Re: Soc Sec: How do private investment accounts solve the problem?
From: Les Cargill (lNOcargill_at_cfl.Arr.com)
Date: 02/13/05
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Date: Sun, 13 Feb 2005 16:51:40 GMT
sinister wrote:
> <ta6bx@yahoo.com> wrote in message
> news:420c954f.961665@News.individual.de...
>
>>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.
>
>
> Exactly. Stocks and bonds are just claims on future production, no
> different in that sense from Social Security, back by future claims on
> production in the form of the sovereign power to tax.
>
> The more nuanced claim is that moving to private accounts will boost
> investment, leading to higher growth, leading to more future production.
> That's an empirical issue, and I'm skeptical.
>
>
It seems extremely unlikely that flooding the markets with even
more capital will improve much if anything.
-- Les Cargill
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