"It’s not easy to see how this asymmetry could be justified. Children have the same need for support as old people."
I don’t think that claim holds up. If we’re talking about the elderly who need the kind of intensive care we normally associate with children (help with basic daily tasks, constant supervision, and support with bodily functions), then they are significantly worse off than most children. A more accurate comparison would be sick children, such as pediatric cancer patients, rather than the general population of children.
To give a sense of scale: in the UK alone, dementia currently costs the economy around £42 billion per year, and that figure is projected to nearly double to about £90 billion by 2040 as more people develop the condition and require care. Most of this cost isn’t just medical treatment, but long-term social care and unpaid caregiving by families and friends.
The birth-rate problem can, in principle, be addressed in two ways: by creating more people, or by ensuring that existing people remain healthy and productive for longer. From a person-affecting perspective, the latter is clearly preferable to the former. From that, it follows that resources should be directed less toward increasing the number of children and more toward preventing age-related disease and addressing aging itself.
> It’s not easy to see how this asymmetry could be justified. Children have the same need for support as old people. One might argue that parents can provide for their children – but that may not be enough, and even if it is, it leaves parents financially worse off. That doesn’t seem fair, especially since children are a positive externality, benefiting all of society
It’s pretty easy to see why this is the case right? It is because the government mediates an insurance program for old age. If the pension system were not mediated by the government, “taxes” would be lower but people would end up buying the same good as old-age insurance. It just wouldn’t show up in the government statistics. I agree directionally with your point, but this just seems like a bad way to frame it because there is a pretty obvious explanation for this.
For "How to build tunnels that pay for themselves", the idea of government claiming a share of the windfall to property values near new train stations is kind of what's done in Hong Kong, where the monopoly train company, Mass Transit Railway (MTR), is mostly owned by the government. The main income of MTR is not fares but property sales at train/subway stations. MTR develops its own residential towers or malls above or next to new stations, or sells the rights to do so to private developers. It works well, and lets more people live within minutes of the subway.
Really sharp analysis on the fiscal asymmetry between age groups. That framing of children as postive externalities is something I've been mulling over after seeing how much my sister's childcare costs eat into her budget while the broader society will benefit from her kids' future contributions. If we're treating pensions as delayed compensation, shouldn't child investment be seen as advance compensation for future taxpayers? The fertility crisis kinda makes this even more urgent than the charts suggest.
All government spending is wasteful because it takes money from people by force and spends it according to the judgment of officials who can’t know what individuals truly need or value. Money spent by the government often goes to projects guided by politics, bureaucracy, or short-term popularity, rather than what actually creates lasting wealth.
When resources are redirected this way, opportunities for investment and growth are lost. Every dollar spent by the state is a dollar not going to businesses, entrepreneurs, or people who could use it to produce real value. The result is slower economic progress, weaker incentives to work and innovate, and money that circulates in ways that rarely benefit society as a whole.
Re fiscal incidence: New Zealand's Treasury has done excellent work on this topic too! The Long-term Fiscal Statement (https://www.treasury.govt.nz/publications/ltfp/he-tirohanga-mokopuna-2025) documents the fiscal implications of our ageing population. A short summary is available on the same page for quicker reading---check out the very first chart on the first page.
For the underlying microdata on how government spending and taxes redistribute across age groups, Wright & Nguyen's "Fiscal incidence and income inequality by age" (AN 24/09, https://www.treasury.govt.nz/publications/an/an-24-09): see Fig. 8.
EDIT: I meant for this to be a top-level comment but I am apparently incompetent at using substack on my phone whatsoever. Sorry!
> It’s not easy to see how this asymmetry could be justified. Children have the same need for support as old people. One might argue that parents can provide for their children – but that may not be enough, and even if it is, it leaves parents financially worse off. That doesn’t seem fair, especially since children are a positive externality, benefiting all of society
It’s pretty easy to see why this is the case right? It is because the government mediates an insurance program for old age. If the pension system were not mediated by the government, “taxes” would be lower but people would end up buying the same good as old-age insurance. It just wouldn’t show up in the government statistics. I agree directionally with your point, but this just seems like a bad way to frame it because there is a pretty obvious explanation for this.
I mean my issue is just that the allocation story and the explanation for it is very obvious if you think for a second about what the pension system actually is, and what would happen if we abolished it.
Not sure I agree that this implies we ought to raise or decrease taxes, but before even having that conversation we should be economically literate about the ways that policies currently function.
"It’s not easy to see how this asymmetry could be justified. Children have the same need for support as old people."
I don’t think that claim holds up. If we’re talking about the elderly who need the kind of intensive care we normally associate with children (help with basic daily tasks, constant supervision, and support with bodily functions), then they are significantly worse off than most children. A more accurate comparison would be sick children, such as pediatric cancer patients, rather than the general population of children.
To give a sense of scale: in the UK alone, dementia currently costs the economy around £42 billion per year, and that figure is projected to nearly double to about £90 billion by 2040 as more people develop the condition and require care. Most of this cost isn’t just medical treatment, but long-term social care and unpaid caregiving by families and friends.
The birth-rate problem can, in principle, be addressed in two ways: by creating more people, or by ensuring that existing people remain healthy and productive for longer. From a person-affecting perspective, the latter is clearly preferable to the former. From that, it follows that resources should be directed less toward increasing the number of children and more toward preventing age-related disease and addressing aging itself.
> It’s not easy to see how this asymmetry could be justified. Children have the same need for support as old people. One might argue that parents can provide for their children – but that may not be enough, and even if it is, it leaves parents financially worse off. That doesn’t seem fair, especially since children are a positive externality, benefiting all of society
It’s pretty easy to see why this is the case right? It is because the government mediates an insurance program for old age. If the pension system were not mediated by the government, “taxes” would be lower but people would end up buying the same good as old-age insurance. It just wouldn’t show up in the government statistics. I agree directionally with your point, but this just seems like a bad way to frame it because there is a pretty obvious explanation for this.
For "How to build tunnels that pay for themselves", the idea of government claiming a share of the windfall to property values near new train stations is kind of what's done in Hong Kong, where the monopoly train company, Mass Transit Railway (MTR), is mostly owned by the government. The main income of MTR is not fares but property sales at train/subway stations. MTR develops its own residential towers or malls above or next to new stations, or sells the rights to do so to private developers. It works well, and lets more people live within minutes of the subway.
Really sharp analysis on the fiscal asymmetry between age groups. That framing of children as postive externalities is something I've been mulling over after seeing how much my sister's childcare costs eat into her budget while the broader society will benefit from her kids' future contributions. If we're treating pensions as delayed compensation, shouldn't child investment be seen as advance compensation for future taxpayers? The fertility crisis kinda makes this even more urgent than the charts suggest.
All government spending is wasteful because it takes money from people by force and spends it according to the judgment of officials who can’t know what individuals truly need or value. Money spent by the government often goes to projects guided by politics, bureaucracy, or short-term popularity, rather than what actually creates lasting wealth.
When resources are redirected this way, opportunities for investment and growth are lost. Every dollar spent by the state is a dollar not going to businesses, entrepreneurs, or people who could use it to produce real value. The result is slower economic progress, weaker incentives to work and innovate, and money that circulates in ways that rarely benefit society as a whole.
Re fiscal incidence: New Zealand's Treasury has done excellent work on this topic too! The Long-term Fiscal Statement (https://www.treasury.govt.nz/publications/ltfp/he-tirohanga-mokopuna-2025) documents the fiscal implications of our ageing population. A short summary is available on the same page for quicker reading---check out the very first chart on the first page.
For the underlying microdata on how government spending and taxes redistribute across age groups, Wright & Nguyen's "Fiscal incidence and income inequality by age" (AN 24/09, https://www.treasury.govt.nz/publications/an/an-24-09): see Fig. 8.
With aged populations virtually everywhere, it’s only going to become more pronounced
yeah, that's called 'apres nous le deluge'.
EDIT: I meant for this to be a top-level comment but I am apparently incompetent at using substack on my phone whatsoever. Sorry!
> It’s not easy to see how this asymmetry could be justified. Children have the same need for support as old people. One might argue that parents can provide for their children – but that may not be enough, and even if it is, it leaves parents financially worse off. That doesn’t seem fair, especially since children are a positive externality, benefiting all of society
It’s pretty easy to see why this is the case right? It is because the government mediates an insurance program for old age. If the pension system were not mediated by the government, “taxes” would be lower but people would end up buying the same good as old-age insurance. It just wouldn’t show up in the government statistics. I agree directionally with your point, but this just seems like a bad way to frame it because there is a pretty obvious explanation for this.
Oh wait sorry I didn’t realize I replied to your comment initially, meant to make a top level comment! Sorry!
Mobile substack truly is godawful
I mean my issue is just that the allocation story and the explanation for it is very obvious if you think for a second about what the pension system actually is, and what would happen if we abolished it.
Not sure I agree that this implies we ought to raise or decrease taxes, but before even having that conversation we should be economically literate about the ways that policies currently function.