David S writes:>From a technical perspective, social security is a ponzi scheme. People pay in and "invest" in nothing more than the hope that there will be future workers who will pay in to the system, who will similarly "invest" in the same hope. However, can we not agree that there is a [low] population problem in all countries with developed welfare states? Western Europe is not reproducing itself and therefore finds itself in need of immigrants to pay the taxes to finance current benefits. At a certain point, the game, like all ponzi schemes, is going to be up. <
this is backwards: the idea that SS is a Ponzi scheme follows from the demographic problem and not vice-versa: the problem, it is said, is that there aren't enough young and middle-aged folks who are working productively to support the non-workers, i.e., the oldsters. Thus, in order to keep the SS system working, you need a bunch of immigrants. (Immigrants have always helped the US thrive, by the way. Many of them are much better people than some of the native-born I know.) The demographic problem is based on a fallacy. It ignores the fact that the productivity of the young and middle-aged folks rises each year, so that we can enjoy a rising living standard (by market, i.e., GDP accounts, standards) _and_ accept the slight increases in taxes that may or may not be needed to keep SS going. The SS's trustees, by the way, do not predict any serious problems with the system for decades (and they're a pretty conservative bunch, making pretty conservative assumptions about the growth of the US economy). Also, if we take the demographic problem seriously, it implies that there will be fewer child non-workers in the future. That frees up resources that can be used to support the old non-workers. Schools can be converted into senior centers. Etc. By the way, no-one thinks that SS is a "free lunch." After all, in the US most people have to pay taxes to make it work. The only free-lunchers are the Bushwhackers, who think that they can finance individual accounts for young workers without cutting benefits to the retired (and disabled, etc.) > I would add that a significant reason for the population problem is precisely > because the welfare state is a disincentive for children (why have children when the > state will pay for your retirement).< So the French welfare-state policy of giving "family allowances" discourages fertility? And the private sector -- which raises the price of medical care and education -- is totally off the hook? I'd like to see a more complete analysis of this hypothesis. JD
