Social Security Debate Online
The Wall Street Journal has posted one of their periodic Econoblogger Celebrity Death Match thingies. This one features yours truly and Max Sawicky, on the topic of Social Security Reforms.
I’ll use this forum to respond to some of Max’s charges that I left unanswered.
we have not succumbed in this dialogue to any economic voodoo about privatization inducing some magical rise in GDP
I actually think that some pretty solid classical economics would suggest a higher path of GDP with privatization than without, but I agree that this would have been a poor topic for dialogue. We also steered clear of the whole Social Security Trust Fund issue, which would have been another poor topic.
If Medicare spending is going through the roof, the implied benefits have to be an important work incentive. You can’t have it both ways. Medicare can’t be simultaneously be a Cadillac program but instill no desire to work.
Last I heard, the amount of Medicare benefits you are entitled to is not a function of how long or how hard you work. But actually, it is not the effect on work that concerns me. It is the effect on savings. Those of us in middle age can count on incurring tens of thousands of dollars in health costs as we get older. Yet we are being told not to worry, that our rich Uncle Sam will take care of all of it.
In Figure 6, we see the total dependency ratio (including children) was as high in 1960 as it will ever be through 2050. We have already had a glimpse of the deluge.
But children do not collect Social Security benefits from the government. As a society, we took care of the dependents of the 1960’s. But, amazingly enough, we did it with individual families providing for their own children.
the Bush administration has done everything else stupidly…We have to hope there will be life after Bush
Our differences on political economy probably can best be summed up as being that Max distrusts Bush and I distrust politicians in general.
For Discussion. Does the WSJ format work to generate a useful discussion, or do the participants simply talk past one another?