Social Security in Nepal will create an enormous downside for society in the coming future. In short term, it’s great! You take some money and give it to the old people and they are happy and it doesn’t cost you that much money. There are a lot of people who are young and not many people who are old, and when the young get old - we are all screwed - people who are our age will never get to see our social security money. Older people will not have an incentive to save, the saving rate will actually go down after social security, because you may well spend your money because somebody else is going to pay for you when you are old. Also, historically, when you get old who takes care of you? Your kids! so the net cost was you are going to spend an enormous amount of money, feeding your children, bringing them up, keeping them safe, and then when you got old, you are not gonna have to worry about yourself because your kids will take care of you, now social security is going to take care of you - now you don’t have to have kids. It’s actually going to be pushing our society more towards western society.
The SSF people in Nepal talk about how it is a very practical and well-experimented method in countries like the United States and wants to follow the footprint without actually having any idea about what’s happening right now in terms of the long term result of SSF. In 2034, the SSF is going to go bankrupt in the US and is running on negative cash flow every year, which is a government program, and won’t go bankrupt - so in order to prevent that they are rather radically going to reduce benefits or increase taxes. The old is going to pay a small amount of money and they will be getting thousands of rupees, it’s not because they invested in the stock market. It’s because they are taxing us thousands of rupees. One of the things social security has done is that it has sifted the burden of responsibility from individuals and families to the government. The government will be just taxing us to pay for their great-grandmother and somebody else’s grandmother since the government does not have its own money supply. By the way, who are the wealthiest cohort, as you get older you get richer, you have more money, you have more assets, you have a house, you’ve been earning for 50 years. so basically you are taxing people who are poor to pay for those who are rich and actually is a regressive policy.