Nobel Economist: No Bullshit On Social Security
An editorial in the FT today by Joseph Stiglitz on social security. With the White House Used Car Sales team out there flashing the usual smoke and mirrors it's nice to see some straight talk. It's not really a very complicated subject. Because of a change in the age structure of society (ie a higher ratio of retirees to active workers), the current "pay as you go" system is set to go bust. Not today. Not tomorrow. But, according to the pundits, around 2040. That's 35 years from now, when people who are not even born yet will have been in the workforce for 10 years.
I don't know why the Used Car Sales team is deciding to make a big issue of it now. I suppose they've always been opposed to it, and now they're thinking they better get it done before the Sales Director leaves office in 2008, because the chance may not come again. No doubt they have the full backing of Wall St., which stands to make a lot of money in fees and commissions on those pointless private accounts.
"If there is a remarkable achievement of the Bush proposals", Stiglitz concludes, it is that, "they simultaneously undermine the solvency of the Social Security system, worsen the fiscal deficit, diminish the security of the elderly and increase the incidence of poverty". The Bush proposals do nothing to attack the root problem, and it's hard to see how anyone could believe otherwise. Worth a read.
Meanwhile in a related story on the front page, Standard & Poor's has declared that the US, Germany, France and the UK will be junk credits within the next 30 years, for the same basic reasons -- pension and healthcare costs for the growing retiree base swamping the ability of the active workforce to pay.
A lot can happen in 35 years, friends, take it from one who has been around for a while. To assume that society will not find ways to adapt to the changing circumstances is extremely naive. The world population will be around 8.7 billion by 2040 (from around 6 billion now), of which a good 3 billion haven't been born yet. Technology will continue to evolve, and productivity will continue to grow as a result. I'm not saying we shouldn't do something about the theoretical future imbalance in Social Security. But for heaven's sake don't swallow the bullshit being shovelled out of Washington.
I don't know why the Used Car Sales team is deciding to make a big issue of it now. I suppose they've always been opposed to it, and now they're thinking they better get it done before the Sales Director leaves office in 2008, because the chance may not come again. No doubt they have the full backing of Wall St., which stands to make a lot of money in fees and commissions on those pointless private accounts.
"If there is a remarkable achievement of the Bush proposals", Stiglitz concludes, it is that, "they simultaneously undermine the solvency of the Social Security system, worsen the fiscal deficit, diminish the security of the elderly and increase the incidence of poverty". The Bush proposals do nothing to attack the root problem, and it's hard to see how anyone could believe otherwise. Worth a read.
Meanwhile in a related story on the front page, Standard & Poor's has declared that the US, Germany, France and the UK will be junk credits within the next 30 years, for the same basic reasons -- pension and healthcare costs for the growing retiree base swamping the ability of the active workforce to pay.
A lot can happen in 35 years, friends, take it from one who has been around for a while. To assume that society will not find ways to adapt to the changing circumstances is extremely naive. The world population will be around 8.7 billion by 2040 (from around 6 billion now), of which a good 3 billion haven't been born yet. Technology will continue to evolve, and productivity will continue to grow as a result. I'm not saying we shouldn't do something about the theoretical future imbalance in Social Security. But for heaven's sake don't swallow the bullshit being shovelled out of Washington.
posted by econoclast at 7:26 PM
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