By Arnold Kling
I am cranky, and annoyed. And I am not asking for very much. All I want is:
* No more claims that we know that carving-out Social Security revenues to fund private accounts will have no damaging effect on national saving. It might work. It might not.
* No more claims that the U.S. is a small open economy. It isn’t.
* No more claims that there is no reason to think that slower economic growth will carry lower asset returns with it. There are good reasons to fear this.
* No more claims that the household employment survey is as good a guide to short-term labor market trends as the establishment survey. It isn’t.
* No more claims that an honest forecast of what George W. Bush’s policies are sees the deficit cut in half by the end of this decade. It doesn’t.
I want attempts to raise the level of the debate, not attempts to lower it still further.
Let me add a few:
- No more claims that we can be indifferent between funding health care or retirement spending out of taxes and funding those expenditures out of personal saving. As Alex Tabarrok put it, “suppose that we documented exactly how everyone spent their yearly income. Now we tax everyone 100 percent and provide them with exactly what they were buying before. Nothing changes, right? Wrong. At 100 percent tax there is no longer any incentive to work – thus no one works and nothing is provided. Everything changes.”
- No more claims that extravagant promised benefits in Social Security and Medicare in future decades can be financed with small tax increases today (claims which at best could be true only if Congress would not spend the money).
- No more claims that Social Security is working because poverty is lower among the elderly today than it was during the Great Depression. Most of the reduction in poverty among the elderly over the past century, like the reduction in poverty in general, is due to economic growth.
For Discussion. If personal accounts rather than Social Security had been enacted in the 1930’s, what would we see today in terms of poverty among the elderly?