Re: Soc Sec: How do private investment accounts solve the problem?

ta6bx_at_yahoo.com
Date: 02/11/05 

Date: Fri, 11 Feb 2005 11:22:59 GMT

On 10 Feb 2005 23:10:37 -0800, "Zerge" <zerge@hotmail.com> wrote:

>
>ta6bx@yahoo.com wrote:
>> Supposedly when SS was started there were many people working and few
>> people collecting, say 15 working to 1 collecting. (Don't know the
>> actuall numbers).
>>
>> Now there are maybe 3.5 working to 1 collecting and in the future
>> there will be 2 working to 1 collecting.
>>
>> Obviously this is a problem for SS. But, how do private investment
>> accounts solve the problem? If there are 2 people working for each
>> retired person, these 2 have to produce enough goods and services for
>> 3. It doen's matter how the retired (unproductive) person gets money
>> to purchase their share of the national product. If the retired one
>> taxes the productive two, those two have less to spend on goods and
>> services and the retired one gets to spend what has been taxed.
>>
>> Now, If instead of taxing, the retired person has a big investment
>> account you have three people spending money to aquire the product
>> produced by two. The working two still get "taxed" in a way because
>> they cannot purchase all of their product.
>>
>> In the extreme say every one was 25 years old and every one saved.
>> When they all retired on the same day, they would have enormous
>> accounts. They would also all starve as no one was producing any
>food
>> .
>> It seems that the actual problem is the ratio of non-productive to
>> productive, not how the non-productive finance their
>> non-productiveness.
>
>You have a very sketchy understanding of economy, I'm sorry to say.
>The "retired one" does not "tax the productive two". The retired one
>saved a % of his/her earnings and invested it in stocks and bonds. This
>investment grew. Now he/she has a good amount of money to keep spending
>without having to work. That amount of money will demand goods and
>services from the economy. Entrepreneurs will build new companies to
>serve that demand. The GDP of a country is not a limited asset to be
>"taxed", as you suggest.
>
Who produces the GDP of the country if most of that country is
retired. People do not eat stocks and bonds. Someone has to produce
food.

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