[natermer]

This is just a microcosm of problems governments are going to face with shrinking populations.

Another, related problem, is the issue of maintaining state pensions and other entitlement programs.

Social Security in the USA, for example, has a negative ROI. For it to work the government has to take money from younger working people in order to pay for older retired people. As the population shrinks you have less and less young people being forced to support the larger number of retired people.

All these sorts of programs have the same problems. They were designed in a era were it was assumed that people died off as a higher rate and people were born at a faster rate. As those trends gradually reverse then all welfare/entitlement programs are becomingly increasingly insolvent.

....

This sort of stuff is why the Soviets had to institute travel restrictions and a sort of passport system in the USSR; you can't have effective long term government planing with a rapidly shifting population.

[sametmax]

Yeah no. We have plenty of shrinking cities in France. The water system is still in perfect shape.

My old grand mother city is one of them: streets are full of closed shops, but the infrastructures are in perfect shape. Roads are pristine. Water is clear. Electricity is never ever missing.

[natermer]

Scale and time matters. How many of those cities have lost over 60% of their population since their peak?

The general decay in France is going to be at a much slower rate then some place like Detroit. This means that the increasing tax burden, crumbling infrastructure, and financial crisis not only are much less noticeable, but governments have more time to react and mitigate the issue.

The reason why places like Flint are impressive in their decay is because the rate of change in population is so extreme.

[sametmax]

From what I understand, the US has plenty of water problems even in populated areas.

And from experience, a lot of US roads suck, even in rich and dense area such as the Bay.

So while I agree with the logic of your point, I think the core of the problem lies elsewhere.

[vkou]

> Social Security in the USA, for example, has a negative ROI. For it to work the government has to take money from younger working people in order to pay for older retired people. As the population shrinks you have less and less young people being forced to support the larger number of retired people.

You can solve that entire problem with a few years of inflation. There's nothing, in principle, wrong with a guaranteed return-until-you-die investment, as part of a retirement strategy.

It's a smart part of a diverse retirement portfolio (Especially when compared with a 100% commitment to the guaranteed-contribution, variable-return investments of 401ks). I wish I could invest more than 3% of my income into SS - and I expect to take a haircut on that investment.

[jtuente]

SS isn't an investment though, even says so in its name -- Federal Insurance Contributions Act -- and like most insurance, it's expected that you will pay more into it than you receive in benefits.

[bluGill]

There are inflation indexed annuities that you can invest in. Most 401ks don't have them directly, but when you retire I advise my friends to move some of your saving into them: enough to cover the basic life expenses (insurance, food, rent). Because they are for life they are typically lower return on investment, but they lower the risk of living wrong so they should ensure you can afford at least the basics of life.

[vkou]

Sure, and I'll probably look into them, if, by retirement, the world doesn't turn into a Mad Max hell-scape. (Which I am not optimistic about.)

The thing is, all the same risks of Social Security (People living longer than expected, investment returns being lower than expected, a prolonged recession emptying out the fund, inflation turning your guaranteed returns into 'only-good-as-toilet-paper-money') apply to them, but even moreso (Because they cannot count on continued buy-in, unlike Social Security).

[rayiner]

The situation with water infrastructure isn’t sustainable even ignoring cities with shrinking populations. Many cities, like DC, are growing but have bad problems with their water systems, because of the extreme aversion to raising rates to the necessary level.

[linuxftw]

> raising rates to the necessary level.

How can they know what the necessary level is?

Perhaps they should institute higher prices for those further away from the distribution point.

[JohnFen]

> This is just a microcosm of problems governments are going to face with shrinking populations.

I don't think it's that simple. If it were, then why do we see similar problems in the areas where the population is growing?