Friday, January 17, 2014

Optimism for Dummies: German economist makes 10 generation forecast

German retirement system exploits families, reports slightly right-leaning German daily Die Welt.

The more middle of the road Die Zeit talks of "massive disadvantages for families with children", which is a tad less aggressive than the Welt headline.

The government makes a net profit off of each child you put into the world. Well, at least in Germany. And according to a study commissioned by the Bertelsmann Foundation, not known for, well, no, we are not saying that....

The following graphic depiction shows how much the government "makes" off of each child and its descendants to 10 generations, with the cumulative figure over 10 gens in bold in the right hand corner.

This graphic is one of the dumbest we have seen to date in the K-Land.

Why?

Because no social scientist or economist worth their degree can seriously put a projection for 10 generations into a study.

Five generations ago, the western social security system did not exist. You can make population projections for the planet with some accuracy, but the numbers are just not there for what they do in this study.

And the numbers used do not tell the whole story, a story of lost well paying jobs, a story of an ever widening wealth gap, a story of large segments of the population not paying in to social security, and a story of women not wanting to go back to a full time job after having a child.
A story of industry and government itself not accepting women back, too.

Why would any self-respecting newspaper publish a study that basically says retirees still get too much money, those without children benefit, and despite social security credit for a mother's time spent raising kids, families lose out in modern German society.

It is cheap and easy frontpage news. No research needed, just an abstract of the study. Any intern can do it -- and it may well have been written by an intern.

Yet, once again, where the paper fails us, reader comments are plentiful and - in Zeit online - very thoughtful.

If you believe in projections over 10 generations, here is one for you.

If an ancestor of yours had put 1 dollar in the bank 10 generations ago at some interest, say three percent, you'd have a sweet nest egg today and no worries about social security.

See, I knew you'd crack a smile.

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