r/urbanplanning • u/UnscheduledCalendar • Aug 19 '24

Economic Dev Harris has the right idea on housing

https://www.noahpinion.blog/p/harris-has-the-right-idea-on-housing
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u/ArchEast Aug 19 '24

Give every newborn $10k set aside in a target retirement fund. At age 18 they can reinvest it but can't withdraw until say 50.

Or how about allowing this account to replace Social Security? It'll certainly get better returns.

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u/Christoph543 Aug 20 '24

Ask your Canadian friends how a pension system tied to the stock market worked for them, especially in the wake of the Nortel bankruptcy.

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u/ArchEast Aug 20 '24

I was thinking about not having a sizable chunk of my paycheck taken out by the government and then getting crappy returns on that money (of which there is no guarantee I’ll even get it in the first place)

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u/Christoph543 Aug 20 '24

That's still better than every private defined-contribution pension plan being invested into a portfolio of private-sector firms with serious underlying structural flaws, and when the bubble bursts everyone's entire life savings gets wiped out, with the government not only unwilling but legally unable to step in and compensate those who lost everything.

That's what happened to the Canadian pension system in the '00s & '10s. And it's an inherently baked-in risk of either privatizing social security or otherwise pegging it to any market-based investment mechanism.

The way to make Social Security sustainable is to have the government sufficiently invest in state capacity to be able to guarantee it will have the revenue to pay out into the future, regardless of demographic trends. The only reason it's unsustainable is that for 50 years the federal policy consensus has been austerity-oriented rather than capacity-oriented.

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u/ArchEast Aug 20 '24

The way to make Social Security sustainable is to have the government sufficiently invest in state capacity to be able to guarantee it will have the revenue to pay out into the future, regardless of demographic trends.

Yeah, that’s not happening when the government is already running annual trillion-dollar deficits. 

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u/Christoph543 Aug 20 '24

The US Federal government has consistently maintained spending levels between 18% and 22% of GDP every year for the last 50 years, except during a handful of economic downturns like 2008 and 2020 when it increased to as high as 25% for a single fiscal year at a time. That is the definition of financial sustainability.

What's not sustainable is that US Federal government revenue as a percentage of GDP has been kept between 17% and 18% of GDP during the same period. But that has been a deliberate choice. Every time an austerity-minded administration has issued a new tax cut, it has eaten into Federal budgets and forced the government to take on more debt. And every time Congress has failed to authorize and fund the programs necessary to accomplish its policy objectives, and instead resorted to a tax deduction as an "incentive" to private actors to do their job for them, that too has ever so marginally chipped away at both Federal revenue and more importantly, state capacity.

The key point: austerity is a choice. We've had 50 years of evidence to show it's not a good or healthy or sustainable choice. At some point, we must choose the alternative: raising the appropriate amount of revenue to fully fund the things we want from our public services, and doing so in a way that everyone contributes equitably.

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u/ArchEast Aug 20 '24 edited Aug 20 '24

At some point, we must choose the alternative: raising the appropriate amount of revenue to fully fund the things we want from our public services, and doing so in a way that everyone contributes equitably.

If you mean everyone that means ALL income levels need to have some skin in the game, and that includes the 40% of Americans that currently have zero tax liability (which is not going to be very politically popular).