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Wednesday, April 08, 2009

Alfamax questions how future generations will pay for our current government's 'economic stimulus' handouts

I wonder where the money will come from in time. What worked in the 20th century won't work into the future. 

I see two forces at work here, namely;
  • An ageing population 
  • Fertility rates are falling 
Brink Lindsey explains... 

The inevitable Ponzi endgame is now obvious in the rich countries of the industrialized world. In the United States, for example, average life expectancy at birth was only 61.7 years in 1935 when Social Security was established -- lower than the original minimum retirement age. Today, U.S. life expectancy stands at 76.5 years, and is expected to climb to around 80 over the next 20 years. For most other industrialized countries, current and projected life expectancies are even higher. Meanwhile, fertility has dropped sharply. With the single exception of Ireland, birth rates in all the advanced countries are now below the replacement rate of 2.1 children per woman. In Japan, the fertility rate is only 1.68; in Austria, 1.45; in Italy, a mere 1.33. Continued declines in fertility are expected. 

The upshot of these demographic trends is a steady erosion in the funding base for social insurance benefits. In 1950, there were 16 workers in the United States for every retiree; today the ratio is only 3 to 1, and in 20 years it will have fallen to 2 to 1. Elsewhere the outlook is even bleaker: By 2020, worker-to-retiree ratios are expected to fall to 1.8 in France and Germany, and 1.4 in Italy and Japan

So the point here is that if the governments are struggling to pay pensions then everything else is in big danger. 

Small companies like Fighting Fathers have a socialist ethos and provide a service to the public, often to those who are marginalised. 

The companies that should be let go are those that serve no useful purpose. The car, rightly done away with the blacksmith and horse shoe. Those who would have been blacksmith’s probably work as bankers or car mechanics. The world moves on. 

If they ever make it so cars don't need tyres, I won't lose too much sleep over the tyre manufacturing industry going bust overnight or the fact that I have to shell out $700 for new rubber for the commodore. 


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