Arnold Kling  

Reality-Based Retirement Club

PRINT
Thoughts on Education... Euro Bet...

In an audio file, Russ Roberts interviews Greg Mankiw. Toward the end, Mankiw endorses raising the retirement age for entitlements--what I call the age of government dependency. Welcome to the yet un-named club! (not that Mankiw's membership is new).

My current thought for a name is the "reality-based retirement" club. That name lacks the esoteric cuteness of Pigou Club. But it is designed to convey the notion that reality has changed--and continues to evolve--since Social Security and Medicare were enacted. People have more lifetime wealth, they are healthier at age 65, and they live longer than was the case 40 years or 70 years ago.

The interview consists of Roberts pressing Mankiw on a number of issues. Roberts takes Keynesian economics and large macro models for dead, but Mankiw does not. Roberts predicts bad unintended consequences for a tax on gasoline (the Pigou club), but Mankiw does not.

What struck me was the gentleness of Mankiw's approach to argument. With all due respect to Roberts, I thought that Mankiw usually got the better of the exchanges. It reminds me that one does not always have to be heavy-handed to succeed in a debate. A light touch can work, as well.

Listen to the podcast* for this debating dynamic and see what you think.

(*random technical note. Due no doubt to some ineptness of mine, I cannot get these files to play in Mozilla on Windows. I wind up having to shut down Mozilla and use Microsoft Explorer.)

UPDATE: Russ is still arguing.


Comments and Sharing


CATEGORIES: Social Security



COMMENTS (9 to date)
Randy writes:

I guess I really don't have a problem with raising the retirement age as long as no group, not even current retirees, are exempt. After all, while the younger folks are the ones who are currently paying, it is the current generation of older folks who are "healthier at age 65".

So how about a test? Those deemed healthy enough to work will be required to continue to work, while those who are no healthier today than those who were 65 fifty years ago will be allowed to retire. Or how about just leaving the age alone and reducing the benefits to what we can afford to pay. Better yet, transfer the retirement part of the system to one of private accounts so that people can make their own decisions about when to retire, and move the welfare aspects into a separate needs based system funded through a general tax.

Lord writes:

If those 65 year olds are really healthier than ever, then the costs of covering them should be declining.

I don't think raising the age is desirable for several reasons. Do we really want to compete in a global economy with a bunch of 70 year olds? Do we really want a society where many people work until death? Do we really want a bunch of poor elderly who can't find work past age 50 except at fast food restaurants? Wouldn't everyone be better off with a large wealthy retired class whose spending supports the rest of the economy?

Steven Vickers writes:

Do we really want to compete in a global economy with a bunch of 70 year olds? Do we really want a society where many people work until death? Do we really want a bunch of poor elderly who can't find work past age 50 except at fast food restaurants? Wouldn't everyone be better off with a large wealthy retired class whose spending supports the rest of the economy?

Whether or not raising the retirement age is a good idea, it's a classic fallacy to believe that one can stimulate the economy simply by transferring money from one group (current workers) to another (current retirees), particularly when the latter group is, I believe, on average wealthier than the population as a whole.

Barkley Rosser writes:

Steven,

The argument for not raising the retirement age has never had much to do with making the economy grow more rapidly, despite Lord's one remark about competing in the global economy. It has much more to do with that even though the average life expectancy may go up, there will be people in manually demanding disciplines who will find it hard to work into older ages.

Susan writes:

I do not think that retirement age should be raised. I think that because people are living longer they are working longer already because they do not have the money to sustain themselves. Companies’ retirement plans are not what they used to be and people are already looking at their retirement plans, realizing that they are not enough to sustain them for the next 30 or 40 years. People are going to have to take retirement into their own hands and start planning much earlier in life if they want to retire around 65. I look at my grandparents in envy because they received a good retirement plan from Duke Power and are in their late 70s, still healthy and without the worry of money. I hope that my parents and I are just as lucky as they are.

Steven Vickers writes:

Prof. Rosser-

I understand what you're saying, and it makes some sense. I just wanted to point out that saying society is better off with a wealthy elderly class "supporting" the economy doesn't really work as a defense of current retirement ages.

SteffenH writes:

Mr. Roberts is absolutely right when he points his finger on political problems of the pigou tax. Despite economic findigs of tax interaction effects advocates of the pigou tax are still talking of a double dividend of environmental taxes and that they want to solve a bunch of other problems with tax revenues (i.e. subsidies energy technologies). Even in theory pigou taxes have a lot of flaws as Coasean Economics teach us. I think advocating environmental taxes without considering the reality of political processes is dead wrong. What strucks me is Mankiws statement about his expertise of climate science. If he doesnt understand the complexity of this problem in what sense he is a expert to choose a solution. In my opinion pigou taxes could bring a political advancement in our situation, but only in a pure form (small tax rats and using revenue for cutting distorting taxes). We dont need another third best solution, lets advocate improvements but don't loose sight of the flaws. And that was what Mr. Roberts was trying to articulate.

Arnold wrote:

Due no doubt to some ineptness of mine, I cannot get these files to play in Mozilla on Windows. I wind up having to shut down Mozilla and use Microsoft Explorer.

For any browser, to listen real-time to an .mp3 file, you need a plug-in that plays .mp3 files. You may be trying to use Mozilla Firefox to play .mp3 files without an mp3-playing plug-in.

One reliable mp3-playing plug-in for Firefox is Quicktime. Quicktime is usually supplied with Mozilla's Firefox browser on Windows as the default player for mp3 files and many other file types. Maybe you over-rode the default. There are several other options, though I haven't explored them all.

Note that, currently, one option that won't work to play .mp3 files with Mozilla is Windows Media Player. It does not play .mp3 files in browsers other than IE. See Mozillazine.org:

If you came here wondering how to make Firefox use the Windows Media Player plugin play a specific file type instead of Quicktime, then you should know that the WMP plugin is hard-coded to only play the proprietary Microsoft formats (.asf, .asx, .wm, .wma, .wax, .wmv, and .wvx), and Windows Media Player provides no provision for changing this. For the most common formats found on the web (like mp3, midi, mpg, wav, etc.) you will need to install and configure Quicktime or Quicktime Alternative.

EconTalk makes downloading pretty easy, with one click, for anyone who wants to play the .mp3 files via software or hardware that doesn't work automatically with their browser. For example, many people use iTunes as their default .mp3 player. Downloads allow people to listen at their own convenience, and also function any time software or plug-in defaults don't function as expected.

Lauren--Econlib editor

Snark writes:

Dr. Kling,

Please don’t resign yourself to the generically boring “Reality-Based Retirement Club”, an epithet that has about as much personality as a mop. We all know that, regardless of how substantive an idea may be, it takes a clever meme to resonate with a disaffected public. You need to swallow your modesty and brand this idea with something creative. A couple of suggestions (the first of which you might find particularly appealing):

Kling’s Cycle – Derived from King’s Cycle, a cycle of 70 years (A presumed king’s cycle was continuously reckoned by Jewish scholars all throughout the Second Temple Era. It appears that the count of 70 years was continued in use, even after Jewish kings no longer ruled over Judea.). This would become the new age at which social security distributions begin.

Kling’s Triangle – A modification of Clark’s Triangle. It’s a bit of a puzzle, but you might start by setting the vertex to age 61 (a “zero” benefits age). The next level down would, from left to right, begin with the age 62 and end with a payment factor, f, for calculating the amount of entitlement. Each successive level would begin with an age range (left diagonal) and end with a payment factor (right diagonal) adjusted to increase the amount of entitlement as appropriate.

These suggestions might wrinkle a few faces, but your idea of increasing the age of entitlement is a stellar one, notwithstanding Dr. Rosser’s (IMO, overly optimistic) view of a perpetual social security surplus as a result of doing nothing.

Comments for this entry have been closed
Return to top