From: Damien Sullivan (phoenix@ugcs.caltech.edu)
Date: Mon Apr 07 2003 - 23:27:20 MDT
On Mon, Apr 07, 2003 at 09:24:24PM -0700, Lee Corbin wrote:
> But let's suppose that (a) people don't die early, and (b)
> one particular Western country (e.g. the U.S.) never crashes.
> In this case, can we really say that the pyramid scheme
> enriched anyone?
Yes: the first batch of retirees who got money from the system without having
had to pay in. At least I assume there was such a group, to get helped out
(or taken out of the labor pool) in the Depression.
I have seen claims that the eldest segment of the population has gone from
being among the poorest as a whole to being the richest. I think I may have
been this from anti-SS people. Note this would include the admission that
most people after a lifetime of work were still pretty poor.
> If this assumption is true, then it means that (1) the money
> properly invested would yield less, and (2) society is better-
> I find both assumptions unlikely. The first is unlikely
> because it discourages savings and investment, and has the
You find your first assumption unlikely because it would discourage saving and
investment? Isn't that like believing in God because the alternative is
emotionally unappealing?
One thing about SS is that while the yield might be less, it's more secure.
Society has developed a certain unwillingness to see starving old people, even
if they 'earned it' through bad luck in the stock market.
Paul Krugman occasionally has interesting things to say about the total amount
of savings in the economy. I'll try to come with something on the spot.
Say there's S money going into SS, which might otherwise go into the stocks
and bonds markets. The money either turns around going out to someone else,
or else gets parked in US bonds. Which reduces the amount of money the US
gov't must borrow from outside, thus reducing the interest rate on the debt,
which after all has to be paid by the taxpayers. So there's less explicit
yield on the SS money, but it's lowering taxes as well. Perhaps these effects
cancel out? And if all the SS money were going into the stock market, but the
gov't still needed to borrow X money, it'd raise interest rates to attract the
money. Raising taxes, as I said, but also leading to the conclusion that the
total amounts invested in stocks and bonds respectively may be the same with
or without SS (the same in each scenario, not the same as each other.)
-xx- Damien X-)
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