Arnold Kling

Krugman on Social Security

Arnold Kling, Great Questions of Economics
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Paul Krugman really understands social security. I know this, because I went to and found this essay, which Krugman published in 1996.

Generous benefits for the elderly are feasible as long as there are relatively few retirees compared with the number of taxpaying workers -- which is the current situation, because the baby boomers swell the workforce. In 2010, however, the boomers will begin to retire. Every year thereafter, for the next quarter-century, several million 65-year-olds will leave the rolls of taxpayers and begin claiming their benefits.

...the general thrust is clear: slow the growth in benefit levels, gradually raise the retirement age, impose limits on expensive terminal medical care that prolongs life for only weeks or days and -- last but not least -- raise taxes moderately now, rather than massively later...sensible proposals, however, because there is not the slightest prospect that they will be put into effect -- or indeed that we will do anything serious about the looming crisis until it is almost upon us.

Social security is one of those issues where economists hold a position that is ignored by politicians, who instead indulge in demagoguery. Krugman understands the importance of gradually raising the retirement age. However, in his current incarnation as a columnist for the New York Times, Krugman omits any mention of the economic consensus, because it runs counter to Democratic Party orthodoxy.

Discussion Question. If the real problem of social security is that there will be too many retirees relative to the working population, why focus on the issue of privatization?

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