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A few years ago, my co-blogger The Accumulator argued that fears for the future of the state pension were overblown, writing:
Governments stay in power by racking up achievement points with their supporters, neglecting those they cannot court, winning the spin wars, avoiding catastrophe, appearing more credible than the opposition, and kicking the really toxic cans down the road.
Your pension is protected by that political nutshell.
Perhaps it’s because they’ve grown up in an era of almost continual political upheaval, but Gen Z is not so sure. When you’ve seen your birthrights and much of your prosperity chucked overboard for a handful of famously hard-to-find magic beans, watched six UK prime ministers fall in a decade, and witnessed a cage fight held on the lawn of the White House, your political nutshells no doubt crack different.
In his early 20s, Joel tells the BBC this week that:
“I don’t believe that I’ll be a recipient of a state pension. I know a lot of people my age don’t think they’re going to be… There just won’t be enough money.”
Meanwhile 27-year old Conor rightly noted that “the goal posts keep moving”, adding:
“At the minute I’ll be 68 by the time I can retire, but I do think I’ll be probably closer to 75, if I’m honest.”
The BBC article is an unusually deep dive into how state pensions are seen by those still half a century from – potentially – receiving them.
Never mind the bollocks
We hear far more often from older generations about pensions – typically in uproar when, for instance, the sustainability of the triple-lock on state pensions is even questioned.
Meanwhile Gen Z quietly suspects that it will have to foot the bill.
It’s easy to scoff when a 20-something says they’ll invest in crypto instead of a workplace pension. But there’s a sort of everyday nihilism revealed here, too.
I’m from Generation X, the famously fatalistic mini-generation of slackers that (at the margin) worked McJobs – at least until the 1990s tech boom got going and we too got religion about capitalism.
Until then, those of us who thought about it suspected we’d be left behind.
But looking back – not least from the other side of a two-decade long house price boom that took homes from a doable three-times income to a bonkers ten-times-plus – our economic concerns seem modest.
And at least the doomed youth of the late 1970s had the Sex Pistols making headlines for them.
Gen Z turns to ChatGPT for comfort. And we all know it’s coming for their jobs, too.
Have a great weekend.
From Monevator
Help! My passive fund is aggressively tech focussed – Monevator
The Living Is Yield-y model portfolio: one year update – Monevator [Moguls]
From the archive-ator: Can dogs and FIRE go together? – Monevator
News
Britons see sharpest drop in wealth of any developed nation since pandemic – T.I.M.
Halifax brand to be scrapped after 173 years – BBC
Interest rate cut ‘off the table for now’ says BOE’s Bailey – This Is Money
‘Sh*tloads to come’: London takeover spree set to accelerate – City AM
Three in five homes listed in January have failed to sell… – This Is Money
…as UK house prices stall for second straight month – Guardian
How scam refund rules are reducing fraud – Which
Motorists face further delays to £9.1bn car finance refunds – This Is Money
NHS to reward people who walk 30 minutes a day – BBC
Hedge funds BlueCrest loses £200m tax battle with HMRC – Reuters
Bubbles or regime-shifting in gold and Bitcoin? [Log scale] – Econbrowser
Products and services
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Hargreaves Lansdown launches table-topping 4.5% cash ISA – This Is Money
The cheapest ways to get Wimbledon tickets – Be Clever With Your Cash
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley
Co-Op Bank slashes fees on spending abroad – This Is Money
Santander switch offer: £180 and a £45 Amazon gift card – B.C.W.Y.C.
The cheapest mortgage lenders in June – Which
Get up to £200 cashback when you open an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor
Chip shortages set to push up prices for electronic devices – This Is Money
Does marriage affect your home insurance bill? – Which
Homes for sale with kitchens that open on to gardens, in pictures – Guardian
Comment and opinion
Should a fund manager invest their own money differently? – Behavioural Investment
“We had packed lunches every day for 10 years and retired at 40” – BBC
Chauffeur knowledge – A Wealth of Common Sense
The ins and outs of withdrawing a pension early – Be Clever With Your Cash
The cost of status – Young Money
Alternatives in a portfolio: Role, risk, and realism explained – Vanguard
Retirees need a plan ahead of a potential lost decade – Morningstar
Is $5m in Treasury bills enough to be set for life? – Of Dollars and Data
A dirty dozen – Quietly Saving
Managed futures ‘crisis alpha’ is compelling – Tax Alpha Insider
Wall Street is becoming crypto – All Star Charts
Another AI maybe-bubble mini-special
Yes, this market is all about AI stocks… – Morningstar
…and what history tells us about the AI boom – FA Mag
Scottish Mortgage: Tech run can continue with ‘unreasonable prices’ – Trustnet
Naughty corner: Active antics
Don’t quit drinking, don’t quit value investing – Lee Roach via X
When information is no longer the edge – Enterprising Investor
The case for value over growth is building – Apollo
When PE firms borrow to fund ‘skin in the game’ – PitchBook
Social media causes coincident bubbles across different assets [Research] – SSRN
Embracing business failure mini-special
Failure as a competitive advantage – Investment Masterclass
Winning a game of failure – Vixology
Kindle book bargains
The Trading Game by Gary Stevenson – £0.99 on Kindle
Alchemy by Rory Sutherland – £0.99 on Kindle
What’s Your Dream? by Simon Squibb – £0.99 on Kindle
How to Have an Epic Retirement by Bec Wilson – £0.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
Are crows really our friends? – Audubon
The corals that shouldn’t exist – Biographic
Lundy Island seabird population soars after rat removal – Independent
Robot overlord roundup
We need a way to prove personhood online – Noema
Ford rehires human engineers after AI fails to match quality checks – BBC
Meta joins SpaceX in selling spare compute – Semafor
AI slop is starting to overwhelm engagement platforms – Bloomberg via MSN
Not everyone is happy to see delivery robots in the UK – BBC
Stiffed twice by the AI bubble – Simple Living in Suffolk
Gen AI creates delicious, sustainable, and nutritious burgers [Research] – Nature
Heavy AI adoption linked to more hiring, new study shows – Big Technology
Not at the dinner table
New ‘No 10 North’ plan will rebalance power in Britain, says Andy Burnham – BBC
Burnham also promises to ease cost of living pressures – Guardian
The wheels are coming off Putin’s war – The Bulwark
Trump’s financial disclosures reveal $1.4 billion in crypto earnings… – NBC
…but the White House sees no conflict of interest – Citation Needed
Florida is executing prisoners at a record pace – ProPublica
Off our beat
The surprising power of simple predictions – Tim Harford
Rips, a ghastly new digital Pokémon gambling game [Clue is in the name?] – Wired
How Amsterdam invented the fire department – Works in Progress
A beginner’s guide to cooking with beans – Guardian
Why Scotland is no longer ‘the murder capital of Europe’ – BBC
A super yacht armada left a marine graveyard in Miami – Bloomberg via MSN
Communion by JD Vance review: a strange, poignant book – Guardian
Couple turn mid-terrace garden into a tropical jungle with poisonous plants – BBC
And finally…
“As you gain more wealth, money solves fewer and fewer of your problems.”
– Nick Maggiulli, The Wealth Ladder
Note this article includes affiliate links, such as from Amazon and Interactive Investor.
It’s not just Gen Z, though perhaps they have more reason to be fearful. I didn’t believe that the SP would be there (and some part of me still doesn’t quite believe it, as in it could be means tested, explicitly or functionally through the tax system). It didn’t form part of my FI/RE planning at 52, and I have been retired for over a decade. That pessimism probably served me ill, because I felt more skint and probably underspent
So while I take TA’s point, there is a hidden assumption there, which is that Britain remains a democracy, at least in name, so his presumptions hold. I am not so sure about that now, particularly what happened in the US. Happy Independence day BTW good people of America, remember that freedom requires eternal vigilance, it’s not the British King that is your problem now.
Although the expectation would be of a rich fossil to become our future Führer, it is possible that an idealistic green rabble-rouser could take the crown. In the sleep of reason, monsters appear.
As a pensioner, I cannot understand the baseline 2.5% lift.
Keeping the pension inline with average earnings growth or CPI inflation is enough, surely? Why do we receive a 2.5% boost?
A double lock is all that was ever needed IMO.
So I did some pension modelling a while back plotting what income streams kick in as a function of time, and how they stack up. It was quite illuminating, I’m really glad I did it, but possibly the key insight was just how big a part the SP played. It’s massive! So I think the corollary of that is if it gets scrapped then it’s going to cause a huge amount of pain to the country. But I agree that the push to the right of the qualifying age looks similar to just canning it. If it did go to 75 say, then it’s really into diminishing returns territory, average payout 3.6 years. A counter insight was looking into the value of additional qualifying SP years, trying to assess whether OMY was justified in this respect. Came to the conclusion it wasn’t. So to summarise, SP good, additional years bad.
@Barm
The triple lock dates back to when inflation more closely averaged 2%. I’d hypothesise the intent was inflation ~2%, earnings growth say ~2.5% (.5% productivity increase seems a reasonable aspiration), and they threw the baseline 2.5% in there in the expectation it would occasionally increase the pension above wages/inflation and it was felt the state pension was inadequate, that seemed fine.
I don’t think the originators anticipated it becoming an untouchable policy, more that it would exist until the pension was less inadequate and then be revisited.
To me as big an issue is the inflation and average wages increase, as they often average about the same, but tend to be out of phase, so you get say 3% inflation one year, harder pay bargaining the next so average wages go up by ~3% but inflation has fallen and so forth.
Linkage to average wages (along with MP salaries etc) seems fairer long term, and similarly MP salaries should be multiples of average take home pay, to concentrate their minds on the the proletariat’s experience.
@Barm – general consensus is that it was needed to ratchet the SP up from a ‘too low ‘ level, but once it hits its target then that element should be dropped and revert to just inflation or earnings indexing.
Imho they should replace the 15% Employer NI with a 15% mandatory employer contribution to your workplace pension, and then freeze all State Pension accrual where it is today, just up ticking what you’ve accrued already by inflation.
This would give us a great opportunity to scrap all NI and increase income taxes (including dividend tax, and CGT) so that the whole system favours work more.
Because right now work is the most heavily punished way to earn.
Next step: introduce a worldwide tax on British citizens like the Americans do. No more fleeing abroad to avoid paying your dues. Tax treaties can take care of the injustices
“launches table-topping 4.5% cash ISA”
HL & This is Money [now?] show it as 4.3%
(I’m neither clever nor erudite enough to post ‘properly’, so am limited to nit-picking, for now.)
Perhaps we could start by following the Norwegian state pension fund model, taking the tax revenue from hydrocarbon extraction and investing it in a ring fenced account. Since 1999 their scheme has grown to a value of $2.2 T with average annual growth of 6.6%. It would, of course, mean that extraction would need to resume at pace, but I think there is only one voice arguing against that policy.
£2.2T at a 4% SWR would cover about 2/3rds of the annual pension bill.
@rhino
https://www.gov.uk/government/news/life-expectancy-at-older-ages-is-the-highest-its-ever-been
The link shows 12/13 life expectancy for 75 year olds.
Was the 3.6 based on life expectancy at birth?
Perhaps we are interested is how long are people expected to life if they make it to 55 years old. These people will have paid in (hopefully) a fair whack – I’d estimate it’s only going to take a couple of years off the 12/13 numbers above.
12 years state pension feels sensible given the costs (and consequential care costs).
I predict a Logan’s run movement in the near future, maybe with financial incentives..
@Bassavoce. (8)
Given that North Sea oil is in terminal decline, with or without new extraction, it looks a little late to view it as a meaningful contributor to a sovereign wealth fund, or ring-fenced pension fund.
Seems to me, that in a country of 69.5 Million population, there has to be more than 1 person who disagrees with ‘Drill, baby, drill’.
I see that Norway includes a wealth tax in their taxation regime. As does, for example, Switzerland.
@Barm (2)
I imagine the 2.5% minimum increase was there to ensure that the Government never had to suffer the political outcry Gordon Brown received as Chancellor when the state pension increase for 2000-01, based on inflation only, was 75p.
And as xeny (4) describes, the triple lock was deliberately designed to have a ratcheting effect until the state pension caught up to a reasonable level. The problem was that the intended eventual level of the state pension was not defined. (Declaration of interest: I am a state pensioner.)
@xeny,Rhino & DavidV
All good replies making perfect sense, thank you.
More for completeness than anything else, the couple in the BBC article who “retired” at 40 (“retired” because they really became youtubers which is another type of job) posted a rebutal: https://www.youtube.com/watch?v=2oUCqKLdNRs
The Great American Ranter thinks people should now expect 30-40 years of increasing interest rates, in contrast to the similar spell of declining rates that’s ending now. I suppose that means that people ought to consider how to clear their mortgages before the pain gets too great.
https://market-ticker.org/akcs-www?post=255646
He also seems to recommend abandoning equities and saving in cash. My own question is how rising interest rates will affect index-linked gilts. Presumably the effect will be small if the maturity dates are close enough. And then there’s Index-linked Savings Certificates: cash them in or keep as diversification? We’ve recently cashed in one third of ours: a reasonable compromise?
@Rhino #6
> value of additional qualifying SP years, trying to assess whether OMY was justified in this respect. […] Came to the conclusion it wasn’t.
Not worth working for, sure. But Class II and Class III contributions are still available for you early retired layabouts. Unless you have limited expected life expectancy once you do the comparison with buying the equivalent annuity on the open market additional years are a steal, particularly if you work at a very low level after FIRE or can make it look that way with some pin money projects.
@Boltt #9
> I predict a Logan’s run movement in the near future, maybe with financial incentives..
I’m not averse to the idea, I hated the way the Lords canned the assisted dying bill. I don’t want to exist as a vegetable and cost the State/NHS money – once the race is run, I’d prefer to let it go if quality of life is crap. Hopefully in some while yet and even more hopefully I’d just keel over, job done
@boltt – yes that’s a good point. I was using life expectancy for UK male from birth which prob doesn’t make sense, 75 wouldn’t make sense either. 55 sounds like a sensible compromise.
@ermine – absolutely, I mentioned previously here my aspiration to do exactly as you suggest. Would be a great wheeze. But an SP qualifying year from a full year of work, not so much..
@Rich – yes I can’t decide if the Donegans are grifters or good guys. Their comments feed seems highly curated which is a red flag. But to be fair, they are providing financial education courses for free (from the perspective of the end user), which I think is commendable. They are a bit matey with the escape artist which is another red flag, but on balance I think they get the benefit of the doubt. One thing’s for sure though, they never retired. They have a full time job the pair of them, but it’s a very intentional, self employed one. Looks like they have a lot of fun travelling the world doing it.
The state pension won’t be formally removed. It just will get means tested out of existence. Probably via taxation and fiscal drag. On the triple lock, it’s not massively expensive right now but it’s structure guarantees it will eventually be. Indexation to average earnings is the right decision, not CPIH. The state pension should be a function of what those who pay for it get paid. Makes it both sustainable but also fair.
@ermine. I’ve had one parent die slowly, painfully, over a number of months. There was no good reason for them to endure that. The other is basically in the same downward spiral. It’s hard for anyone to help without risking legal action. I blame the religious types to be honest. We need a UK version of Dignitas. Legal and simple.
@Rhino. I would say being matey with the Escape Artist is the sort of red flag you cannot ignore. So, grifters until proved otherwise.
@Ermine and ZX: I had a similar experience with someone I was very close to. Meanwhile one of my parents has recently been diagnosed with a disease that spells a terrible end.
I don’t think either of them would have chosen assisted dying but I think it’s inhumane to be denied the choice. I hope it’s there for me and I hope I’m brave enough if needs be.
@TI – I think I read somewhere recently that younger generations are tracking ahead of their creaky counterparts income-wise. Did you see that? Gen Z in particular, IIRC.
@TA. (20)
“.. I think I read somewhere..”.
I read that too. Looks like Gen Z’s are doing just fine in these early stages of their careers. In fact, they’re doing better than any other generation, except for the Boomers, at this stage of their careers. The Millennials took a hit in their early careers, from both the 2008 financial crisis and the subsequent wage stagnation.
State pension increases mean less is needed to be made up in pension credit and subsidized care fees, so cutting it wouldn’t save as much as we’d think. I’d be interested to know what percentage of state pension payments would’ve had to be paid one way or another anyway.
It could be argued too that because it’s taxable, it means any workplace pensions are more heavily taxed – that effect of it might not be fairly reflected in the numbers
On the other hand paying people to not be productive isn’t really a winner, work is good for health, but I suppose there comes a point where we simply can’t work – do we call that disability?
And employers might not want to be stuck with staff too elderly but on permanent contracts into their 90s etc – if there’s the risk of that we might see more ageism in hiring
@Matthew Ainsworth #22
> work is good for health
Sez who? I retired early because work was doing my nut in, I was drinking far too much to get it out of my head, and I am in decent health touch wood some 14 years down the line thank you very much. Which probably wouldn’t have been the case had I stayed working. So no, it isn’t good for health. It may be ok or better for some people’s health, but not everyone’s, and this myth needs to be laid to rest. Work just isn’t all that. Sure, pay your way, but then be done, there’s a lot of more interesting things you can do with your finite time on earth than working.
@Ermine – The drinking was probably the most damaging part of that I imagine, the stress at the time can otherwise be character building maybe – unpleasant, but leaving us stronger in the long term
But I do hedge my work because it’s a game of survival and endurance, 2 employers, 4 sites, so that I’m never taken for granted by being at the same place all the time, or stuck with one set of problems, so I know I’ve got boltholes if it comes down to it – there are ways of structuring it, zero hours contracts give options.
But I do think sitting at a desk, staring at a screen, ploughing through a pile of paperwork, isn’t going to be as healthy or fulfilling as hands on work where you’re moving around, doing tangible stuff that you can see. But most jobs break isolation a little bit, make us feel a bit useful, let us feel like we’ve earned our crust, give us something to talk about
> stress at the time can otherwise be character building maybe
Ah, I was that young pup once, my technician would never do overtime, because he had once gone off sick with stress. What is this stress you speak of, my 30 year old self thought, though I at least had the manners not to voice it.
And twenty years later, after the GFC and some psycho nutters in HR, it came for me. So no, the drinking wasn’t the problem, it bought me three years to marshal resources and invest most of my income to GTFO, and I have never been tempted to sell my time for money since. Even when I fearfully did some contract work post-FIRE I invested the lot, because as soon as you rely on work for your lifestyle you become a wage slave, and BTDT. No consumerism tastes as good as freedom from the hamster wheel feels.
So no, stress does not build character. It fucks you up, particularly past 40. If you are lucky like I was it concentrates the mind to get the source of stress right out of your life. If you aren’t lucky you get a heart attack, and if you are really unlucky your colleagues get to pay their respects at the little pile of earth that was once a former worker. I saw that a little too often as time went by, particularly after 45. Send not to know for whom the bell tolls, it tolls for thee.
Work really is overrated. Besides, there’s no point now. They tell us AI will do all the things anyway.
@Matthew Ainsworth #22
> work is good for health
Tell that to the miners with emphysema , the iron workers, and all the others with industrial diseases or injuries. Sitting in front of a screen all day isn’t exactly healthy either.
And there are better ways of breaking isolation, feeling useful and having something to talk about. And as for earning a crust, I’ve done that and am now living off the squirrelled away crusts, and completely voluntarily helping my community – not work, not workfare, just doing stuff that no-one is willing to pay the unemployed to do.
@ecomiser – there will be injury cases, like with exercise, of course that’s bad for those people, and I hope we’re wiser to the risks now, but it wouldn’t make exercise itself bad if done carefully – I think acrobatics looks dangerous, sprinting too hard might cause a ruptured aneurysm, but a gentle jog, aerobic exercise etc might be ok – if we’ve got to exercise in life, you might as well get paid for it
And yes, don’t depend on work income, and I do like zero hours contracts for retirees as a way of managing the load on your terms. I’d be tempted to give what I earn that I don’t need to a charity I care about.
@Ermine – I do sense the stress you’re still carrying from that time, I hope that heals for you, and that bad experiences there don’t put you off other things
@Matthew: This is satire, surely. Of all the alleged benefits of work that you could have mentioned, such as having a sense of purpose in life or being with other people. Although I think those “benefits” are mainly espoused by people who have no friends or hobbies. You choose stress .. really? The thing that kills people?
I have Ermine’s “Against Workism” essay bookmarked (https://simplelivingsomerset.wordpress.com/2024/12/10/against-workism-a-defence-of-early-retirement/) and I return to that from time to time. Worth a read.
@TA et al — Yes, the story about Gen Z tracking ahead of millennials was in last week’s Weekend Reading 🙂
What we have here though is potentially what pseudy people Like me call a “stocks vs flows” problem.
Will a smaller generation potentially earning a slightly higher income be able to use that to compensate for much higher national debt and capitalised future spending commitments etc?
Or to buy a home at 8-10x income?
I can see why they have their doubts though I see other sides too.
Absolutely I can see why people doubt. I guess that’s what we’re programmed for. I suppose that decades back some people questioned the point of saving for their old age as we’d all likely perish in a nuclear war (TBC).
Perhaps our fretting helps keep the apocalypse at bay. Maybe we can’t help it. Feels like a waste though.
This just in from Private Frazer:
https://www.youtube.com/watch?v=V7NlFWh7Sz8
@Matthew Ainsworth 27
Exercise cannot really be compared to work, and I’d hate to get paid to exercise. Why? Because I exercise on my own terms (very gently), not anyone else’s, and you can’t do that if you’re getting paid. Same with work.
I hope we’re wiser to the risks of work too, but the risks have not been eliminated.
#s 29/30 @TA, TI: we don’t need anything ‘bad’ happening for demographic doom, just a TFR <2.1/2.2 globally.
Musk is wrong about most things these days but not that.
The longest official (from a workshop of the EPA of the USG in June 2011) study (related to climate change concerns) that I'm aware of (going out to 2300) for both demography and economic impacts (the UN also did ones in 2004* and 2013, but for population only, both going out to 2300) said this (it's a hefty beast of a report, and it looks like Trump has removed it from USG websites, but I saved a copy at the time, and the 'fun' stuff starts at around p427-428 of 733):
"[This] report extends the projections to 2300 by assuming growth rates in 2100 linearly decline to zero, producing a global population size in 2300 of 8‐10.9 billion. Both the UN (UN 2003) and IIASA (Lutz and Scherbov, 2008) have carried out illustrative long term projections to 2300. In neither case do these institutions identify a most likely long term outcome; rather, both emphasise that the projections are intended to be illustrative of the consequences of different assumptions about fertility and mortality. The UN produces three projections that differ only in terms of fertility rates, which are assumed to converge to levels between 1.85 and 2.35 births per woman in the long term. This relative narrow fertility range produces a range of global population size of 2.3 – 36.4 billion people in 2300. IIASA considers uncertainty in both fertility and mortality, and assumes that fertility converges to levels between 1.0 and 2.5 births per woman, based on various lines of reasoning regarding determinants of fertility behavior. These assumptions produce a range of global population size of between 40 million and 47 billion people in 2300. Thus the SCC report essentially does not consider uncertainty in long term population size at all, since the range of outcomes it considers vary by a factor of 1.4 between low and high projections, while those in the demographic literature vary by a factor of more than 1000"
And (getting to the 'dosh' / 'wodge' part):
"In contrast, an illustrative exercise by Tonneson (2008**) applies a range of different growth rates to current GDP to project growth over the next 300 years. The growth rates are based on data for GDP per capita over the past 180 years, defining three scenarios by selecting the slowest and fastest periods of growth over this time span as well as the overall average growth rate. I combine these per capita growth rates with the projected population growth from the UN and IIASA scenarios, and with current estimated per capita GDP, to produce illustrative long range GDP projections. They span a range in 2300 from around $100 trillion to around $1 million trillion – a range of a factor of [sic] 10,000, far wider than the range of a factor of 3 covered by the SCC scenarios."
Although DJT (or whatever) looks to have scrubbed it from the USG's internet presence, there is still this yet longer (840 page monster) version of all the workshop papers and slides still available here: https://share.google/2xNsHW5TnhiVMn6a2
More recent independent academic modelling of low to very low sub replacement (TFR 1 to 1.75) fertility scenarios out to 2300 sees a very aged (about two thirds over 65), low income global population (in the lowest fertility scenarios) at the low single figures tens of millions (20-40 mn worldwide, about where we were at the start of the bronze age). If that transpires then, in some sense, it'll be the ultimate in (demographic) mean reversion, albeit with an inverted population pyramid (in 2300 CE, as compared to the 20-50 mn youth dominating worldwide bronze age population in 1200 to 3300 BCE).
*United Nations, 2004. World Population to 2300. Department of Economic and Social Affairs, Population Division. ST/ ESA/ SER.A/ 236. UN, New York.
** Tonneson, M. 2008. The statistician’s guide to Utopia: The future of growth. Trames 12, 115‐126.
@Delta Hedge #32
I can think of not one single aspect of humanity’s relationship to the environment that is improved by a higher population. Yes, of course it will be a challenge and a different society, but if the old saw that we need three Earths to support a First World lifestyle is true then the corollary is clear. And no, we won’t all be living on Mars etc for various good physical limitations, both of ourselves and of energy.
One of the reasons for the drop in fertility is that we have these aspirations to live above what the natural world can provide, that demands we compete with each other to allocate more of our life energy into work etc which reduces the amount that can go into the unpaid labour of children, which are a serious cost centre in the developed world. You can’t just extrapolate from the situation now and say that there will be the last man standing in 2500. Complex systems just don’t behave like that.
Humans are adaptable bastards, it’s our one piece of exceptionalism in what is otherwise quite an average animal. Perhaps that future society will scavenge a lot of our vast excess, and you know, perhaps living in smaller better connected communities will serve the basic design of the human critter better that a globalised seething mass of economic work units plugged into social media extracting their attention, hopes and dreams. We can’t all be content creators amusing ourselves to death on TikTok.
As for Elon Musk, he is universally wrong about everything that matters and right about everything that doesn’t matter AFAICS. We won’t go far wrong by inverting everything that comes out of the gobshite’s mouth.
My younger self used to view the landed aristocracy as an anachronism, but looking at the solipsistic, tasteless excess of the tech bros I wonder if earlier societies knew a thing or two about keeping excess in check. These guys are all about to have, rather than to be. You enter this world with empty hands and you leave it with empty hands, the art of living well is just as much about what you become as what you have, and the brash consumerism of the upper echelons of the technorati shows an epic fail on that front. They are ageing, and seem to be refusing the turning at midlife that shifts from success defined externally in what you have to it more defined internally in what you stand for, how you relate to the people around you and what you are in terms of character. They seem to be man-children, the lot of them.
Capitalism seriously discourages breeding in its work units. It will have to change, then, won’t it?
@DH – Yep, have noticed the issues around demographic decline. Then again, you’ll be aware of 1968’s Population Bomb.
I’m not saying humanity doesn’t face grave challenges. I’m not saying, “Don’t worry, be happy.” I am saying that subsequent events regularly don’t bear out our worst fears and projections.
It’s super useful we’re an alarmist species. It does seem to spur us to head off threats before it’s too late (fingers crossed). But we spend a lot of time living in fear.
Genuine question: do you think that living in a state of high anxiety is our superpower? Does it enable us to reform and correct our societies as needed? Or has it got out of hand in our information saturated world? For example, I can’t help but notice that my wee nieces can’t find anyone to play with in the local park cos free range kids seem to be a thing of the past.
##33-34/@ermine+TA: yep. Never take an exponential (in/decrease) and extrapolate to the indefinite future. Feedback. Phase transition. Reversion. Adaption. All kick in.
But… it’s 10,000 BCE, 4 to 10 mn people globally, at the start of the agrarian revolution.
The Paleolithic period naysayers say that it’s just a false breakout. Will never replace tried and tested hunter gather culture. Humans are all about the tribe and movement. Being tied to the land ain’t au naturel.
Skip a hundred centuries (a couple of percent blink of evolution’s eye in the species’ lifetime to date) and your proto farmer would have a heart attack in shock at a world of nuclear energy, airplanes, cars, the interweb whatnot, satellites and the digital banter of LLMs.
Future history did not mean revert for him. The feedback loop did not kick in.
We hugely overweight both the near term past and immediate future and massively underestimate the longer term (in each direction of time).
Yeah, TFR reduction (even the rapid phase right now) is not gonna take down humanity by 2500; but do you really think that we can balance exactly on a knife edge of stable population for thousands of years, less still the millions we should be aiming for??
Some form of collapse (even slow moving over many millennia) or explosion (digital people) is, statistically speaking, far more likely.
Like with AI where the Ed Zitron’s are likely right over 3 to 30 years but (I’m feeling confident) probably not over 300 to 3,000; so too with demographic destiny.
Don’t anchor to the 3 bn to 8 bn range you’ve lived with. Moves a 1,000 fold in either direction are not just possible but (for one or other) likely over the longest terms.
The biggie problemo for the long future large population scenario (esp if we get digital people with a future ASI) is that seems to fit ill with the Doomsday Argument (Richard Gott / John Leslie / Nick Bostrom et al); whereas a far future much smaller population due to ‘natural shrinkage’ sorta ‘solves’ the DA without an imminent catastrophe. Fading into irrelevance beats flaming out spectacularly I guess?
I only came across the doomsday argument a couple of years ago – being a statistician (of sorts) it stopped me in my tracks..
It’s another one where Musk is right – get to the stars or humanity fizzles out (or maybe a big bang)
@ DH #35 > Some form of collapse (even slow moving over many millennia) or explosion (digital people) is, statistically speaking, far more likely.
I have no idea and cannot imagine what a digital person might be 😉 I can grok the intellectual and theoretical construct by I am philosophically of the view that consciousness is embodied. But sure, you could hyperscale digital people, it’s all just microscopic patterns in sand. Whether there’s any point to the exercise is a different matter. May still be energy limited, at the rate it’s going AI will need more energy than all the humans anyway
As for the doomsday thing, if Wikipedia is right and the initial premise is
> suppose that the total number of human beings who will ever exist is fixed.
WTF? Let me fix that for you
> suppose that the total number of human beings who will ever exist is unknowable until there are no more humans.
@Boltt #36
> where Musk is right – get to the stars or humanity fizzles out
Well, since Musk is always wrong on the things that matter we’ll fizzle out. Or our survival is not one of the things that matter. It’s happened to other species before. The big problem with getting to the stars is both the amount of energy required but also we’re just not designed for that, all that hard radiation and stuff the Van Allen belts kindly thin out for us. And communications. Obviously if digital people are a thing then sure, fill your boots, though the energy is still a problem. I believe in the past that was called robotic exploration of space. Scientifically sensible but it ain’t got soul.
Haha, yes I went away and also tried to find out what the doomsday thing is. And yes, either it’s non intuitive (as statistics sometimes is) or it’s bullshit, or it’s both! Possibly the wiki description was just not the best?
@Rhino/Boltt/ermine: you saw the two urns example right? The first holds tickets numbered 1 to 10 and the latter numbered 1 to 10,000. You don’t know which urn is which. An adjudicator reaches into one urn and hands you a ticket. It’s ticket number 1. Do you really think there’s exactly the same odds that it came from the urn with only numbers 1 to 10 than from the urn holding tickets with numbers 1 to 10,000?
If you do, then you can’t simultaneously accept @ermine’s (IMHO correct) intuition that we aren’t going to the stars.
Say there’s 40 billion habitable (or, in any event, terraformable) planets in the Milky Way (one reasonable estimate). *If* we colonise the galaxy then you could have been born on any of them. And yet you were born on the first world, not the n billionth.
Does that not affect your view of how likely we are, therefore, to colonise up to the n billionth world?
I think it suggests we’re stuck here, just on this pale blue dot, with an aging and shrinking population. Just like you tend to find yourself in the longest queue at the checkout, because that’s where the most shoppers who are waiting to pay are actually queuing.
As it happens, there are some flaws (self sampling and reference classes assumptions), but there’s a Bayesian version which looks to me so far to be irrefuted.
If we are indeed shrinking and graying from now onwards (the acceleration in the rate of growth in global population peaked in 1960, the rate of growth itself plateaued from 1961 to 1968, and has been falling everywhere ever since, it looks like we’ve gone below global replacement fertility in 2023, and only increasing life expectancy is keeping world population rising, and the Institute of Health Metric Evaluation and the Institute for Applied Systems Analysis-Wittgenstein Centre pin world population falling from 2055-64 onwards, possibly from an ATH of just 8.9 bn); then it’s not a good look for either long term future investment returns or for the future of the welfare state. Fewer workers, more dependents, less tax. If so, it’ll be interesting to see if it pans out inflationary or deflationary.
I’ll give it a go without looking it up :
There’s about 10 dead humans for every living human – so around 100b people born so far.
In birth order my grandchild (pretend was born this Morning) is Rank 100b ie the 100b th person born ever.
The sample of all humans is a uniform distribution ie and in the absence of any other info the best estimate of our expected rank birth order is the 50th percentile
Therefore the best estimate for to final number of humans ever is 200b. And a 95% confidence interval would be 103b-4000b for the end of time total human births
Scary stuff (Bayesian stats)!
Like I said , I’ve probably remembered it incorrectly
Jumping in without doing the maths, but I’m not sure why the population of a dynamic and technology-adapted species should be presumed to have a uniform distribution (which I agree is underpinning this kind of statistics, as best I understand it).
Nor even a non-technology adapted species. I’m sure the rise and fall of the dinosaurs looked pretty uniform to a long lived extra terrestrial space scientist, right up until that meteor struck… 😉
Sometimes in investing, as more generally in life, an edge comes not from having new or different information, but instead from using the information others have already but chose not to see.
This is the missing quadrant in the Rumsfeldian epistemic model, the unknown knows (as Rumy, or his folksy likeness Yogi Berra, might have put it: that is the things we already know but have chosen to unknow, unknowledge if you will).
I think we do have information about the likely distribution of the future. Not certainty, but a probability distribution.
We have it from the intersection of the likelihoods of the human species longevity and cumulative population size.
At the 95% Confidence Interval the boundaries of the range lie at 2.5%/97.5% (a thirty-ninth) and at 97.5%/2.5% (thirty nine times).
Estimates (from the fossil record) of the past longevity of our species (as anatomically more or less modern homo sapiens sapiens) run from 200,000 years (from slightly dated research, now thought likely too low) up to 500,000 years (from the most recent research).
Estimates of past cumulative human population plus current living human population also vary, but there’s a strongly supported consensus around the Population Reference Bureau’s figure of 109 billion humans born and died plus the 8.2 billion persons now alive, for a cumulative total of 117 billions.
Given this, we can then with 95% confidence say that humanity will last from 5,100 years (being one thirty-ninth of 200,000 years) and 19.5 million years (being thirty nine times 500,000 years) and that there will be from 3 billion (being one thirty-ninth of 117 billion) to about 4.6 trillion (thirty nine times 117 billion) future births.
If one assumes the average future human lifespan is between 30 years (roughly it’s pre modern era average for those making it to a year old) to 80 years (roughly current global life expectancy at birth), then you get to between about 65 and about 650,000 future generations (i.e. from between 5,100 years divided by 80 and 19.5 million years divided by 30); for an average global future population size of anything from 47 million on the high end (for the shorter future timeline, i.e. 3 billion divided by 65 generations) and 7 million (for the longer timeframe, i.e. 4.6 trillion divided by 650,000 generations).
The future humanity will, statistically speaking, likely be a dessicated husk of the current era, so we’re quite likely around the top (give or take) of humanity’s ‘golden age’. The very long term might resemble something like the world building of Gene Wolfe’s Solar Cycle in his Book of the New Sun tetralogy:
https://youtu.be/Qt2-YPmKyfI?si=AhvM8eFXPEbDJ8cU
[@TI’s fave ‘Neuromancer’ gets a cameo around 21 mins]
Imagine you have two bags full of counters, you pull a red counter out of the first bag, thus proving interstellar travel isn’t possible. Is that the gist?
Joking aside, I’ll try again to understand it at some point. I did eventually get the Monty Hall problem so there is hope..
@DH (#42) At 19.5 million years, do you win the prize for the longest investment horizon?
@DH (#39) “I think it suggests we’re stuck here, just on this pale blue dot”
Mild extrapolation of current technology might just about see meaningful human colonisation (i.e., self sustaining) of Mars and other liveable real estate within the solar system.
The problems associated with interstellar colonisation require large extrapolations. Even generational ships (e.g., Harry Harrison, Captive Universe) require social and technical resilience that is currently far beyond our capabilities (as well as a patience to expend resources that will take hundreds of years to get to the nearest suitable star and ‘pay’ a return that, as a species, I suspect we do not possess).
Of course, FTL travel and inertial dampeners solve some of the problems but raise others!
Alan S #44: re 19.5 mn years: in the long run everything ends up as mean reversion. Thermodynamic heat death and then quantum fluctuations lead to a new ‘cycle’ of cosmological chaotic Eternal Inflation, and, ultimately, to Poincaré recurrence within any finite horizon volume.
On FTL, Alcubierre only uses his (theoretical, mathematical construct) warp metric to teach his students why it doesn’t work. There’s no 4-D coordinate in spacetime where a useful (information carrying) signal propogates faster than the speed of causality (light in a vacuum).
I think we’re already in the down leg after Peak Human. I don’t know if the period from say 1991 (collapse of the USSR) until 2025 (start of Trump 2) will be seen in a millennium as a distinct becalming ante chamber to an era (2026 to maybe the 2040s???) of rising and high level geopolitical and economic volatility and disruption, like characterised the earlier period from the Russo-Japanese war in 1904 (or the Sino-Japanese war over Korea in 1894-5) through to 1989-1991 (which ‘shock jock’, vox pop, ‘BritScot’ historian par excellence, Niall Ferguson, calls the period of the “War of the World”). It’s plausible to me though that it might.
@Rich (#28) – I like Ermine’s ‘Against Workism’ too. But long before him, Bertrand Russell wrote a masterpiece on the same subject that I highly recommend reading if you haven’t read it yet. Here is another link to bookmark:
https://harpers.org/archive/1932/10/in-praise-of-idleness/
‘I think that there is far too much work done in the world, that immense harm is caused by the belief that work is virtuous, and that what needs to be preached in modern industrial countries is quite different from what always has been preached’.
‘When I was a child, shortly after urban working men had acquired the vote, certain public holidays were established by law, to the great indignation of the upper classes. I remember hearing an old Duchess say, “What do the poor want with holidays? they ought to work.” People nowadays are less frank, but the sentiment persists, and is the source of much economic confusion’.
https://harpers.org/archive/1932/10/in-praise-of-idleness/
BTW: If anyone missed the Morning Star’s Long View recent interview with Jeremy Grantham, it is really worth listening to. Specially what he says about demographics, the environment, the chances of humanity surviving in the future, AI, the idea of colonising Mars or even the Moon, etc. It’s very lucid and full of common sense.
https://www.morningstar.com/podcasts/the-long-view/jeremy-grantham-almost-everything-looks-more-attractive-than-us-equity-market
I listened to that podcast too-great stuff especially on the positive point that demographic reduction will possibly save us all in the long run -reassuring ?
xxd09
DT today: “For the first time in half a century, deaths are now believed to outnumber births across England and Wales. This historic milestone – which researchers have dubbed “Death Day” – comes as British fertility falls off a cliff. Live births recently hit their lowest level since 1977, with the fertility rate plummeting to 1.4 children per woman.”
UK has it mild.
Check out China now at TFR of 0.98, and falling fast.
All despite the one child policy of 1979-2015 being reversed with fertility incentives introduced (including financial subsidies, tax relief, extended maternity leave, and healthcare support, with a total estimated fiscal cost of 180 billion yuan / $25.8 billion for 2026); despite an official 3 children policy being adopted; and despite also an estimated 500 mn prevented live births up to 2015 giving rise to an absolutely massive births shortfall today.
Meanwhile, South Korea’s TFR has been as low nationally as 0.72 to 0.75 (across 2024, 2025 and as estimated for this year).
Regions within countries are even lower.
Parts of Manchuria believed to be at 0.5, and Seoul is just 0.55.
In 1960 South Korean TFR was at 6…..
I think the empty planet scenario is quite plausible. If it’s coupled with a youth shortage supply crunch (of labour and human and financial capital) then it could be an emptying and high inflation with high rates (to counter deficit spending on healthcare and pensions leading to devaluation). That’s going to be epically bad for house prices worldwide in the very long term.
Belated thanks for the linkage @TI
Some very interesting comments as usual, cheers all!