In Part I of this series, I explained that modern welfare states are in deep trouble because of falling birth rates.
The core of the problem is that entitlement programs generally tax young people to subsidize old people. And fewer babies today means fewer workers (i.e., taxpayers) in the future.
And that’s a recipe for fiscal crisis because there will be a growing number of old people expecting various benefits.
Here’s a look at some data for the United States.
This startling chart shows the average amount of taxes paid by age, which is grim news for working-age people like my children. But the worse news is that older people like me are very expensive because of programs like Social Security and Medicare.
This chart might be less scary if there many more young people than old people, as shown by a traditional population pyramid.
And that was the case for much of the 20th century. Indeed, I pointed out in my video on Social Security that there were more than 5 taxpayers for every Social Security recipient when I was born.
Unfortunately, today there are only about 2.6 workers per beneficiary.
In other words, America’s population pyramid is become a cylinder. A very expensive cylinder.
Which led Russ Greene to describe America’s system of “Total Boomer Luxury Communism.” Here are some excerpts from his article in The American Mind.
Total Boomer Luxury Communism (TBLC)…is driving every aspect of American decline—from skyrocketing national debt and the erosion of our defense industrial base to the despair of young people. …The essence of TBLC is that it redistributes wealth from younger families and workers to seniors, who are on average much richer. America has achieved the Marxist paradise… Only it looks more like golf in the morning, horseback riding in the afternoon, drinks at the social club in the evening, and a restful night’s sleep in a million-dollar home—all thanks to the largesse of the U.S. government. …There’s six times as much wealth redistribution happening in America as in China. That’s the “communism,” but only for the “Boomers.” The “luxury” part comes in how the government distributes these benefits. Perversely, retired millionaires have become the greatest recipients of government aid. Max Social Security benefits in the U.S. are 3-4 times what seniors can ever hope to achieve in other developed nations, such as Britain, Canada, and New Zealand. …Democrats and Republicans agree on at least 85% of federal spending, mostly because they both support a massive wealth transfer from young workers to seniors. There is no political debate… American politicians have let Social Security grow on autopilot. New Zealand, Canada, Germany, and Sweden all reformed their versions of social security… The money is running out. The only question is who will bear the burden. Each day that passes means Gen Z and Millennials pay more of the price for Boomer irresponsibility.
I have three comments.
First, at the risk of being pedantic, what we have isn’t communism, but Total Boomer Luxury Redistributionism.
Second, Greene is completely correct that the U.S. faces a fiscal crisis if we leave the system on autopilot.
