Why were people so stupid about demographics in the past?

Question

When you consider such doomed-to-fail schemes as pensions and social security, I always wonder, were the powers that be in the 1930s, 40s, 50s totally ignorant of demographic trends? Did ANYONE ANYWHERE notice that people were living longer? Did anyone have the brains to realize that a higher ratio of old people:young people would make social security a Ponzi scheme?

Just wondering if there were any prescient voices of warning in those days of innocence and stupidity.
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Answer 1

In the 1930s, people WEREN'T living much longer.


But more important is the trend- which still continues- for policymakers to only care about the next 2, 4, or 6 years (depending on which branch of government). This is why monetary policy is so popular while fiscal restraint is never practiced.

Answer 2

I am sure they did.

The problem is that it was hard to forecast how MUCH longer people would live, and how much longer their retirements would last. Until the post WWII era, the country was growing quickly, and we figured that the increasing number of people coming in would offset the increasing number of people taking out. Also, the rise in life expectancy is a very recent development, within the last 100 years, and the people who came up with th New Deal had the not unrealistic expectation that half the people who paid in would never get any pay out. The average life expectancy at the time of the New Deal was 65, which is why they chose that age. Generally, over the last couple thousand years, people who did make it till they could retire died not too long thereafter, so it wasn't an extreme assumption to say this would continue. Usually, if someone even reached 65, they were pretty used up, since most occupations were physically demanding.

The average life expectancy has risen from 65 in the 1940's to the high 70's today, this is more than the system can absorb quickly.

Social Security was intended as a way to support the elderly poor in the few years when they were still alive but too old to work. It has become, as you say, a Ponzi scheme, although one with a long time horizon, and with some marginal adjustments, it could remain solvent for many years to come. FDR did not intend for Social Security to become a way for perfectly healthy 65 year olds to move to Florida, it was intended to put a floor under the workers so they did not fall into abject poverty after they ceased working.

The people who implemented pensions and Social Security were not dumb, they were just wrong in thei predictions of how life would be in the future. Their underlying idea on Social Security was sound, but we have perverted it in order to buy votes and win elections. It has become one of the taboo subjects of politics, and if anyone tries to reform the system, they are punished by not being elected.