The Electric Commentary

Thursday, February 24, 2005

Ask and ye shall receive

On Tuesday I wrote:

When most pundits write about Social Security, they almost never mention the worker/retiree ratio. This is by far the most important stat regarding Social Security.

And, right on cue, Arnold Kling begins today's Tech Central Station column by stating:

To view Social Security correctly, always keep in mind that it is a tax-and-transfer system, not a pension system. Because it taxes current workers to pay benefits to current retirees, Social Security's critical parameter is the ratio of workers to retirees. As that ratio falls, the ability to use a given tax rate to meet promised benefits declines. This ratio will fall in the coming years for three reasons: the Baby Boom retirement bulge; a secular decline in the birth rate; and greater life extension -- people living farther past the legal retirement age.

Read the whole thing. It contains many shocking lines like:

Yes, this is an issue on which Krugman and I agree.


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