If the US economy functioned fine 10, 20, 50, and 100 years ago, when the population was ~half the size, why can’t it withstand a population decline now?

Question

If the US economy functioned fine 10, 20, 50, and 100 years ago, when the population was ~half the size, why can’t it withstand a population decline now?

In: Economics

Answer 1

It functions fine now. The issue isn’t the economy writ large, it’s Social Security (and similar), basically. Old people can’t work(/we don’t want to force them to), so we use taxes on the young to pay (some of) their expenses. This is where a declining population can become a problem — unless you have so much economic growth to offset it, if you shrink your workforce, you either have to increase contributions or decrease benefits, and we really really don’t want to have to do either of those things.

Note, this isn’t a Ponzi scheme — we don’t need endless population or economic growth to maintain the system. Even if GDP/cap and population stayed constant, we could still have a solvent social security system. But decreasing is a problem.