ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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That's an awful lot of "Swiss" and very little "cheese" in this Swiss cheese argument.
In other words, Siegel's warning is overinclusive. Those who do not save will be "punished" for that in the long run -- no news there.
But those who do save will, most likely, in fact benefit from higher income opportunties as interest rates begin a steep secular rise as the federal budget spirals increasingly out of control. (Remember, retirees tend to prefer income securities rather than capital appreciation securities.)
So the demographic situation may very well change the asset mix away from zero-income instruments (e.g., non-dividend-paying stocks). But that's very different from "a long and painful bear market in stocks, bonds and real estate."
Stated differently, I have very little fear that the U.S. government will stop issuing bonds any time soon -- at ever increasing interest rates. So anyone, pre- or post-retirement, who has the cash to buy them will be fine. That's the rub, of course: making sure you have the money to invest in the first place. But again: no news there.
KipEsquire,
You are missing the point of the farmers vs parasites argument. When you subtract out the money what you are really left with is exactly what Arnold describes, only so many goods and services are produced each year. You either give them to the parasites or the farmers. What capital investment does is increase the productivity of future farmers (contributing to solution 1). When an individual saves for retirement, they are part of the solution (increasing productivity).
A pay as you go social security system however does *not* do *anything* to improve productivity, it simply takes food from the farmers and gives it to the parasites. This is the main reason why privitization of social security is crucial, because it increases the rate of capital formation and thus increases productivity and makes an attempt at solution 1.
Think of the choices this way:
1) Increase productivity (privitize social security)
2) Cut back on food given to parasites (reduce benefits)
3) Less food for farmers (increase social security taxes)
It makes no difference whether you invest in stocks, bonds, gold, or rare postage stamps. It makes no difference whether you earn an annual return of 0% or 20%. At the end of the line your financial assets at that time only serve to enable you to bid for whatever consumption goods and services may actually then exist or can be made to exist. You may be able to win the financial race individually, but everyone cannot win beyond the extent that the supply of consumption goods and services has been increased, something that only a small minority of possible investments contribute to.
Regards, Don
As long as people can still collect some benefits at age 62, I'm all for raising the age for full benefits.
The thing is, regardless of what happens to Social Security, I think most people will stop being particularly productive in their mid 60s. I'm speaking from my own experience of course - just looking around the office... and knowing I'll probably act the same way after I've been here another 10 or 12 years.
I know many people that are quite productive in their sixties; they either like their work or they need the income. If the minimum age for SS benefits were to increase to 70, I imagine we'd see people in their sixties working much harder.
Bill,
I know some older folks who work quite hard. I'm sure its quite common in the professions. But here in the cubicles I see a great many who are just putting in their time. Would making them work 5 years longer make them work harder? I doubt it. I think it would just mean they'd keep putting in their time for 5 more years.
And once we've created an incentive for employers to get rid of older employees, what would the government do with people over 62 who "can't find" suitable employment? I suppose we could just let the old guy and his old wife starve unless they take a job cleaning rooms.
So sure, cutting $100/mth for retiring at 62 is a great idea. But trying to get people to keep working - I don't see it happening.