Fareed Zakaria has noted that the Federal government spends four dollars on those over 65 for every dollar on those under 18. This is the inevitable byproduct of an aging society with AARP as its robust lobbying apparatus. Incidentally, the situation will only get worse as our “demographic decline” continues.
Short of disenfranchising the old, I’ve seen no good solutions to the problem (actually, I’m hard-pressed to call this a “problem” but that’s another story). I have (what I think is) a neat idea that, at least in theory, would create an “intergenerationally efficient” political representation. It’s not politically possible, and requires a radically different concept of what democracy is.
Americans vote nationally every two years for an average total vote count of (78.5 – 18)/2 = 30.25. If we think about “voting” as a token, each eligible citizen is “granted” a token for each election, immediately after which it expires. But what if the government endowed voters with all 30 (untradable) tokens at the age of majority?
I can now temporally optimize a voting position based on my personal discount rate. Let’s back up a second and talk about what that means. Other things equal, I would like to spend a dollar today rather than tomorrow. I bet most of you would much rather have $100 dollars in your checking account today, than $500 in 50 years. This is one reason savings rates are so low.
Now consider an election where there are two, broad voting positions: (A) reform entitlements and increase spending on infrastructure, education, and climate or (B) maintain entitlements financed by cuts to education and a tax hike on the working young.
Today, voting power is proportional to the demographic distribution. That means as the population over 65 increases in size, so does their voting power. Let’s further stipulate that most voters are approximately rational. This means that “old” and “near old” voters will go position A, “young” and “recently young” will go B, and “middle aged” will split somewhere in the middle.
However, if you had all your tokens upfront, unless everyone’s personal discount rate is 0, voting power is no longer proportional to the demographic distribution. That’s because we value utility today over tomorrow.
In this case, voters between 20 and 40 will have a lot more voice because they’re just a little bit more careless with their tokens. Before writing this post I thought hard about my “electoral discount rate”. Perhaps I’d vote twice for a candidate I really liked in a swingier state. However, this isn’t really a correct thought experiment. If everyone else is voting only once per election, the political positions fail to reflect the discount rate, and it doesn’t matter.
There’s a good chance our voting positions won’t change much. Yet, if this doesn’t create any changes it means the “we’re burdening our kids with future taxes” crowd doesn’t have much to stand on, because those same kids have shown a revealed preference towards not caring.
Problems to this model are both theoretical and practical. In practice, we ought to be worried deeply about people who “vote and run”. That is, use all their votes on one election without planning to retain citizenship. Assume this away for argument’s sake. (Maybe you can require some sort of contract, at least enforcing tax positions for some number of years past each vote rendered. Or, even better, you pay taxes as far into the future as votes you use).
Does this alleviate intergenerational injustice? To some extent, yes. Let’s think about climate change. I’m going to make the rather ridiculous assumption that the “cost of climate change” is binary, and starts in 2100. Think about an election in 2075. Aside from the fact that it might be already too late (this is a scientific, and not theoretical, inconvenience) only a discount rate-positive system can make the “right” choice. In 2075, the 65+ population (which expects to die by 2100) is majority just can’t understand why we need a carbon tax.
Recent evidence suggests that we purposely answer survey questions like “did inflation increase under GWB” incorrectly to signal political allegiance. I think climate change is the same thing. However, if we’re paid, we make the right choice. If you’re young in 2075 the tax on this “cheap talk” is imminent climate change. None of us today face that, so we can really know the underlying opinions thereof.
However, under this system young people can coalesce and take extraordinary action to halt climate change, because they have far more “token wealth” as a) they’re younger and hence used less, and b) the elderly temporally optimized their voting preferences resulting in disproportionately lower savings in their retirement.
All said and done, I’m inclined to think that this will not change our political structure much, for better or worse. That means that we the young care about helping the old and they care, in principle, about education and infrastructure. Normally, high discount rates are seen as too deferential to the “here and now” over “then and there”. Interestingly, in this scenario, over the long-run, a high discount rate results in just the opposite.