European pensions are predominantly unfunded, and promises typically amount to 3.5 times GDP. The prevailing view among those who have looked at this is that nobody under the age of 40 will get anything close to what is promised. The only exception is Netherlands, and maybe Sweden. Leaving private pensions the only option.
Basic demographic analysis will point out that in a world with a declining and aging population, private investments are probably not going to be doing so hot, either.
Wealth creation requires work. Retirees don't work, but still require a portion of the wealth that workers create to live.
It doesn't matter if it's a government pension or a 401K investment, a declining worker population will mean that you'll have the exact same retirement problem. Government pension require people working and being productive and paying taxes. Your investments will only produce returns if people are working and being productive (in which case they are also probably paying taxes).
Unless, you know, you do some wealth redistribution, away from people who own all the means of production, to the people who don't. Then they former will be the ones with a problem. It won't generate more net wealth, but it would certainly prevent a large portion of it from being locked up in the hands of a small elite.
Or, alternatively, more automation and high taxes on robots.
Privatizing the problem of pensions is just an accounting trick. It doesn't actually solve the problem.
Do private pensions solve the “I hope I have money in old-age” problem better in a fundamental way? No.
Do they solve the “I want to pay more now to have more later” problem better? Probably in most systems.
Do they solve the “what is the fair value of grandpa’s pension this month” problem? Definitely yes.
If you want guarantees, the state can pull tricks to make you believe that the world is static… for a while. Eventually, reality will force the state to price pensions in line with demographics or suffer increasingly severe budget crises.
In the past, your children were your pension. This is a private system. When responsibility for old-age is distributed without accounting for monetary or demographic contribution, politicians can promise the moon. Stop eating the young.
You're mostly right, but production can only be stored for so long. If a young farmer produces more food than they consume, they can't save that specific food to eat when they retire. Likewise, investing in machinery to increase production later only goes so far without further reinvestment in the form of maintenance.
This time displacement of value service is exactly why the industry is financialized. Of course, the financialization creates a huge moral hazard and introduces middlemen that take more than they supply in many cases but the near universal demand for wealth preservation for old age is one of the few truly noble pursuits of finance. Now if only pension systems didn’t treat their beneficiaries as contemptible idiots who cannot be allowed to manage their own finances, the rampant corruption might stop.
There's no fundamental reason that we can't save for retirement in a world with a roughly static population.
What we can't do is continue to use pyramid scheme math. Everyone more or less needs to set aside their own surplus for retirement over the course of their lives. Of course this gets financialized away such that the current workers pay the current retirees and whatnot but the math still holds. Basically at scale average people's entire lives can no longer be run based on net neutral or net debt with reliance upon market growth to have surplus available to spend at the end of it. We'll have to run a surplus and set some aside.
Put another way, retirees who are no longer actively building/operating society, require that someone else does actively build/operate society. If there are fewer people left to do that, retirement will necessitate a decrease in quality of life (for everyone, not just the retiree).
How to solve for this? Not sure but the west will need to figure this out.
I am more optimistic. I always suggest automatically dropping x% of ones income into an index fund. At the least it will hedge against the very real chance governments will not be able to deliver on their promises.
What wealth will your index fund produce when nobody is working, and nobody has the money to buy stuff?
However you answer that question, I'll retort with - 'And exactly what will stop the government from taxing that wealth, to keep pensions working?'
> At the least it will hedge against the very real chance governments will not be able to deliver on their promises.
That's a fair point, there's the very real possibility that governments will refuse to take the steps necessary to deliver on those promises.
A good way to ensure that they won't shirk from that is continuing to elect the kind of government that will. Don't vote for people who seek to destroy public systems.
I think its worse, the governments will be unable to deliver (my perspective is Europe). Think one needs to consider many strategies to avoid starving when retired. But I fully expect my EU government to give me no pension, no matter what they say today.
Even in the worst case scenario, a 100% haircut sounds incredibly unlikely.
Unless you actively elect a government that pursues such a policy. Or unless someone somehow puts all that money in a large bag, and flies off to Cyprus (If that's a real concern in your society, there is no guarantee that your brokerage or bank won't do something similar). Bad governance and theft can ruin anything, just ask anyone who has lived in 90s Russia - where the government could not hold up it's end of the social contract, but neither could any of the thousands of thieves and fraudsters that spun up in the privatized financial sector.
As it turns out, when the economy collapses to the point that a government can't[1] pay it's bills, everything else goes to shit, too.
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[1] The budget brinkmanship the Republican party practices every year isn't a matter of 'cant' - it's a matter of 'politically expedient to pretend that they wont'. But that cycles back to not electing people who govern poorly...
The SP500 magic money machine may stop and then everyone is stuck with shitty subpar indexes that lose in real terms. You may need to pensionize 50% to save enough but if everyone does that it is austerity.
Tangentially, I'd also suggest that you consider your own career-sector as something to be hedged/diversified against. This is especially true for people getting stock-thingies as compensation, but it might also apply for some index funds.
The worst-case scenario that comes to mind are all the Enron employees who focused their 401ks onto their own employer's hot stock, and then the implosion wiped out both their regular earnings and their reserves.
We always forget that people actually consume services, not dollars. What if instead of a pension or Social Security delivered as a cheque, we provided a basket of highly subsidized services, essentially state-funded retirement homes?
These can be delivered on enormous government scale, potentially bringing unit costs down far below what individuals can achieve.
It could be an effective way to create an evergreen economic engine in regions that have had poor development-- dropping a community of 200,000 retirees into a Rust Belt city creates tens of thousands of infrastructure and support jobs.
Private retirement schemes could, of course, deliver additional luxuries, but it would be a huge stabilizing influence to know that nobody is going to have to try to drag themselves back into the workforce at 92 because their 401(k) ran out and they can no longer afford their rent.
People are living longer after retirement (over 10 years longer since the 1970s) and birth rates have fallen. Expenditure surpasses income eventually. There are other factors but that seems to be the main issue.
No, it can't come from tax in general. The whole problem is a lack of productivity per capita. So any tax high enough to pay the shortfall will be oppressive. It's not a magic money machine that beats private investment earnings.
If you invest wisely, you will make money or approximately tread water even if the economy is shrinking, because businesses operating with sufficient foresight make money on average. It might not be enough to retire on. That is a separate question. If there is not enough juice in the system to fund everyone's retirement, then neither investment nor taxation can create that productivity. There might be some in-between solutions but anything that does not involve generating enough production and profit to at least fund pensions seems guaranteed to be regrettable.
Re: Taxation, if you want to make up for the shortfall in people's pensions with an additional tax, you're assuming that someone else is making enough money to make up the difference. That is not the case. People can hardly fund their own pensions to the extent recommended, much less anybody else's. Most businesses are not profitable enough to fund extra pension contributions either, and imposing that cost will stifle them.
yes, number 1 reason why the researchers around me pick R. RStudio just works.
I had to run someone's 10 year old R workflow last week. Ran perfectly.
Last years python code will not run unless someone was careful enough to make a requirements.txt. Try explaining that to the non computer scientists. My python support colleague runs into that constantly. She is not a happy support person.
Same with NodeJS. The way it does package management is more "Pythonic" than Python. Even importing your own files is simpler, just relative paths instead of the __init__.py and packages.
Asked a Spanish professor of computer science, and he said the system is so corrupt that nobody cares. Everybody knows about this guy, and nobody cares.
we dont have these tariffs in europe, and still the sunnyest place in europe, the Canary Islands, make 85% of their electricity with oil. Always wonder why they dont have more solar panels.
> I'll be happy when we have a successor language for R, but it won't be 2024 Python.
When it comes to statistics, and especially having to program stats analysis instead of just calling libraries, R is a much better language than Python or Julia. When it comes to other things, they are better than R. I use all 3 daily.
And with Quarto being available, why wouldn't you switch to whatever language is best for the current task? I'm throwing ObservableJS in there now too with the Quarto compatibility. You can do your data cleanup in R/Python, then use native web libraries for displaying pretty plots in the browser.
It is clear that R is not doing as well as Python. It is not clear that it is not doing well overall. It is still the best in statistical analysis and interactive usage (sklearn, statmodels, etc are not good enough). Maybe there is a healthy community that can thrive. For the moment being it seems that they are trying to eat SAS userbase.
And I don't think younger statisticians, those that will have 30+ years in the career tank, are now favouring Python over R (a few, Julia perhaps). So I don't imagine new stats functionality dropping in R first is going to change any time even close to soon.
most are specialised in my field. for the more general, I cannot work without dynlm and plm. Just last week I needed to compare the empirical distribution of something to a known reference, with either the empirical or QQ, and searched Python, Julia and R. The R libraries were by far the best. More subjectively, I like data.table better than any alternative in any language for the type of work I do.
There is nothing like data.table in Julia, Python or JavaScript (if you want to stick to high level programming languages). It's the best combo you can get for speed + syntax.
> The author is a PhD student that has been using LaTeX heavily for 10 years. But what should a new student use, and why? When the only reason to choose LaTeX is old colleagues and gatekeeping publishers, I know it's a matter of time.
Sadly its more than that. Will we be able to compile a typst file made today in 10 years? I have to do that regularly with latex. Will everybody one collaborates with also use typst? Very unlikely. A new PhD student may find it beneficial to write papers with someone who only uses latex. then why bother with typst? (and I really want typst to win)
That's only true if you need a lot of speciality packages. For the vast majority of people using LaTeX, they only need the core packages like the basic features of hyperref, geometry, amsmath, amsthm, and in that case, they are quite stable.
I've never had a problem recompiling documents. Yeah, you might have a problem if you're using LaTeX for a fringe use but most people don't.
> Will we be able to compile a typst file made today in 10 years?
Yes! typst is actually better than LaTeX in this regard:
LaTeX: contrary to how it sells itself, it's not good at compiling old files. The TeX core is fine but the packaging story is awful. Once I found a beamer presentation about LaTeX itself, including of course some slides about the amazing backward compatibility. Well, the slides failed to compile in multiple places due to the fancy packages used by the author, which had made breaking changes between whatever they were using and my own TeX Live installation. And using an older version of TeX Live is not trivial. Another example: a few weeks ago a colleague found himself unable to compile a document that worked before the system (Linux distribution) update. It took us two hours to figure out that one of the LaTeX packages had made a change which made it incompatible with another package unless you switch the order of \usepackage. Fun!
typst: it's a single binary, statically linked. That's it! If you care about this, you can literally commit this one file (30MB or so) in your repository and it will run flawlessly in 10 years. The packaging system is very recent and still a preview, but it's already better than LaTeX since packages are imported by specific versions. And if you're worried that the typst package server will go down it's easy to mirror it locally.
> Will everybody one collaborates with also use typst? Very unlikely. A new PhD student may find it beneficial to write papers with someone who only uses latex.
That's the reason I mention. If it's the only reason left for learning LaTeX, good luck LaTeX. Very soon it will be "Will everybody one collaborates with also use LaTeX? Very unlikely".
A legitimate concern given that Typst is still maturing. But I have at least one thing to say in its favour: you can lock the version of packages that you import. The only reason LaTeX documents full of \usepackages are reproducible ten years later is because packages are in maintenance mode, not because of well-thought-out future-proof design.
Typst is a single file binary. The preview packages are versioned too. If typst breaks the API in ten years, I'd still be able to download the old binary and make a PDF from scratch. I can't begin to imagine the complexity in installing multiple texlive distributions side by side.
Yes, but its more complicated. In my case I have slides with a number of include files, some have not changed since 2006 (just checked), one does not want to maintain slides with same ancient version of typst, and then possibly have many floating around.
For me, they need to promise full backwards compatibility.
That's a valid point: if you don't want a language that makes breaking changes (so you can always compile old files with the latest version), it's not the right time to use typst. It's just moving too fast now. It's currently at version 0.11. Come back when they release 1.0.
You can't have truly statically linked binaries on glibc systems; they ditched support for that over a decade ago. On the 1% of Linux systems using Musl you can produce statically-linked binaries, but `ldd` will report `not a dynamic executable`.
But it's true that when I tried ldd on a trivial static binary (compiling "int main() { return 0; }" with "gcc -static a.c") I got a different message: "not a dynamic executable". I don't know why you'd get sometimes one message sometimes the other...
Nice piece, and his comment on typst is spot on. I would love for typst to displace LaTex, I hate LaTex and use it every day, and deep inside know it will never go away, unless a much better programmer than I writes a LaTex -> typst converter that covers all the corner cases. One can always hope.
