Re: Soc Sec: How do private investment accounts solve the problem?
From: The Trucker (mikcob_at_verizon.net)
Date: 02/11/05
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Date: Fri, 11 Feb 2005 10:38:15 -0800
Zerge 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.
It is you, sir, who seem to have no understanding of economics. Personal
savings (as in saving up money) has has nothing to do with it. What
matters is the diversion of current consumption oriented production to
an investment oriented production, the diversion of effort from producing
lip gloss to producing engineers and scientist, the diversion of effort
from producing MBA graduates to producing scientific and technological
competence. A transer of the ownership of the means of production from
the current owners to a new set of old people is meaningless. The
"demands" of the elderly can be met in many ways (or not). The Republican
solution is to give Wall Street a bunch of dough so they can build
taller towers of power and to import more Mexicans. This also seems
to be the favorite solution for the Democrat wing of the Republican
party. The GDP can be increased by increasing the number of imported
Mexicans and paying them next to nothing. But it can also be enhanced
by _real_ productivity which demands _real_ investment.
-- "I know no safe depository of the ultimate powers of society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education." - Thomas Jefferson. http://GreaterVoice.org
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