Inverted Population Pyramids

How to reconcile the paradox of individuals each making rational decisions to choose financial security over expensive children leading to a society that is financially insecure, without resorting to the strawmen of late stage capitalism? Populations get older as fewer children are born, putting a bigger tax burden on a smaller earning population as the state needs to take care of a larger non-earning section of the population. A lot of heavy lifting there with many true subclauses that nonetheless sound dubious together. As always I begin from the individual and then resolve inconsistencies in the sleight of hand that comes from extrapolating from the individual to society before admitting, as always with a grudging lack of grace, that the sleight of hand might have a case.

1. Who will take care of me when I’m older: If you have 5 children, your expenses in your old age are split 5 ways. But your expenses to raise them are multiplied 5 ways. The equation is simple. Your child is an asset you invest in, and that asset pays you dividends when you need them, contingent on 2 facts.
2. A) Your asset appreciates by using your seed capital to actually plough in effort and ability to reach a state of substantial growth on initial investment
3. B) Your asset recognizes your stake and therefore right to returns though there is no shareholder documentation, which means your actual stake could range from 0% where the asset washes its hands off you for being a horrible parent, to 100% where the asset will sacrifice its own wellbeing in an act of supreme gratitude. This, of course, you will not allow as you are sufficiently emotionally invested in the asset’s wellbeing. So you will err on the side of caution, and take just a little below what you might even need.
4. The utility of Children: There is no creature on this planet that procreates in order to be taken care of when older, securing a secure future. At median, it secures an afterlife, at best it secures the momentary pleasures of raising children. I think it’s important to start with this biological reality because it makes ludicrous any conception of children as a pecuniary decision exercise. It was perhaps true when strength was security, and the aged have no possible way to maintain a hold on strength the way they can on wealth. Today, wealth is security and we created financial markets precisely to reduce uncertainty about the future and pad out a period of inevitable relentless decay. I say this not to reduce the utility of children but to highlight that even if you consider your child an asset that pays dividends, the lions share of these dividends are non-monetary, that’s what the asset is good for.
5. Children as Assets: Assets store value and generate income. But the financial asset’s store of value is only the sum of the income it can generate in the future, making children instrumental without any intrinsic value. Can they not be both, providing both monetary and non monetary utility? It depends on your decision-making and your balanced optimization for value, for these are not non-overlapping magesteria, nor are they zero sum games, but the balance is neither clear nor easy.
6. The market for asset-children: All assets follow demand and supply. In a developing market, growth rate is high, and small investments in children result in large outcomes even without killing yourself. In a saturated market, you’d be lucky just to retain value and maintain your standard of living. Competition is insane, so if you really want your initial investment to return high growth dividends later, you will need to really sweat that kid to its breaking point, taking decisions optimized for future returns rather than intrinsic value.
7. Child-rearing is becoming more expensive: Not just in terms of the cost of children but the opportunity cost of time spent rearing them that might otherwise have been spent in productive hours at the workplace. This is the primary reason people are having fewer children, not some new-found freedom or courage about facing old-age without the financial and emotional support of human pets and slaves disguised as children. The calculus has defined that your current standard of living cannot tolerate an additional cost shock of children, and your future standard of living cannot tolerate the dent in savings required to make your nest egg. These are 2 different equally important calculi
8. A) The present value of utility of children is lower than the utility from similarly expensive experiences. This is likely to be untrue for the vast majority of our biologically wired species. For a minority it is not true. Even for the majority it need not be catastrophic, there is nothing particularly disastrous about a life that summed up to a lower total utility than it was capable of.
9. B) The present value of the dividends from children’s income generation is lower than the present value of investments and savings. But financial markets have no underlying securities, whereas the future income of your child has a human being that is staked as a security, and though that human being may die more easily than a bank, that brings far greater problems than simple financial issues. The idea that the economic system is less reliable than your baby is a magnificent conceit that has nothing to do rationality and everything to do with utility and biology. So why not neatly separate the two and spare everyone the heart ache.
10. Decoupling Children and Financial Security: The creation of the private sector and financial market was supposed to reduce the financial burden on children for your post retirement years and instead maximize the optimization of parenthood decisions on the intrinsic value of children. But an unintended consequence is the opposite, where you take the fact that children cannot possibly compete with financial markets in the creation of post-retirement security as a mark against children and put all your eggs in that creation of the private-sector nest egg through maximizing savings and investments in your prime. You no longer have the rationalization of ‘investing’ in children, they have become a luxury good, a Veblen good even. They exist purely for their own sake, and that makes them an indulgence. It holds no financial utility, only the utility of pleasure, and that makes them a frivolous indulgence. That is not their fault, it is yours, because in their moldability lies infinite potential to construct the artifacts of a meaningful life well lived, and anything short of absolute transcendental purpose will render your life a failure, long and financially secure as it is. Your decisions now are no longer optimized for ensuring the long-term dividend payoffs of your seed capital in the child, but in controlling so many aspects of the asset that are all tailored specifically to give your life meaning over a massively long horizon. It doesn’t take a neurotic to forgo child-rearing and write a book instead, or learn a skill, or travel.
11. Children as Sacrifice: There is only one winning solution then. You sacrifice your life for the child’s, and accept that the act of bearing children is an open declaration to the world that you have subordinated the contents and purpose and meaning of your life to those of the child, of the other, and this makes you a martyr, it makes you dependable, it makes your selflessness visible and admired, and in that you find a new sort of utility to be enjoyed and also abused. The measure of your personal meaning after this fact is the extent to which you optimize for the child to find its own meaning, its own actualization and thriving, the fulfillment of its potential according to a set of values it discovers and invents, with help but no contamination from you and yours. This is the ideal of parenthood
12. The Ideal of Childless Parenthood: That brings us back to society then. If the childless have not declared their selflessness and begun the journey to the ideal of parenthood, of sacrifice and subordination, then what value could they have to the subsequent generation. The conceit that their knowledge, experience, perhaps even money and power, would be of benefit as guidance is magnificent again, because it is always colored by the fact that their motives are compromised, having skipped the declaration of the capacity for selflessness. Their ends are their own, and that makes them untrustworthy, their experience suspect, their knowledge meaningless and their money corrupt. The elderly childless have become subprime.
13. The Elderly as Assets: We are all subjects of the great law of demand and supply. In an inverted pyramid, there is too much supply of those with claims to accumulated capital be it wealth or knowledge, too little demand for the latter, and too little access to the former. As technology improves and the dissemination of knowledge becomes easier, it is not the knowledge worker that is endangered, but the elderly. It is not the rate of return on our children that we have become pessimistic about, but ourselves. We doubt the sustainability of the ability of our experience to generate income, making the future uncertain, and the present that much more important for hay-making. But that merely explains a phenomenon that we’ve already explained through the risk-averse decision making of a pessimistic working population covering its future, it doesn’t explain what we really seek to explain: the pressures of an inverted pyramid
14. The Elderly as Liabilities: Whence the sleight of hand then? The working population has subordinated expensive questionable-asset children to savings and investments, which are objectively superior decisions when it comes to financial futures. On average then, all this frenetic production and sacrifice at the altar of work secures financial security for all of these childless martyrs. They haven’t sucked out liquidity from the system by eschewing the expenses of children for their bags of cash sitting under their mattresses, they’ve injected it into a system that promises to return dividends to them far greater than children can. And the rest they spend, on themselves, shifting industry from children to young adults and the middle aged. Their liability comes from their motivation. Their independence is the source of their unreliability. It is not their dependence that the state fears but their independence, for that unshackles them from the state’s project
15. The State as Asset: How much of state spending is a variable expense, how much is as fixed as the square mileage that requires fencing, tracking or roading. If a large part is fixed, and the tax base is getting smaller, the fact that the variable portion, ie the section of your population that requires expenditure, is getting smaller makes a smaller dent in the pot than does the reduction of the contributing base. The state can of course reduce its fixed expenditure as well, that isn’t tied to how many people use the service but to how many years down the road the state’s project is secured for, through infrastructure and defense and capacity building. The fact that there are fewer young people does not mean their appetite for how many years down the line they want certainty and growth to be secured has reduced. Fewer people, each wanting just as little uncertainty as we do. So the state shifts its tax bill from income to wealth, and that is a big problem, for now it targets the population that has the least leeway to do anything about the new circumstance, they cannot go back in time and have children to reflect the new calculus of unreliable returns from actual wealth. Would you rather buy golden eggs or the goose that lays them, after you’ve killed the last one? All your calculations have come to nothing, for the state cannot consider your particular standard of living and your risk tolerance in imposing its tax shock. You’ll have to increase your tolerance or reduce your standard of living, just like any external shock. But what if you have no margins
16. The Vulnerable: All this considers a massive if. You’ve had the luck, capability and willingness to execute the childless plan that resulted in financial independence. What if you did not. How many of you are there among the childless youth of today? How many will end up gaining financial independence? How many will become the liability elderly? This proportion is of huge interest, because the childless have relegated responsibility for their elderly liability to the state, for there are no children to shoulder this burden. The state’s project includes this safety net that prevents abject vulnerability, including where the child has abdicated its responsibility citing evil parenthood. If the success rate of the childless youth is lower than the production of new youth, then the state has neither its cake nor the eating of it, for the returns from this financial market and private sector in replacing unreliable children with reliable future dividends have accumulated in the hands of a few fortunate, capable and willing individuals, childless or not, and the rest, childless or not, have remained financially insecure. It is no time for postmortem, but what is the extent of shared responsibility in the decision to chase financial security outside the purview of children in an uncertain economic environment. Is your wealth expected to match the market returns and anything below that is your fault, and if the market returns are below what is required, then it isn’t your fault? Will your frivolous spending be blamed, or perhaps your non-astute decision making despite all the free time you had from lack of child rearing? The risk premium then is much higher for the childless worker despite the fact that his horizon of expenditure is much much higher, decades away compared to the child’s immediate expenditure and the near-future expenditure of the child’s education and training. The state cannot simply wash its hands off the extent to which an individual’s returns fall below the market, for the market returns are so ridiculously non uniform that you’d need to not just abdicate child-rearing but everything else in service of watching the market in order to be on the positive end of standard deviated returns. So the state adjusts for at least one standard deviation below market returns, but as long as the market grows healthily, even that standard deviation is well above the point at which you’d need the state’s help
17. A Failing Market: And here is the point that ties everything together, the dependence on the financial market to replace a child’s nature as income generating asset, the shrinking tax base, and the generation of income itself. The point that needs to dance on the edge of the strawmen late stage capitalism. The market is a function of output, and output is a function and capital and labor. It doesn’t matter that the childless youth have secured capital for the future, if they have not produced labor. That means the output, and the function of output, the market, both begin to fail. That isn’t the problem if the function lags behind the variable, it will simply self-correct. There are fewer people, and lower output, and lower future need for output, unless there isn’t in which case there are more people being produced, leading to greater future output. Unfortunately, the market is reactive, and reacts before the variable. So it drops faster than the variable, the function leads the output, and returns drop faster than need. For the youth, there is not as much to be lost, for they merely work this in their calculations, and perhaps child rearing becomes more attractive than investments and savings. For those who have killed the goose already, what scope is there for correction.
18. The Great Attractor: The state is supposed to live in the present, affecting outcomes today, maintaining law and order and justice. It has no hand in the decisions you make that play out over decades. Don’t cheat or steal or lie today. This is why we have a hard time believing the state has a moral duty to save you from lung cancer or heart disease, as long as you don’t drive drunk or shoot someone in a rage. But what about the decisions of a large number of people that shift long term phenomena in directions that are contrary to the information you have at hand today while making rational decisions. Does the state have a duty to ensure the homeostasis of conditions based on which you make incredibly long-horizon decisions? How long is that horizon? The world is uncertain, and to an extent we all factor that in, but we’ve been lulled into a sense of complacent faith in the reliability of the modern world functioning smoothly and persistently. Which generation will have to suffer the moment where that faith is tested and perhaps shattered? Surely it cannot last forever. And when it fails, what happens to all the decisions you’ve made?
19. The Static Organism: This is the true problem of the inverted pyramid, an inflection point of the nimbleness of nature and the stability of culture. A species reproduces at a faster rate when the environment is less stable, in order to adapt more quickly to a changing external system. Developed nations have falling birth rates because at an individual level the future is not uncertain, the system is stable and the choice matrix is transparent. But today, uncertainty has been injected into the system from the outside in the form of technological and environmental change. Flux and entropy have taken a stable system by surprise, and its individuals react slower than the system already nudged out of orbit. The state then has promised conditions of stability and now has to answer for those changing conditions to those individuals in society for whom it is too late to adapt and adjust and reorient. The youth will re-skill. What will the elderly do? They are liabilities not financially but socially, as individuals of a species in an environment that has rendered their adaptive traits insufficient. So it isn’t just the machination of late stage capitalism that feeds on the energy of a virile and adaptive young population, but the species that seeks certainty in an increasingly uncertain world through individuals who are well placed to not just encounter change but possibly sublimate it into something creative, productive and beautiful.