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I think you're the first person I've seen in the wild who seems to agree with me thay not all jobs need to pay a "living wage", and that that's okay! That some jobs should be just for the high school kid after school or during the summer, or someone who isnt trying to support a family on it ling term. I don't know how you deal with people getting stuck in a rut and eventually not being ready for retirement, though... I'm sure many will say that it isn't their problem to make sure others don't make poor life choices, but that doesn't help convince the general population when the news is publishing sob stories.
I'd be willing to bet that the number of people who:
Rounds to zero.
Let's say you get the "burger flipping" job because you're not really doing anything else. You're living at home (or with a bunch of other underemployed roommates). Sure, maybe you get some cheap beer every weekend - fine, whatever. If you retain that job for two years, you're going to be promoted to some sort of assistant manager position by inertia and availability alone. The cycle repeats.
Or, you get the burger flipping job, decide that, yes, it does suck, and figure out a new job a little further up on the skill/wage level. You like this and do it again. The cycle repeats.
My more controversial take is that this should be the path for pretty much everyone.
College has become a pay-to-play social proof mechanism for bullshit jobs that mostly fuels middle class over-capture of resources - especially housing. There are some hacks around this (military service, community college pathways) but it, most of the time, boils down to a family being able to pay between $100,000 - $500,000 to jumpstart their kid into the professional class. Oh, by the way, for something like 50% of graduates, this has not worked and has been a fraud for 20+ years. Please ignore that.
At the bookstore job I alluded to in my original post, I got unofficially promoted to assistant manager by my second month mostly because I would follow the store close down procedures correctly each night. This was as a 17 year old. Several of the other 20-somethings working there would routinely forget to lock doors, secure the cash box, or do basic cleaning and organizing. It doesn't take much to be an above average performer and, with just a dash of talent, you can accelerate quickly. I've seen too many graduates of "prestigious" universities who can't metaphorically close down the bookstore making $100,000+ per year because they have the fancy sheepskin on their wall.
But why do you not care about those people? Those are also human beings and our fellow citizens. We should help them, not make fun of them for being losers and go "oh well, sucks to suck, I guess we're going to remake society to make their lives even worse."
I do care about them. But I'm not willing to trade the general warfare of the top 80% to help the dysfunctional 20%.
Of course, always.
Not always.
@Amadan's comments below are useful here. The fact of the matter is that somewhere around 10% of the population even in highly prosperous western societies are just going to continually fuck themselves up with bad decisions. This is a fact as real as gravity and it sucks. I don't think we should leave these people to die in the streets, but what to do when every bit of government "support" delivered feels like it's not only going nowhere, but might actively be subsidizing damaging anti-social behavior.
You, @BahRamYou, can keep telling me "it's hard out here in these streets!" and "people are struggling." Great. But what's your solution? Because if it's more of the same; a Government sponsored cash transfer and redistribution scheme, I am telling you it does not work for anyone involved. The poor remain trapped in poverty, the middle class gets soaked and slowly collapses, and the wealthy elite use the myriad holes in tax and estate law to shield their assets.
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Reading reddit subs like /r/personalfinance and /r/povertyfinance, I am not so sure. There are a lot of threads along the lines of "My mother worked her entire life at low-wage jobs and has nothing saved up, what should I do?" A lot of people really do just fall into a rut, have zero ambition, and do not think about the future. Either they assume their kids will take care of them or they assume there is some sort of government assistance.
We here on the Motte are almost all well above average in intelligence, conscientiousness, and time preference. Those 20-somethings you mentioned who couldn't even cut it as assistant manager of a bookstore are more numerous than you think, and a lot of them will never really change.
Should we as a society say to these penniless retirees (even the ones who did have substance abuse or crime issues) "Tough shit, your bad choices, die on the street"? While there is a certain karmic justice in that, I also think that's a path to looking more like India.
This made me think of something else.
The Success Sequence
It states:
If you do this, there's only a 3% you're at or below the poverty line by your late 20s to early 30s. This even holds for a variety of often awkwardly tricky subgroups:
To me this says there's more to the equation than just jobs and job friction - it's a basket of pro-social and delayed gratification goods.
So, to return to your anec-data about "my mom worked odd jobs all her life and she can't retire" .... I'd have to ask that reddit poster if their mom had kids before marriage (perhaps before adulthood)? Did she graduate high school? Has she always worked these menial jobs full time or sort of cycled in and out? Because, depending on those answers, I become a little more openly hard-hearted. Repeatedly fucking up what should be obvious decisions because of a lack of self-control doesn't make me feel for you.
If you go to page 3 of the report, you see a pretty stark data visualization. I've attempted to summarize it here:
These numbers drop drastically as each step is completed, starting with finishing High School.
Much like crime being concentrated in a handful of super-repeat offenders, it would seem that non-violent but "I don't have my shit together at all" people are hyper concentrated as well. Maybe a lot of them party on reddit, that wouldn't surprise me.
I know there are some other folks on here who like to dabble in the genocidal, but I do not. I don't want to round up the "poor 'n stupids" to walk them off a cliff. I don't want to sterilize them. I don't want to have them knife fight on Netflix (Hobo Wars 6!). But allowing them to exist in a kind of poverty limbo that also slowly bankrupts the nation seems like a literal negative sum game; everyone who plays leaves worse off.
I mean, I don't disagree that anyone in that situation in their 50s or 60s has probably made a long series of bad life choices. I don't think many people exhibiting even a modicum of common sense and responsibility wind up old and penniless through sheer catastrophic misfortune.
And yes, the people who fuck up like this are probably concentrated in certain demographic groups.
All the being said - what do? Like I said, being hard-hearted may feel righteous, but then you have a population of elderly poor people eating cat food, so to speak. I'm okay offering a very sparse social safety net for those who done fucked up their lives, but I'm not okay offering nothing (or something like poorhouses). Not just out of soft-heartedness, but because I think there is a genuine case to be made that some people are just born... well, not able to do better. And some people who could have done better have the misfortune of being raised by people who sucked as parents and didn't teach them any better. And some people really do hit a run of bad luck (a woman who decides to be a SAHM in good faith and then her husband ends up gambling away all their money and does a runner really can leave a single mother in terrible straits, through no fault of her own but not being able to see the future). I don't think you can really say that every one of those people "deserve" to suffer. Maybe a lot of them do, but we also can't realistically separate out the "deserving" poor from the undeserving.
Is there a solution that doesn't leave poor people on the streets and also doesn't bankrupt us? I'm sure there is; can our politicians construct such a workable solution? Eh...
Well, yes. But it would probably cause some serious issues with the market and bubbles.
If the government takes $50,000 for every birth within the USA each year, and puts it into a broad market fund returning 6% a year (this is conservative), at age 70, that's worth $2,953,796.51.
Everyone who makes it to 70 automatically gets $3 million. At 4% per year (considered the "safe" withdrawal rate) this is $120k per year. Current max social security per year is $45,864.
There are 3.7 million live births per year in the US. Times $50,000, that's $185 billion. Per year.
Current social security disbursements, annually, are about $1.4 trillion.
So, there, I've solved social security, right?
Maybe, but maybe (probably) not.
People, and the politically ambitious among them, will inevitably see this $3 mil as "theirs" - They will want to withdraw it early, or be able to take loans out against it etc. If we allow people to include this payout in their wills, you'll have all sorts of fun family fights about who gets to go to the lawyer with Mom. If all of this is allowed to happen, we're right back in the same situation as at present and, for an added bonus, we get a massive doom credit bubble to wait on to explode.
This involves putting tax dollars directly into the market. Lot's of people have problems with this on principled grounds (which are valid). The pure financial economics of it are also worrisome - every year, the market can count on $185 bn of super patient capital arriving. That will fuel risky bets left and right.
The one upside I can think of is that people who choose to live frugally can do so with a very real sense of 'reward' coming to them. Entrepreneurial types will maybe decide to take the risk and start-the-thing in their lives. Most will fail, but many more people taking risks like that could actually propel the general advancement of society forward.
You can math out some solutions, sure, but @Amadan's point remains - what do when the bottom 10 - 20% find a new and inventive way to short circuit the system? "DIE IN THE STREETS" is an attractive edgelord position, but even median pop culture level moral thinking detests that.
The answer is we'll muddle through. I see a comeback of multigenerational households. I see a return of old school style "poor houses" and weird alt-poverty encampments (think Slab City, not Portland Tent Camp).
The problem with this sort of thinking is that the stock market isn't a magical money machine. There's no particular limit on money being invested- banks create money out of thin air all the time. The reason stocks appreciate is that we limit how much money banks can create, and that the economy overall is growing. If the government throws in an extra 10 trillion dollars into the stock market, all that happens is that stocks overall grow slower because they're weighted down by all this useless government money.
Is this your serious explanation of how equity appreciation works? Or is this kind of a short hand for something else? I can't tell.
If it's the first (i.e. serious explanation) this is a categorically incorrect understanding of financial markets.
I could have phrased it better, but my position is basically the mainstream economist view that a soveriegn wealth fund like you describe wouldn't make sense for the US:
https://archive.is/xCTIz
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The 6% is not the real return but the nominal one. Adjusting for inflation by the time the newborn is 70 $120k will be extremely mid.
No, 6% is the real return. Link
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This is fair enough.
The better data point would've been to hit me with would've been "what about people who save something, but then have it gobbled up by medical issues later in life, or some other tragic event?"
The simple solution is what used to be the default solution - you have Old Timer's insurance in the form of Social Security, and it only kicks in at a truly advanced age. "Retirement" in the American vision of it is not something that can endure. People live far longer now and, due to some of the cost diseases I mentioned earlier, it's just plain harder to save the necessary amount to finance a 20 or 30 year retirement.
I'm optimistic that people will be comfortably working into their 70s by about the 2040s. I do believe this is a good thing. I've seen retirees go through cycling phases of anger and depression because they feel they've lost purpose by not working, even if they are totally financially self-sufficient. Cognitive decline without social interaction is a real thing and seems to me (anec-datally) to be more severe in older folks.
But what to do about those folks who can't even work a semi-BS laptop job after 65? Or who have medical issues (probably lifestyle related) that simply makes not-dying a herculean daily chore.
My answer here is I don't know. Which is an unsatisfying answer. I can say, however, that the math paints a pretty stark picture - if we keep paying out for healthcare and social security the way we are now, we're bankrupt as a nation by 2030. That is a path that doesn't just look like India, it would look up to them.
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