Re: Re: Generational Warfare

by Robert Stein

Kevin makes a basic, but common, mistake regarding the long-term effects on a public old-age retirement system of having more children.

Let’s say the fertility rate is exactly at replacement and the tax rate and retirement age are set to generate promised benefits. Then let’s say one generation (G1) of workers decides to have three kids per woman rather than two.  In turn, those children (G2), when they grow up, decide to revert back to the norm of two kids per woman.

When G1 is retired, either they will receive a windfall in benefits or G2 gets a windfall in the form of a lower tax rate, or a combination of both. This is a one-time windfall for the system that is NOT offset by a one-time loss in the future. When G2 retires they will get normal promised benefits (and G3 pays the normal tax rate) as G2 has generated two kids per woman, just like earlier generations.

In effect, Kevin and many others assume that any additional kids are barren. Our retirements depend on kids being raised; their retirements are not a given. If they have no children themselves the retirement system will give them nothing and so they will have put into the system without getting anything out. Again, another way to see the flaw in his thinking.

On education, I support vouchers wholeheartedly, but how we “distribute” schooling is different from how we pay for it. The current system of the working age paying in makes sure that everyone who is educated pays into the system when they are grown up.  Otherwise, the childless of today are saying that they should get their K-12 education for free.

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