor had become 100,000 times more productive?
No, it’s the machines that are gaining in productivity, and so it is only natural that the gains from that productivity go to the owners of the machines.
The real problem is that we’re not all owners of the machines. And, why is that? Why is ownership becoming more concentrated than in decades past? That’s what you really need to think about, and deeply.
Productivity, such as in agriculture over the last 100 years, significantly decreased the size of labor. Farms are bought up by large corporations decreasing the number of owners. If the benefits of technology result in increasing unemployment and poverty, governments will become unstable. This is also a problem for the owners, who will be increasingly parasitic.
This is exactly right.
Economists – at least the honest ones – have known about rent-seeking and monopoly’s power to destroy growth, innovation and competition for decades if not centuries.
Thomas Picketty’s famous Capital tome showed that growth slows to almost nothing when rent-seekers gain near complete control. It disadvantages them to have upstarts invent ways to not need whatever resource the rent-seeker charges rent for. Rent is literally called “unearned income” by economists. Or, as John Stewart Mill described it: “The land owner makes money while he sleeps.” Everyone else has to earn a living while awake, i.e. working.
Unless this is fixed, the spoils continue to be sucked upward to the owners and there is little or no trickle down to those who earned the returns to labor. There’s enough to survive and little more.
Almost all the great fortunes involve monopoly and rent-seeking.
Thank you comrade.