Maybe you shouldn't save for a retirement then. Maybe no-one should.
I think about this quite a bit. I'm quite frugal in my personal life (although certainly I could be more so), so I actively save for the future as a matter of course.
I'm also aware of the statistics around personal debt levels and net assets in the public at large and while it's clear there's a rude awakening to be had, I'm less and less convinced over time that the "awakening" is going to be of those who have no savings in place when they need them.
It seems pretty apparent to me that if the majority of people have no assets in a couple of years/decades (regardless of why that might be) and wealth inequality peaks to such extremes, then it's very likely the first political candidate to offer hard socialism (debt-driven basic income guarantee coupled with ultra taxation of higher net worth individuals) will sweep in an election, and the money problem will correct itself at an individual level.
Of course this isn't a solution to the living-beyond-your-means problem, and causes it's own problems (inflate the currency with QE, capital flight of high net worth individuals to friendlier jurisdictions), but I don't think that will matter in this scenario.
If the nature of people now is to be relatively short-sighted with regards to money, then what reason is there to expect that people in general are going to be any different in the future?
I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority.
>I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority.
Absolutely. I expect the government to renege on most tax-advantaged programs for retirement they instituted in the 1960s and on (Roth IRA etc). I expect Social Security to stop being paid to higher net-worth individuals or for them to be pushed into a later age where they can collect it.
The crisis we face isn't one that is going to be fixed easily. Government receipt shortfalls project to be massive in a few decades.
>>it's very likely the first political candidate to offer hard socialism (debt-driven basic income guarantee coupled with ultra taxation of higher net worth individuals) will sweep in an election, and the money problem will correct itself at an individual level.
As someone who has had experience living in that system let me tell you the moment something like that can even happen. Most rich people from whom you could take significant for your socialist schemes will leave the country. Leaving behind a very very small part of usable money for your schemes. It will be over before it begins.
You have also now scared away almost every single economic prime mover individual from the economy to a point almost any body smart will only have one option for a good future- To leave the country and immigrate to else where. And there will always be some capitalist heaven which will welcome all this smart people with open arms.
With this set up your common pool of money from which you wished to pay for your Basic income will shrink year after year, until bankruptcy and total investor loss stares you in the face.
>>I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority.
They won't(rightly so) and that is what will be the biggest problem in the times to come.
The only way in the future is to make good decisions for the future or suffer.
This is assuming they haven't found a tax haven where they already park their money.
These days no one stores money beneath their mattress. Most money is in global businesses. So exit tax strategy is already a failure. Capital exodus today is called 'foreign direct investments'.
Besides you still are left with a problem with losing a lot of bright young people every single year without whom and taxes from their ventures you won't have anything to run your schemes on.
The global business holdings are typically held in US accounts. Transactions from there are 100% traceable.
Overseas accounts in HK and Switzerland are being cracked down hard. (I mean if you want to break the law, you can always break the law...)
It's not that easy to move funds into tax haven without some risk (ex: whether your GRAT will actually pan out) or advance tax event. (The easiest way is to start businesses in a tax haven in the first place, which is different from moving capital once it has been created).
Great point about human capital. I would leave for Canada or Singapore under such a regime as well!
You can't stop people from leaving. Look at USSR, India or any other ex-socialist economy. Unless you turn your country into a kind of North Korea, these things can't be stopped. And even if you did turn your country into North Korea, the rich will likely be in the top party positions and do whatever is best for them.
Every other socialist economy has had this thing in the past to make it hard for people to leave. They don't work because you can't make people stay against their will.
Most countries have now learned this the hard way. On the longer time period you can only encourage people to do good work, you can't punish them into doing it.
Ah ok I think I get what you're saying better now. Once people decide they're leaving and never coming back, whatever rules you have in place are worthless since they're going to ignore your exit taxes or whatever since they're not coming back and they think your regime is illegitimate anyways.
I think about this quite a bit. I'm quite frugal in my personal life (although certainly I could be more so), so I actively save for the future as a matter of course.
I'm also aware of the statistics around personal debt levels and net assets in the public at large and while it's clear there's a rude awakening to be had, I'm less and less convinced over time that the "awakening" is going to be of those who have no savings in place when they need them.
It seems pretty apparent to me that if the majority of people have no assets in a couple of years/decades (regardless of why that might be) and wealth inequality peaks to such extremes, then it's very likely the first political candidate to offer hard socialism (debt-driven basic income guarantee coupled with ultra taxation of higher net worth individuals) will sweep in an election, and the money problem will correct itself at an individual level.
Of course this isn't a solution to the living-beyond-your-means problem, and causes it's own problems (inflate the currency with QE, capital flight of high net worth individuals to friendlier jurisdictions), but I don't think that will matter in this scenario.
If the nature of people now is to be relatively short-sighted with regards to money, then what reason is there to expect that people in general are going to be any different in the future?
I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority.