People will have to pay a little more, a little longer, and take out a little less in some combination. I am sure the actuaries are smart enough to figure it out.
No. That is a dangerous attitude on this. There are limits to how much you can raise through taxes before you trigger a death spiral, where you scare off working age contributors, which increases the burden the rest have to pay, which scares off more contributors, and so on.
That's exactly what happened with the dinosaur companies (GM, Bethlehem, etc) with unfunded pension obligations. The "legacy costs" made it so they couldn't compete. True, it's harder to switch countries than avoid employment at a dinosaur, but that's a difference of degree, not kind; the dynamics are all the same.
Don't start from a model that assumes no one will ever leave. That's how earlier generations of actuaries "didn't figure it out".
Edit: It's not even necessary that workers flee the country; it could also be that more of the economy is driven underground, which has its own nasty side effects.
Pension funds are usually funded by the contributions of the qualifying members in their tier, much less by taxes receipts in state funds in some kind of general debt obligation. You may also be confounding private and public pension funds, the latter of which I am guessing makes up the lion's share of what the article is talking about. Of what I know of actuarial work (not much, admittedly,) outlooks are calculated on the combination of many risk dimensions. Changes to pay outs and qualifications are made decades in advance to attenuate the effect.
But to address your concern head on - yes, the fund can go broke, and it's not the rest of the public's problem. That's the kind of loss that creates healthy risk aversion and should make for sensible negotiation by labor leaders and the politicians they put into office in order to limit corruption.
>Pension funds are usually funded by the contributions of the qualifying members in their tier, much less by taxes receipts in state funds in some kind of general debt obligation. You may also be confounding private and public pension funds, the latter of which I am guessing makes up the lion's share of what the article is talking about.
I'm not confounding anything; it's the same the problem in both cases: your organization accrued a liability with no asset to pay it, so you had to take the payments from newcomers to this system. Whether that happens within a private or a public pension fund doesn't change the dynamics of the core problem, which is that your organization is at a cost disadvantage to competing organizations, which then spirals out.
The example I gave was the dinosaur companies. Bethlehem offers $15/hour but must take out $1/hour to pay for unfunded pension obligations. NewSteelCorp offers $15/hour but needn't take out anything for legacy pension obligations. Where do the best workers go? And what does that to do the burden on remaining workers?
Likewise, every time you raise SS taxes to cover increased obligations, you're risking the flight of contributors to other countries and the underground economy.
I don't know what you think I'm "confounding" there; I see a recognition of a common pattern that I tried to explicate, with implications for the current problem. "Oh, this is public, not private" is non-responsive.
>Of what I know of actuarial work (not much, admittedly,) outlooks are calculated on the combination of many risk dimensions.
And my point was that the actuaries missed a big dimension, which is that the organization has actual competition. So when you say "oh, we'll just take one more dollar an hour from workers to shore it up, what's the problem?" you're failing to model the loss of contributing workers to companies that don't have to thusly gore them.
You're right that pension funds can retroactively change pension formulas, but they typically don't, and Social Security definitely hasn't cut pensions to something sustainable.
>But to address your concern head on - yes, the fund can go broke, and it's not the rest of the public's problem. That's the kind of loss that creates healthy risk aversion and should make for sensible negotiation by labor leaders and the politicians they put into office in order to limit corruption.
So you agree a pension fund can go broke, but are simply claiming that governments are immune to an analogous problem? I'd say it becomes the public's problem at that point, when there are millions of seniors that expected payments they can't get without raiding other critical government services. Why don't you?
I'm not trying to be combative, but there are significant differences between public and private pensions that I don't think you're accounting for which stem from the legal mandates in the charter for how the public pension assets can be invested and the monopsony on the employment of public servants (e.g., there is no "competing" state trooper battalion operating at a better labor cost advantage). Pension funds do not necessarily impose an obligation on the operating budget of a municipality. That's what it means to say it can go broke. If it were the public's problem, it would be solvent. It's not like muni bonds. I'm with you on your description of the pitfalls in the private sector.
>I'm not trying to be combative, but there are significant differences between public and private pensions that I don't think you're accounting for which stem from the legal
Then you agree that you need to address the parallel's I've drawn if you want to maintain that position?
> (e.g., there is no "competing" state trooper battalion operating at a better labor cost advantage).
Are you reading my comments? In both replies, I already explained how there are relevant ways in public pension funds experience this problem: workers can be scared into other countries, other jurisdictions, other jobs, and the underground economy, with the exact same effect on ability to meet obligations. If you believe this can't happen, you need to flesh it out a bit more.
"It's not like there's another company they can work for lol" is how GM etc got into this mess.
> Pension funds do not necessarily impose an obligation on the operating budget of a municipality. That's what it means to say it can go broke
I don't know any non-trivial sense in which "a massive class of people expected pension payments that will be cut off" doesn't count as the public's problem.
To everyone in the world looking at the this, the problem is that a) lots of people are expecting to receive pension money and b) lots government services need to be provided, and we can't afford to do both.
You're saying it's "not a problem" simply because "you can just reneg on a) while paying b)"? That's a non-standard conception of "not a problem".
A lot of solutions for budget shortfalls seem to be focused on increasing burdens and reducing services for the lower classes. Maybe some of these shortfalls could be made up for by bringing the tax rates on the wealthy and corporations back up to pre-Reagan era levels, and also recouping some of the trillions in tax avoidance money hiding in offshore shelters?
This seems more preferable to me than nickle and diming the elderly.
Well, people are supposed to fund their own pensions. This is not a tool of redistribution. If they life longer, it is logical they have to either retire later, get lower pensions, or contribute more, or all of the above.
I don't think it's axiomatic that individuals should be funding their own pensions. I feel a lot of these problems that keep popping up have the same fundamental root cause: governments (and the non-wealthy) have less resources, as more of those resources end up concentrated in fewer hands over time which has certainly been the case in first world countries over the last few decades.
Proposed solutions of austerity and cutting and degrading services even further for the lower classes are exacerbating this tendency. I'm not sure what the endgame here is supposed to be.
The US has to pick model for right or wrong. Saying it's in everyone's best interests to look after people is totally true, but it's not really the design of the US social system. The US is free market, in a free market you look after yourself and in return are a little less regulated and/or taxed. Both work, but yeah...in the current model, it anticipates people looking after their own retirement plans.
In my opinion, most people are incapable of planning for their future. I've probably done a great job in comparison to others, but I often wonder if it's going to be enough.
Most developed countries have a system that's somewhere between free market capitalism and socialism, trying to pick each approach for each concern to maximize benefit to society overall.
Just because you organize a fair amount of the economy around ideas of free market efficiencies (which already has a big asterisk), doesn't mean you should organize all of society around that idea.
I doubt that's true, in fact, could be the reverse. SS is not enough in many cases for poor people to live on because they have less in savings, but if they earn too much working, they can't qualify for SS. They also have shorter lifespans. Middle class people in general live longer and can afford to retire earlier because SS complements their savings, which transfers to them the taxes on the wages of the poor.
The gap is large enough it's really just math. TLDR; Some people get 70+% more per dollar put into the system.
Further, there is no income cap on social security, you simply get deferred payments, but at 70 earnings stop counting. AKA if you take it at 62 and make enough money to get 1/2 as much from SS at 70 it's recalculated and you get more money than if you had started at 62.
Double earnings to 80k and keep other number the same and you get: $2,510.00 which is much less than 3,128 or 2x $1,564.00/month. Drop that to 20k and it's still $1,090.00.per month which 73.7% better ROI than someone making 80k per year.
Now yes lifespan is critical, but not enough to make up the 73+% gap. Marriage on the other hand can provide more than a 50% benefit on it's own which shifts things even more dramatically.
Because their union negotiates benefits on behalf of only their members, not society at large. That's not meant to imply general social security is bad or should be done away with. But these funds are public charter corporations that operate on behalf of a single labor group of voluntary association by its members.
The problem isn't the actuaries, it's the assumptions.
For example, NOBODY KNOWS how much health care will cost in 20 years, but that's central to figuring out defined benefit obligations (as just one example).
Or, what's a good investment rate of return assumption to use? Small differences (e.g. fractions of a percent) compounded over decades lead to huge differences.
How do you model black swan events (e.g. 2008 crash)?
What should scare people the most is the Illinois pension funds' assumption of ~ 7% real returns going forward. If the market stays flat in real terms for the next decade, which seems at least possible (if not plausible), it's significantly worse than their worst-case scenario, which is already probably unsolvable without some form of default.
I trust saner heads will eventually prevail. New York Teacher Retirement System had a similar expected return (even a big higher) under which they offered an investment option of 7% return under any market - no more, no less. That's an insane risk-free rate now, and the option no longer exists to new incoming members.
> I am sure the actuaries are smart enough to figure it out.
It's not that simple when you have politics involved. We will keep borrowing more and kicking the can down road so that the next for the next generation to deal with until we can't borrow anymore. No different than how terribly indebted households keep borrowing and moving debt from credit card to credit card until there run out of options.
What politician is going to ruin his chance of re-election or election by supporting "people having to pay more, a little longer" or "people getting less".
Most discussions about "fully funded" safety nets go something like this. It's the reason, so far as I can tell, why Republicans talk about social security being trillions in the hole while others point out that the money in the fund is more than sufficient. The same principle is responsible (along with other things) for suburban growth in America.
The reason is that republicans are referring to accrual accounting, while others are looking at the balance sheet. It's very uncommon to do accrual accounting in government, though I've heard rumors that military pensions are funded in this way. My understanding is that, outside the government, it is obligatory (de facto or legally, I don't know). The absence of accrual accounting is known as a Ponzi scheme in the private sector.
When you let governments reap the benefits now and pay later, they use unfunded pensions as compensation and build low-value roads to cheaply built houses built in corn fields. And for government pensions, it's impossible to sustain the required infinite growth in a finite world. In the short term, the tendency of developed nations toward low birth rates breaks the systems even before we reach space concerns.
The smugness practically drips from your pores. It's not government building those houses out in the cornfields, it is the monied developers who capture local governments and bribe them into letting them build those cracker boxes.
I live in an 80s suburb and while I can see that the newer ones are even worse, I prefer to avoid telling others how they should live their lives. For example, urban high rises are just human filing cabinets and it's just so Soviet to pack everyone into cities. I have lived in urban areas, rural areas, and where I am now, and I can tell you that where I am now is the most comfortable--it is reasonable density, I am not concerned about being mugged, and groceries and entertainment are close at hand. But yes, Americans have been screwed over by developers and shitty politicians, what else is new?
I don't get all the hyperventilating that some people do over low birth rates. You're right: Infinite growth is not going to happen, it's blatantly obvious. So what if low birth rates break their system? Their system sucks! Maybe that's what you were saying. The answer is certainly not importing the bulk of the third world into our communities, that's bullshit, too.
Birth rates fund our social security system. It keeps the "Ponzi" scheme going.
I think I'm having a hard time with it being called a Ponzi scheme. Had an individual invested the amount they put into SS into the market, it would not be a Ponzi scheme, and is essentially a 401K. Is SS is only a Ponzi scheme because of the way the government manages it?
If I take a step back and government takes money an invests it into the growth of the GDP, is it no longer a Ponzi scheme?
"Ponzi scheme" as a term is generally overused. It identifies a specific fraud, and things that look sorta vaguely like it may have any number of critical differences in those sorta-vague similarities that result in a completely different outcome, including potentially worse ones. It is not a sufficient analysis of the situation to stick the label "Ponzi scheme" on social security and think anyone has obtained any sort of understanding of the situation from it.
I can see the similarities, at least with a pyramid scheme (which I think is synonymous). Current "investors" are paid by future "investors." Current investors being people collecting SS, future investors being people paying into the system. When it was first enacted, the "current" investors at the time hadn't put anything in (obviously).
I know that's a huge oversimplification. As GDP rises so does the tax revenue (assuming politicians stop cutting taxes) so I understand it's a little more nuanced than a simple scheme.
Also, when we had a SS surplus (in the 90s?), the politicians of course spent it all while increasing the debt. I don't think there is anything inherently wrong with the way it works financially, as long as the government manages it properly, which they aren't.
I don't get something: if the point is to assure pensioners a pretty similar life quality to the one they have today, with shouldn't be that by 2050 it would be easy and cheap ?
How does that go into the calculations , if att all ?
Effectively your arguing that productivity growth will effectively bail us out of our high levels of debt and pension obligations (which are another form of debt) and there are more than a few that have argued the same.
The challenge is that productivity gains have been slowing. Computers and the internet are now fairly mature technologies and aren't driving the productivity gains we saw in the 80's and 90's. Also as people age the economy is shifting from goods and services that can be highly automated (entertainment) to those that cannot (nursing home care).
I free with the point you made, but: Productivity growth is maybe a too abstract concept and that creates confusion .
For example, some claim that the reason we don't see Productivity growth across the econmy is that because people(across all age groups) take the money saved from sectors with growing productivity(say, manufactured goods) and use that in sectors with stagnant productivity , say restaurants, plays ,spas , etc.
As for the shift towards nursing care - yes, it is true today, but one could imagine(and some are building) all kinds of technologies that reduce that need and it's expense.For example, if there was a really affordable and good: custom meal delivery, transportation , telehealth and medical adherence , fall prevention, some arrangement that prevents loneliness, and some better medical treatments and tools to age related diseases , and many of today's drugs will be off-patent[1] - it's possible that elderly treatment cost, at today's quality levels would go down significantly.
[1]Of course ,new treatments should be too available to seniors, and that raises the question of ever growing health care costs ,which is a big issue itself.
I think you have a point. Following your reasoning, the important thing would be not the saved money, but the investment in the real economy, material and intellectual advances starting now.
I mean, what would be the point of savings if the real economy is less productive?
Imagine a desert island with three inhabitants: W, P, & U.
W climbs trees every day to fetch coconuts and then swims them across the channel to a neighboring island where she barters them away for drinking water and then swims back with jugs full of water.
P used to help W with the tree climbing, but is now too old to do the work. However, he long ago made a deal with W, and she's a man of her word, so she keeps him supplied with enough fresh water to get by every day. Still, when the yield of coconuts becomes bad, or when there's a glut of coconuts on the neighboring island, she is liable to feel that there is an excess of pensioners on the island.
U is in desperate need of water and would do almost anything, but he doesn't know how to swim or climb trees.
Now, tell me: How does the existence of U help get the fresh water that P needs? How does the existence of P help U find a way to earn his water?
Well, P could take steps to help U learn to help W. e.g. giving them a bit of water, and training them to help W; instead of blaming U for the poor coconut yield. Which in turn would help W yield more coconuts, or be flexible to diversify how they get water to be robust against the coconut market. I get how you example illustrates how the amount of P's aren't dependant on the number of U's, but I think this example is too microscopic.
I think there's another factor to consider. W doesn't give water directly to P, there's G who takes a little bit of water from everyone. G has enough water for themselves, and instead of drinking just the water they need, or helping U to make their island economy better, they decide to bathe in the water. Then when P wants some water like G has promised and there's none left, they blame U. Which makes W and P angry at U.
The situation is more like G is taking a little bit of water from everyone, and there's yet another person on the island E. E is in charge of delegating coconut fetching tasks to W and up until recently P. G decided E should also be in charge of distributing water that comes from G to W and P.
E realizes that once P leaves, there will only be one coconut fetcher. So, worried that they won't be getting enough water to give to G, E gives less water to W instead of hiring and training U to help this coconut fetching business. This isn't good because eventually W will become a P, and E will have no one, and G will not be getting water from E. Everyone becomes a U because G decided to give water to E to delegate instead of directly to W, P, and U.
Imagine a desert island with three inhabitants: W, P, & U.
They are primates descending from groups inhabiting the savannah.
As all the groups of this kind, they take care of the group whenever there are enough resources. If they are not forced by harsh circumstances, they don't leave to die of hungry the old. In the improbable case that one member of the group doesn't know how to do almost anything, somebody (maybe the older and experimented P predicting that he will be too old for working someday), will teach him how to do it so the economic welfare of the group improve.
In the other hand, imagine now that the group is made of Homo Economicus. Wait, why are we imagining this? Such creature doesn't exist.
You're responding to a totally different point to the one made by the parent.
Their point only shows that it is possible to have unemployment and an excess of pensioners.
It would have been easier to point out that an excess of pensioners != not enough workers. They're clearly different statements. But the illustration also served the purpose.
It did not, as far as I can tell, in any way suggest W should let U and P die, only demonstrated their simultaneous lack of utility for the workforce.
So, as I understand it, the argument is that unemployed people is unemployed not because the economy is so productive (we have coconuts and water for everybody with very little job) but because they are not enough qualified.
In other words, there are not enough qualified workers as demanded, and that is the reason we see real wages going up and up all the time.
I think you're simplifying the relationships too much. First of all, you can't very easily make more qualified workers because you promised too much to too many pensioners. Those pensioners are counting on promises from their too-big-to-fail governments. Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions. Once you're in the trap, it's not as simple as pensioners employing more unemployed people to make sure they get their pensions.
Government and private pensions have the same problem, because even the stock market is "pay as you go" in the sense that somebody has to buy stocks in the future at a high price to support future price appreciation.
Either private or government investment could, in principle, lead to economic growth that could expand the physical size of the economy. If people saved more money, I see the price of stocks going up, but I don't know how that translates to real growth in the economy, more jobs, better jobs, etc. Look at how Apple and so many other companies pile up cash, how telecoms refuse to invest in better broadband, the EU can't put together a realistic plan for Greece, and how economic investment is channeled through a series of "bubbles"; just yesterday I heard an acquaintance just bought a GM Suburban, than I heard on the radio that Banco Santander was not happy with their subprime auto loan portfolio in U.S. and then that GM is closing a factory.
Yes, American consumers didn't wait one minute after the price of gas dropped to get big, expensive vehicles because they assume the low prices are permanent. Ray Diallo had a bad year because he assumed high oil prices are permanent. It is completely predictable that oil prices are volatile on a five-year horizon because producers and consumers will change their behavior a LOT on account of a 5x change the price of crude, but people get blindsided every time.
The lesson of history us that people don't learn from history. Add up another 30 years of economic mismanagement in large and small ways and 2050 is not looking so bright.
It seems to me that if a government can make good its promises to pensioners it's only related with the productive capacity of the economy at the moment of paying. So, related to investment in infrastructure and education now, not so much to saving schemes.
"Meanwhile, the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions."
My understanding was that pensioners would spend the money in the economy, so they are not funneling away from nothing.
> the government is funneling an ever-greater percentage of revenue from productive pursuits to pensions
That is too simplistic for me. Income for one also is income for somebody else down the line.
All those "economic" considerations I read about - not just on this topic - remind me of my extremely lousy chess play: Never think more than a single step ahead.
But the economy is a circle. All those views are form the PoV of an individual entity - income and expenses, and where it comes from and where it goes "does not matter".
But to look at the economy is completely different! Here you have to look at the entire circle, not at just a single piece of the chain.
For example, giving old people money, directly or indirectly, leads to an increased flow of money through systems of the economy that are utilized by old people. That would be the health sector most of all, not a lot of change in housing or food (they already had a roof to live under before they retired and they won't eat more food than before). Maybe tourism benefits too.
What happens if they get less money? What sector(s) benefit(s), who loses?
The purely financial considerations don't make sense to me on the greater economic level. Is the economy suddenly unable to maintain the housing and produce sufficient food because some numbers in some balance sheets are off? That happened a lot in history. My own grand parents lived with at least five different currencies within their lifetime without moving (Germany). We found that "finance" can easily be reset provided people are willing to do so (that's the important part) - what matters is factories, knowledge, culture, trade, etc.
There certainly are a lot of problems of high pensions (compared to non-pensioners), for example if the old people end up with a larger share of the available housing, which includes not just housing they themselves use but also housing they control (investments) because that funnels even more of the money flow through the economy through the control of (some relatively few) old people. that may no lead to a housing shortage, after all who owns housing does not seem so important as long as there is enough, but a consequence is that young(er) people feel insecure in their outlook and are more reluctant to have a family. Also, the kinds of housing being built is probably different when done purely as an investment.
As for the health sector, I'm not sure how bad it is to have it deal (even more) with old people's problems. After all, aging is everybody's problem at some point and if that leads to progress, be it symptom control or some day even more direct control of aging I don't see why getting more of the economy's money flow to go through that sector would be bad. After all if "cost control" was the overwhelming argument then collective suicide would be the best solution. Since we are alive and like it that way we may as well "waste" our resources on just that.
We have that wonderful tool "money" and "finance", but I think too many people have forgotten that it is a tool and treat it like a natural law and the be-all and end-all. We actually have much greater control - and much more arbitrary control than a lot of people think - over how we use the tool. Unfortunately only severe crisis opens the minds of people enough to wield the power we actually have over our own creation.
Disability is an increasing issue, particularly mental health related disability.
A very intelligent and agreeable but severely depressed man came out to my farm and I tried to get him to move rocks from one pile to another. He could do it as long as I supervised him, but could not sustain the effort when I was away.
Any employee takes a certain amount of time to manage, and that sets it's own floor on the "minimum cost" of hiring an employee.
The opiate epidemic is related to a syndrome of chronic pain which is very much a mind-body phenomenon from the viewpoint of biological psychiatry. People get back pain, neck pain, headaches, etc. and there is really no safe and effective treatment -- contacts with the medical system usually make it worse, but often the problem clears up when the patient gets a new job.
Because you're ignoring problem 3. Not enough work.
Modern economies run into issues with lots of investment in bubbles that don't increase productivity. Housing booms that rapidly increase the cost of housing don't increase productivity. Investing in ever riskier twisted financial exploitations does not increase productivity. Having huge amounts of taxable income filtered out of the country robs a country from future infrastructure investment, which does not increase productivity.
OK, but now I don't get how 'not enough work' (I suppose you mean jobs) is a problem.
I get how not enough real resources (not enough food, not enough housing, not enough infrastructure, not enough knowledge) is a problem but 'not enough work' doesn't sound like a hard problem.
Distribution is the hard problem. Capitalism has operated in such a manner that labor has been the means of income redistribution. After you work some time you can invest your income in a market that will provide and even more productive future.
When labor becomes disconnected from gaining capital things become problematic in countries that do not believe in wealth redistribution. If you don't have a job "It's your fault for not working hard enough", if you are getting money from the government "you're a welfare queen". You can run into a system that deadlocks. There is plenty of production. There is lots of need. But there is no means of wealth transfer between those two groups and you can run into a state of consumption collapse.
Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when:
- Inadequate savings for the median retiree
- High levels of wealth inequality
- High levels of foreign debt
In that case the wealth transfer mechanism is broken. Those that are old are reducing consumption while those that are young can't generate income to replace it while those holding all the wealth (savings) scramble to avoid defaults (and risk) in a rapidly slowing economy.
I'm thinking of wealth as the claim on productive assets such as stocks, bonds and property. Pensions are a structured transfer of wealth from the old to the young and of labor from the young to the old.
"I can't think of the mechanism..."
Inadequate savings can create structural problems that result in temporary mismatches between the desire to work and the desire to consume.
For example if retirees are worried that savings or pensions are inadequate they may delay consumption which can create temporary high unemployment.
By being unable to find productive work for the workers. You can't produce anything for the retirees, and you can't find out how to make the workers produce.
Lack of ability to find good, regular matches between demand for specific labor services and workers capable of providing such services (sometimes called "sustainable patterns of specialization and trade").
The point is, it's logically and economically possible. You seemed to be under the impression that this situation is inherently contradictory, when it is not.
The calculus is all broken. The Boomers voted themselves lavish benefits and decided (as always) to screw everyone else. Now we're finding out that "everyone else" can't hardly pay their own bills much less keep all the asinine promises. Something has to give, someone has to end up being the bagholder. Usually that's the younger generation. However, this time, the younger generation has already been fleeced down to the clothes on their back--there is nothing left to skim there. What is going on now is the search for bagholders. I suspect it will be the Chinese, but we'll see.
In the US, one initiative that should help tremendously is increasing the limit to all tax advantaged retirement contributions, and future periodic adjustments to inflation.
How can a shortfall happen, technically? I mean, why not just print enough money to inflate it, to cut real values of pensions to make ends of the system meet? After all pensioners aren't likely to riot.
I would highly recommend reading The Road To Serfdom (https://en.wikipedia.org/wiki/The_Road_to_Serfdom). It details precisely why a right wing government needs to invest in welfare and social care for this exact reason; when a government fails the poor (or the poor's parents I imagine) they have a tendency to rise up and kill all the rich people.
> It details precisely why a right wing government needs to invest in welfare and social care
I was gobsmacked when I read this, as most of the Hayekians I know argue to let the poor/weak fend for themselves, as it would be better to let the weak perish than to steal from the strong to protect them. I may actually have to read it now!
Also, I feel it's unreasonable for those without property to respect property rights if they gain no benefit from doing so (other than not being a victim of State violence).
Hayek was one of the first to suggest a Universal Basic Income would be a good idea. That would be quite a strange notion if he thought the poor should be left to fend for themselves (at least economically).
At this scale, it's not just about money. You have to think about social structure as well. Suppose we did inflate the heck out of our currency and hand it all to our retirees. What would that do to the economy? Well, it would make it so that you'd make a lot more money serving old people, be it for their needs or their wants, than doing other things that people current profitably do. It rearranges the entire economy, in ways that are not necessarily sustainable in the long term. For instance, just as a limit exercise, you can't afford everyone go into geriatric care and stop growing food because food is no longer profitable enough. You can't actually get to that point because everyone would starve, of course, but you can get seriously deep into that sort of misallocation at smaller scales. (More realistically, "should I go into a STEM career or go work at the old folk's home?" Of course you can't get 100% to the latter but you can reallocate a lot in that direction.) Individually the economy doesn't care if one person goes into engineering or goes to work for retirees, but at scale that matters a lot.
The real problem with these pension promises isn't just that we're promising money we don't actually have... the problem is that we're promising a quality of life we can't sustain. We can't give every retiree a life that matches their pre-retiree life in most material ways (perhaps minus a mortgage), and promise them all the best health care that they could possibly want, and promise them that they can retire into this at 65 and keep all these benefits no matter how long their life span may improve, and that no matter how the social winds may blow in the future or how the economic winds may blow in the future that these benefits are written in stone. This ultimately isn't about the money, it's about what they expect this money to be buying them. No amount of accounting tricks can fix these problems for real; focusing too much on "dollars" obscures this fact.
The entire concept of fixed benefits in the future is a lie. It was always a lie, even if some people have managed to cash some in. The future is not predictable enough even before we consider people trying to game the predictions themselves or changing their behavior in light of the predictions.
Because that solution doesn't give money to manage now, to the bosses of "Jacques Goulet, President, Health & Wealth at Mercer, the lead collaborator for this initiative".
Many pension obligations are inflation indexed and high levels of inflation distort the economy. At some point producers start hoarding raw material (or leave it in the ground) because it's more profitable to do so in the long run. This is currently what Venezuela is experiencing and rioting is the outcome.
