[Pwnguinz]

> even if they haven't produced offspring that will labor in the economy while the retired generation lives off their production.

This is the unfortunate fallacy that most make when looking to social security and its apparent dwindling in funding. You are insinuating that social services must come from taxation of individual labor, whereas our economy has successfully and continuously been moving towards a more capital based economy.

In short, where will the money come to fund future social services? More from capital, less from the individual labor of your children.

"But America as a whole won’t have gotten poorer: the money is still there to support the programs, it’s just coming in the form of capital rather than labor income. There would be no problem, at least in economic terms, in continuing the programs by adding revenue from general taxation, maybe even from dedicated taxes on capital income." - Paul Krugman http://krugman.blogs.nytimes.com/2012/12/28/policy-implicati...

[rayiner]

Krugman is using the term "income from labor" and "income from capital" in a tax sense, in the context of payroll taxes, because in the tax code we distinguish between "income from labor" and "income from capital gains." But of course we still live in a world where all income ultimately derives from labor applied to capital. E.g. when Google throws off a fat dividend, that's counted as "income from capital" for tax purposes, and Krugman is saying we should tax that to fund the retirement system. But Google, of course, makes it's money from engineers. If Google didn't have engineers, it wouldn't have any money. If they don't have enough engineers, they make less money than if they do.

Now, we could have a future where capital really does generate production by itself (everything is automated by robots). We're not anywhere near that point yet. For the foreseeable future, even to the extent that profits from Google, Facebook, etc, are counted as "income from capital" for tax purposes, it still depends fundamentally on human labor.