It's not finance, it's your pensions
theloop.ecpr.euI realize there's only so much you can fit into an article, but this article glosses over a monumental shift in welfare spending in the US: the transition from defined benefit retirement plans to defined contribution. It's not so simple as a split between private and public directed asset allocation: it affects the growth of companies that offer these plans and the wealth of participants in the plans.
The US has pushed the burden of retirement onto individuals, hoping that the private sector will offer incentives like 401k matching and generous health care plan subsidies, but this is a fundamental difference in who qualifies, what they receive, and how it's funded. These effects compound wealth and income inequality. If, for whatever reason, you're locked out from a job that would help pay for these programs, there's no coming back. You are dependent on the government at the same time as the government is underfunding the program you rely on. It's not a great situation.
Defined benefit plans have a fatal flaw: If the promised benefits don't match investment returns, the difference has to come from somewhere. It comes from some combination of broken promises, higher taxes, higher interest rates and inflation. All of which are political hot potatoes.
Defined contribution plans don't have the same flaw. What you get out of it depends on how much money you put in and how much alpha your investments get. If you don't have enough to support a comfortable lifestyle in retirement, it's not the government's fault, it's user error: You didn't put enough money in, or you didn't invest it properly. The politicians set up systems to help you; "If you didn't use them properly, too bad, so sad, but it's not our fault," they say.
There's also the inescable truth at the root of supporting retirees (and others who aren't working) - in the end, people who aren't working are being supported by those who are working. Investments, pensions, etc. are all just an abstraction around that fundamental reality.
There's also the inescapable truth about what purpose pensions served. They effectively create a massive amount of debt, "owned by" retirees, owed by regular people, managed by bank bosses and politicians. Surprisingly, they changed the social contract enormously: nobody got a choice. Everyone had to pay the new debt, MASSIVE debt, to take care of the elderly. The then barely existing elderly.
Which brings the question ... WHY did they do this?
Politicians: to spend the money (and not on retirees, on their own projects), in other words: when it comes to money, ideally you do not own, but do decide what money is spent on.
Banks (and the rich in general): to redirect a percentage of the money to themselves in 1000 different ways. They can't really get money unless there is large amounts of socially accepted debt in society, it doesn't work: can't get blood from a stone.
Now, when this leads to the problem that either the money disappears, or the social contract behind the debt disappears (ie. either pensions drop to almost nothing, and the spending/social contract (ie. if pensions aren't paid out/aren't livable the willingness of people to pay for pensions disappears, and the debt ... oh dear god the horror ... disappears, and with it the lifeblood of banks and the rich). Then of course panic sets in, and suddenly when THEY get in trouble any law change imaginable is suddenly on the table.
The scary part is the obvious solution, the only solution really. You know what would solve the pension crisis without destroying the social contract? If the elderly were to die (a lot) faster. That is the only way the politicians can keep spending and banks can keep their profits. Which is exactly what Trump's doing with the enormous increase in medical costs. For the elderly it's simple: pay ... or die. That's the new social contract here. In other words: in what I'm sure will come as a total surprise to everyone, when democrats get control again, they will see how much it costs, how much of their projects it would kill ... and then will not refund Obamacare to anywhere near the level before Trump and they will in fact vote to keep this new social contract in place.
Of course reality is simple: politicians and the rich are promising pensions to everyone, and the really obvious truth is starting to become glaringly fucking obvious: they're lying. One way or another, you're not getting the pension you paid for, you're not getting the medical care you're paying for. You paid the money, and ... you're NOT getting the service you paid for! You also, of course, don't get to stop paying, in fact they're demanding more now. You don't get to stop working. Obviously, politicians don't want to be called to account for that one.
Kill the elderly: it's either that ... or take the money from the rich. Easy choice, no?
It's simple, move to a nordic country if you can, but if you are rich stay put in the US.
being rich is pretty great almost anywhere in the world including the nordic countries. it's only "better" in america if you value having a huge gap between you and the poorest people in the country.
I think the US is markedly better for people in certain professions who want to become rich. This is obviously not true for the general population, but the amount of cash that's chasing profits in tech means that a non-trivial percentage of SF Bay Area techies have a shot at financial independence (let's say, $10M in the bank). This is certainly not true for IT workers in most of the EU.
But if you already have enough to never need to work again, you should be fine in almost any liberal and politically stable country, and there's something to be said about moving to a lower CoL place where you can afford a nicer home, etc.
> a non-trivial percentage of SF Bay Area techies have a shot at financial independence (let's say, $10M in the bank)
You can become financially independent in most parts of the US. You definitely do not need $10M. $1.5M is enough. If you want a lavish lifestyle or you want to have complete control over where you live, of course that will require more, but financial independence means only that you have enough to cover the bills and live a modest but comfortable lifestyle.
Agree, many of my peers are on track to reach financial independence around 45. No compromises needed: Nice large home, good schools, safe neighborhood, plenty left over for luxuries and travel. I don’t know of anywhere else in the world where fairly normal but hard-working people can reliably do this (provided you got lucky enough to get hired at and survive a FAANG for ~10 years).
From here we can then move to a lower CoL place or stay put, whatever makes sense for our families.
> Nice large home, good schools, safe neighborhood, plenty left over for luxuries and travel. I don’t know of anywhere else in the world where fairly normal but hard-working people can reliably do this
There’s no way you’re really this dumb.
I think the only part of that statement I kind of agree with is the “large home” part.
It’s much easier to afford good schools, safe neighborhood, luxuries and travel in most of Western Europe than it is in the US. Because the first two are basically free, travel is cheap, so you have plenty left over for luxuries (unless you want like race cars or something)
Good schools are certainly not free in most Western European countries, in fact for most middle class families, it's one of their biggest expenses to put their 2-3 kids through secondary schools.
There’s a massive disconnect here between a “good school” in the US and an expensive international school, and no definition of middle class where a majority of families pay for it. “most Western European countries” is not a thing. Nonsense.
The part you seem to have missed was being financially independent at 45, retiring, and still being able to have all that stuff in perpetuity. Or if I’m truly that dumb, you’re going to have to spell it out for me.
CoL is very low in the US and QoL is very good. Just obviously not near the coast. For some reason many Americans forget that most of America is not in San Francisco.
I'd argue that QoL in middle America is not great compared to similarly priced places in the EU.
Americans have worse health outcomes (including lifespan), travel far less and have less time off, and retire later. That said, you do get much more space, nicer housing stock, (arguably) better access to education, and generally more 'stuff', so it's a tradeoff.
I live a few months out of each year in Europe. Usually max out my 90 day stay with ABnB.
It's a hard life in Europe. My friend owns 11 bars that are packed 24/7 on a Mediterranean shoreline. He is what anyone would call successful. But he lives in a little apartment and drives a beat up old Mercedes, not because he's modest but because that's what "rich" looks like in Europe. If you ask him, he'll tell you that taxes ensure that you can never be rich in Europe.
My friend in middle America owns one bar, multiple houses, multiple cars, kids in private school. And what's mind blowing is that no one in America would consider him "rich." That's just middle class America.
I'd love to visit wherever you're going to point to as a counter example. Let me know where I'm headed this summer.
Btw I checked about health outcomes. It's actually only true if you look at America as an average. Middle America has much better health outcomes. Look at Utah for example. Again, point was that middle America isn't like the coasts.
It's true that non-coastal Utah, Colorado, and Minnesota have good life expectancy for the US but they lag behind California, New York, Massachusetts, New Jersey, New Hampshire, Connecticut, and Hawaii.
https://www.cdc.gov/nchs/data-visualization/state-life-expec...
Utah is 1.7 years behind the EU average. Even Hawaii with the highest life expectancy in the US is behind all but the former Eastern Block EU countries.
https://web.archive.org/web/20240324032202/https://www.ined....
(Archive link to get comparable 2022 data.)
Sounds about right. I'm surprised by California. Nice.
But I bet healthcare costs are way higher there. To match with higher income, I guess.
Median income is not much lower in Utah than in California. Utah's low healthcare spending per capita is likely a reflection of Utah having the lowest median age of any state. Most healthcare costs are spent on elderly people.
I should add though that life expectancy is affected at least as much by social policy as by healthcare spending. Much of the difference is a result of cars/guns/drugs killing more people earlier in life in the US than in Europe.
Doesn't seem like big correlation in this case. Violent crime rate is roughly double in California compared with Utah.
While Utah has a lower homicide rate than California (2.2 vs 5.1 per 100k) like many rural states it has a much higher suicide rate (21.5 vs 10.1 per 100k). Accident mortality (mostly overdoses and car accidents) are similar (49.7 vs 51.1 per 100k).
https://www.cdc.gov/nchs/state-stats/deaths/homicide.html
https://www.cdc.gov/nchs/state-stats/deaths/suicide.html
https://www.cdc.gov/nchs/state-stats/deaths/accidents.html
More on the drivers of lower life expectancy in US here:
https://www.healthsystemtracker.org/chart-collection/what-dr...
All really interesting stuff. Thanks.
The education is available to those who don't live here. The more "stuff" is not a fair trade for anything else mentioned.
Yeah. Education is absolutely broken.
> CoL is very low in the US and QoL is very good.
Compared to where? What is that based on? The strong public sentiment, determining elections, is that the US is unaffordable. People work multiple jobs and can't afford health care, housing, education, or even food.
Well, compared to San Francisco, was my point.
But you can look at random places like Tel Aviv, or London, or Milan. CoL is high in big cities around the world.
How about South Dakota vs the UK.
>The strong public sentiment
That's everywhere in the world. Of course, politicians are catering to what everyone complains about. But objectively, healthcare is better than it ever has been in the history of the world in every country in the world, including the US.
Right?
So you're right, it determines elections. But it shouldn't. That's really what I'm trying to say.
It depends what you include in cost of living. Healthcare and education tend to be more expensive than other first world countries, and the taxes are high given the fact that healthcare and education aren't part of what one gets from paying taxes.
Depends which state. I pay less for healthcare in the US than my friends in Europe when we break down the tax costs and private supplemental care that's necessary in Europe.
In fact, I pay their private health care costs myself because I don't want to wait a year for them to get shoulder surgery in the "free" health care system that's clearly not free.
Quality of life is very subjective though. Few American cities offer the kind of walkable lifestyles those of us who moved from Europe took for granted. San Francisco is one of the few places that can offer that, though even then I spent most of my career here driving out to Silicon Valley's suburban office parks. At least I could always walk to the supermarket, bars, restaurants, and cafes in my neighbourhood.
If you value a big house and are content to drive for all your errands most of the US is set up for that.
You're right, the cost is significantly higher than Europe to live in walkable type developments in the US. I prefer to drive places, myself. Carrying stuff home and shopping daily wasn't a highlight for my time in Europe. It takes so much time.
>financial independence (let's say, $10M in the bank)
In Russia $1M gives you financial independence for life
Until the next regime change or great war destroys your assets or makes them worthless. (Granted, that doesn't seem so impossible in the States any more, either.)
>doesn't seem so impossible in the States any more
A great war means both our countries will be thoroughly nuked.
Yes, but what kind of life is that?
Completely false, the money to help the poorest people comes from the rich ones, so you are poorer if the gap is smaller. But at some point too many poor people can make a country hard to live for the richest (crimes for example)
This statement is equally true if you swap poor and rich.
> money to help the poorest people comes from the rich ones
It comes largely from the middle and working classes, who pay a higher tax rate than wealthy people.
> many poor people can make a country hard to live for the richest (crimes for example)
I'm not convinced that poverty causes crime. It might be lack of public services, such as health care, shelter, food, education (creating social mobility), safety net, etc.
The richest or the merely rich can trivially insulate themselves from meaningful risk even in crime ridden hell holes. As far as the rest of us in the US crime has been on a steep decline for decades regardless of the blip in 2020.
There are only ever too many poors in America by virtue of inequality.
Being rich in the US has the benefit of giving access to the widest array of utilities meant for rich people.
You should travel a bit my friend. Ever been to Monaco? Switzerland? And few others. Tons of americans there/here, but they are mostly not coming back and have strong political opinions to base such decisions on. Once you are not poor, whatever it means, folks get very different priorities.
There are no trends of rich people thinking about moving to US from here in Switzerland for example, unless they want really to start some startup and already aim very high (but then Asia offers much more for less money, there is no US moat I could see). US as a country these days is mostly despised, thanks to your current government and its behavior.
Of course some US folks see it differently but but thats emotional view of home-is-always-best. Or literally prefer heavily class-based society based on wealth - we don't do that in Europe anymore.
You're confusing rich destinations with rich home bases.
The NYC metro area alone has 3x more billionaires than Switzerland and Monaco combined (although Monaco has only two.)
This isn't about politics or anything like that. The US simply offers the broadest range of services (vertically and horizontally) for ultra wealthy individuals, and extremely friendly capital environments.
Looking at migration trends for billionaires (so not billionaire creators but rather billionaire magnets) over the last 30 or so years - synthesis of various sources:
Top attractors are London (non-dom era), Singapore, Dubai, Miami, Austin, SF, NYC, Hong Kong (pre-[1])
Top repellers/outmigration are London (post-abolition of non-dom), Moscow, Hong Kong (post-[1]), China, high-tax zones in Europe, India, developing nations
For places that are in both lists but at different times, you can see the massive impact of public policy (non-dom tax haven, Chinese hand)
[1]https://en.wikipedia.org/wiki/2020_Hong_Kong_national_securi...
SF and NYC are the surprising ones there, because the rest are low tax (0-25% income tax, give or take).
Goes to show it is possible to tax people quite a lot and still be an attractive place to live, but you do need to bring something special (which in 2026 means "be the centre of the world for either tech or finance").
If you're good at that stuff but still very much second tier (London), the tax rate seems to matter a lot
It's better to be rich in the US because you can cut ahead of the line in virtually every segment if you have the money.
Why would you think this exclusive to the US? This is true everywhere (arguably it’s true tautologically, it’s practically what “being rich” means).
As an example: Healthcare. In a public, single-payer model, no amount of money can jump the queue.
Private healthcare exists alongside the public system in many places.
Go abroad for treatment, problem solved.
Sure, to a country like the US right? Then why not stay there?
A random person living in America has a higher chance of becoming rich than in most other countries.
This is untrue.
Here is a measure of upward mobility. We are 27 out of 82 right below Lithuania
That index measures a lot of things, most of which aren't related to the probability of a random person becoming rich.
However, despite the fact that we live in a country full of temporarily embarrassed millionaires, it is still a low %age chance of actually happening
Apparently, 25% of Americans over age 50 are millionaires by wealth, and so if you don’t expect those figures to go down, your odds of living to be a millionaire are pretty good!
https://www.fool.com/retirement/2024/05/27/heres-how-many-mi...
Yeah yeah, illiquid household wealth … but millionaires nonetheless.
Even the richest Americans face shorter lifespans than their European counterparts, study finds
https://www.brown.edu/news/2025-04-02/wealth-mortality-gap
In some specific cases, the mortality rates of the wealthiest Americans were roughly equivalent to the poorest individuals in countries like Germany/France/the Netherlands.
https://english.elpais.com/science-tech/2025-04-03/richest-a...
Exactly.
At some point the greedy rich people will realize that their well-being immediately depends on the well-being of others around them, and that at some point if you want to increase YOUR longevity (/quality-of-life, /pleasure, etc) you need to increase EVERYONE's longevity (/quality-of-life, /please, etc)
The crazy thing is this is with Americans being generally extremely puritanical when it comes to alcohol and tobacco by European standards.
What on earth are they doing over there that's so crazily unhealthy you can have no fun and still only live as long as a beer swilling chain smoking European working class person?
You're European? You guys shipped over all your individualist (aka antisocial) people to the US. They have no idea how to work together to build a society, can't trust each other, so all they do is hustle and pray that having money will insulate them from each other. Doesn't work.
I'm British so we are in a strange place where it comes to this stuff.
The shared language means we're totally submerged in US culture in a lot of ways, but equally we're quite distinctly European in others.
That cognitive dissonance explains a lot about the modern UK I think
Traveling vastly larger distances by automobile.
That's the difference.
Yep combined with eating a lot - being puritanical about all other vices won't help you much if you eat 5000 kcal/day and don't walk anywhere
If you're not rich, you'll need to bring a needed skill and be employable. They are not interested in people coming in just to claim social benefits and contribute nothing back.
What is the annual quota for naturalizing poor Americans up there? Or should I just overstay my visa? How much welfare will they hook me up with?
I think the point made by the article is that in either case you’ll be deeply invested in financial markets.
Sweden is in massive social decline due to stupid and incompetent immigration policies.
Immigration policy is rather a consequence of a demographic pyramid[1] that isn't really looking much like a pyramid anymore. Socialized health care and pensions is really dependent on able-bodied working-age people outnumbering the old and infirm by a pretty large margin.
Lax immigration policies were thought a solution to that, though I think almost anyone would agree (non the least the immigrants themselves) that the implementation of this solution was bungled fairly spectacularly.
Regardless of the merits of immigration as a solution, the nordics are very much, along many other western countries, kind of stuck between a rock and a hard place with regards to the demographic distribution.
[1] https://upload.wikimedia.org/wikipedia/commons/6/6d/Sweden_p... (it's actually looking a bit better now. For a while it had a very sort of unfortunate buttplug shape)
Meanwhile, having children is more difficult than ever. Preschools are asking parents for their attested work schedules, just so they don't sneak an hour of leeway between work and picking up kids... What a bait and switch that was, fool everyone that society will provide, nobody has to stay at home, then inch by inch, little by little, take those things away. Let the rich have their tax breaks though, lest they leave for another social democratic paradise.
Sorry, it's tough seeing this play out in real time.
It think anyone with any experience of it will agree that Swedish bureaucracy and policy making is, generously put, as misguided as it is bumbling, but whatever the cause of the declining birth rates is, any explanatory model also needs to account for why it is also happening in South Korea and Japan, along with the nordics and a bunch of other places.
I doubt young adults in in Seoul are skipping kids because of Swedish preschool policies.
How does the bottom 50%, those most effected, move anywhere.
Guess they'll just have to learn to vote in their interests.
Lots of us have always done so and are equally fucked
Yeah I'm not happy about it either. Moving to a different country, sometimes learning a different language, is hard.
HN hug of death:
https://web.archive.org/web/20260207195051/https://theloop.e...
I read the article but can't make any conclusion from it. Someone can explain in simpler terms?
Governments pick the size of their country's financial markets when they decide what parts of society get traded in those markets.
Pension and healthcare are the two most obvious pieces governments can decide to "make it themselves" or "let companies solve it", and the later option creates the pieces of paper that get traded in financial markets and "frees" money to buy those papers.
And the article ends with the obvious notice that "large markets" is not something good by itself.
He seems to be saying that Funded Pensions like 401k can lead to asset inflation such as high housing prices. While public pensions which are pay as you such as Social Security do not lead to financialization and asset bubbles.
It was a tough read. He should tighten his word choice.
This seems like an incomplete analysis since many countries with pay-as-you-go schemes borrow money to fund them sometimes, which contributes to general inflation.
The more people trust their pension system the less they invest their own money.
When economists were worried about "savings gluts", to decrease savings demand they advocated for things like government funded pensions.
If you read some of the literature out on China and their anomalous savings rate (household consumption is only 40% of national income) studies show that the lack of a social safety net exacerbates the problem and savings rates decline once you have the safety net.
One difference they noticed was the dramatic decline in savings rates as you go from rural to urban areas. In urban areas you have a different social safety net -- a government pension, but in rural areas the pension is optional and savings rates are dramatically higher. Because much social spending in China is handled at the provincial or city level and there are differences, it is a natural laboratory for these types of studies. It's also why you need a citizenship document when trying to "emigrate" into a city or different province, and there are internal controls that limit what city you can be registered in, which also affects things like car registration, real estate purchases, and access to local education in the city for people that are considered "migrants" - e.g. they physically live in the city but do not have enough points to be registered there.
I feel this in my own life. From well before my working years I had a message ingrained into me: “Do not count on social security to be around when you retire.”
It’s probably not all so drastic as that, but for me (and many other American millennials) my financial ethos has been squarely centered on saving and making hay while the sun shines. Compound that over 300M people and multiple generations and you do get overly deep and inflated capital markets.
As genX this was my experience too. The numbers have been clear for decades, SS is unlikely to be a great option by the time anyone working today gets it. (including people who retire in a month). Generally I think there will be SS when I'm old - but it will barely be enough to live on. I'm trying to save money so I can not only eat but also do other things I enjoy [that cost money] when I retire.
It’s not just you, I also read it and had little idea what the central thesis was. I see there are a number of points made but the author could do better job bringing it all together.
The author is using fancy words to say that communism is good
Parent is using normal words to say they have no idea what communism is
>Public pensions and family benefits may seem old-fashioned compared with asset-based solutions. But they provide security without locking households into markets, without generating trillion-dollar investment pools, and without driving asset inflation that prices younger generations out of housing and wealth. Sometimes, the non-assetising path may simply be better.
It's an obvious propaganda post intended to demonize the financial markets, and promote unsustainable social security policies.
If the options are pensions or self investment, how is one sustainable and the other isn’t? The investment dollars in scope are similar, with pensions being better managed than your average human would do.
> with pensions being better managed than your average human would do.
Only if they are. Some pensions are well managed. Some are not. Some seem well managed for years, but in fact they are not. Some have been well managed for a long time, but someone incompetent gets in power. Can you tell the difference.
Oh, and if you can tell the difference, can you convince everyone else and thus get this fixed? Or will voters be happy with the mismanagement because it is returning great results now on low investment leaving more money to spend on other things now?
I guess the question is: Will the average person 1. choose to save and 2. invest that savings better than the average pension manager?
I know, I know, everyone on HN is an investing genius and consistently beats the S&P 500, but we're talking average joe.
In the worst case no pension (either personal/private or public) is better than a pension. At least if you have no pension you got to use/spend your money today - it didn't go to whatever the corrupt pension manager did with your money.
Before pension reform in the US I had some distant relative who was laid off 3 months before his planed retirement when the company went bankrupt - it then came out the pension he was counting on was entirely invested in the now worthless company stock. This is the real risk you need to worry about if you have any form of pension.
In principle defined contribution plans should be a good way to split the difference, although I recognize that it's a lot harder politically to make them mandatory than it is for pension contributions.
The question is who is managing the pension. Defined contributions can be a really bad deal if you can't control who is managing the money.
The other major problem with contribution is you don't know when you will die. If I'm going to die at 65 like some relatives I should retire at 50, but if I'm to live to 97 in great health like others I should wait a few more years. (family history says my expected lifespan is about 80, but it follows a statistical curve ranging between 65 and 95 - just like nearly everyone else in a "first world" country). I want a system that acounts for how long I will live and my health and ensures I have plenty of money - group pensions should be really good at that.
Most pensions are Pay as You Go systems where no investment actually occurs (or if it does it is vestigial).
Effectively no different from a regular ponzi scheme being used to purchase votes.
Self-investment has the actual investment there.
If pensions were fully-funded you'd be right, but they aren't in almost every country. Unfunded pension liabilities are well over 300% of GDP in most european countries, but since they don't show up on debt to gdp metrics, people aren't aware of it.
>The investment dollars in scope are similar, with pensions being better managed than your average human would do.
Also that is untrue.
Retirement is going to be effectively pay-as-you-go no matter what you do (at least until we invent much more sophisticated robots).
You can't stockpile nurses and save them up for when you retire.
If you save money or invest in financial instruments, you're still relying on labor from subsequent generations and if there aren't enough of them, higher labor costs will eat up everything you saved.
The only way to really save up for retirement on the society-wide scale is to spend money on things that increase the productive capacity of future generations.
> The only way to really save up for retirement on the society-wide scale is to spend money on things that increase the productive capacity of future generations.
Indeed, and we didn’t do that. We invested in issuing debt and other non production capacity efforts.
>You can't stockpile nurses and save them up for when you retire.
But you can?
It's called paying nurses more to encourage greater supply...
Well, the current situation is equally effectively unfunded because you’ve got gains in an investment account that will be competing for a rapidly shrinking working age population in concert with large amounts of voters who don’t have investments but have a vote to vote for someone who will increase taxes to increase benefits. Pick your illusion of generational contract and financialization performance art.
Pensions are no more a Ponzi scheme than a capital market predicated on growth that will not occur due to structural global demographic dynamics. People are too bought into an abstraction while the underlying crumbles, for obvious reasons.
TLDR Humanity is Pay As You Go no matter what.
>Well, the current situation is equally effectively unfunded because you’ve got gains in an investment account that will be competing for a rapidly shrinking working age population in concert with large amounts of voters who don’t have investments but have a vote to vote for someone who will increase taxes to increase benefits. Pick your illusion of generational contract and financialization performance art.
You seem to have a serious misunderstanding of what the current situation is.
There is no "gains in an investment account" because social security is unfunded, and has only vestigial investments (many of which are primarily fig leaf to finance the government at lower costs/lower returns).
There won't be any "gains in an investment account that will be competing for a rapidly shrinking working age population" because there fundamentally aren't any gains.
Now, assuming that your misconception was correct, and that there was a pot of unrealized gains to be consumed when you retire... That still wouldn't cause any "competing for a rapidly shrinking working age population" because the thing about having resources is that you can spend them to get more of the things you need. Sure a large influx of capital requiring some specific goods or services would increase the price of those things... which would in turn increase the incentive to provide more of those things.
Frankly that isn't an issue if it's fully funded.
> large amounts of voters who don’t have investments but have a vote to vote for someone who will increase taxes to increase benefits.
And this is the problem.
Theft and its normalization through political power is what causes the self-funded and fully funded model to fail, not anything inherent to it.
>Pensions are no more a Ponzi scheme than a capital market predicated on growth that will not occur due to structural global demographic dynamics.
There is nothing to capital markets that requires growth. Indeed historically it is the opposite, and investors tend to overpay for growth resulting in lower returns.
So why have pensions rather than direct ownership and control via a 401k?
It's pretty obvious that pension fund managers have ulterior motives. It also seems insane that a bad pension fund or company directors can destroy people's retirement.
Hugged to death?