Arnold Kling  

Slate Produces Two Good Columns

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William Saletan writes,


The point of Social Security was to subsidize those who couldn't work, not those who could. The program's founding document said it would support old people who were "dependent," "beyond the productive period" and "without means of self-support." In 1935, that described people around age 65. Today, it more accurately describes people a decade older.

A lot of us think that raising the retirement age (or the age of government dependency) is the right thing to do. But Saletan's piece is the most eloquent that I have seen.

Another Slate columnist, Michael Kinsley, writes,


Krugman and Wells note repeatedly that 20 percent of the population is responsible for 80 percent of health-care costs. But that doesn't explain why health insurance should be different from other kinds. The small fraction of people involved in auto accidents in any year is responsible for almost all the cost of auto insurance. You insure against the risk of being in that group.

What's different about health insurance is the opposite: Much of it isn't insurance at all but a subsidy. The value of the subsidy is the difference between what the individual pays and what the insurance would cost in the free market. If people were buying health care or insurance with their own money, they might or might not spend too much—whatever "too much" is—but no one else would need to care if they did.


I recommend reading both columns in their entirety.


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COMMENTS (4 to date)
Lord writes:

There is really no need to raise the retiremeent age; this will happen automatically as people find themselves without sufficient means to retire. The incentive to delay retirement is already there in increased income and benefit levels.

With over half of healthcare paid for by government, how can a free market exist?

spencer writes:

Lord -- I think you have a good point.

For over a half century we have watched the baby boomers move through the demographic pipeline and generate massive unforeseen social- economic changes. Why should that change now?

Zubon writes:

http://econlog.econlib.org/archives/2006/01/at_first_glance.html

Title: Slate Produces Two Good Columns

What the Reader is Supposed to Think About the Story: This is newsworthy (because Slate rarely produces two good columns).

Or is this cigar just a cigar?

Eric J Rhoades writes:

The baby boomer concept as generally thought of by people is a myth. The baby boomer generation does not represent a higher percentage of the population occupying a particular demographic. If one looks at U.S. census estimates by age increments of five years for the year 2004 one sees that from the under five bracket to the 50-54 bracket all increments consistently run at about 20 million people. The variance is slight. After the 50-54 increment population numbers for the continuing demographics fall drastically.

The problem then is not that the baby boomer generation represnts a higher percentage of the population for their demographic, but that the preceding generation was so small in comparison, smaller and lived shorter lives. What this then leads me to believe is that the problems facing social security funding are not a one time event based around the retiring of this particular demographic, but are indicative of endemic problems in the system.

As Lord stated above the need for people to retire at a later age may be driven by factors outside of public policy. But this wont change the funding issues concerning social security, unless means testing is implemented. So if maintaining the fiscal viability of the program is an issue, then raising the retirement age is a natural policy move given the increasing productive life spans of people. However considering the softness of the job market over the last few years, especially in relation to the participation rate, it is hard to envision how another 15 million workers are going to be absorbed into the labor market.

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