From: utzoo!decvax!yale-com!bj Newsgroups: net.misc,net.politics Title: Re: Social Security Article-I.D.: yale-com.708 Posted: Sat Jan 22 02:44:29 1983 Received: Sun Jan 23 06:15:42 1983 References: hplabs.1124 Clearly this robbing Peter to pay Paul pyramid cannot continue indefinitely. I myself am 28 and do not feel confident about social security being around when I retire. How do you feel? I believe that figures presented are misleading. The comparison being made is between apples and oranges. To get figures which have any value you have to look at real dollar ammounts. For a contrived example, assume that people put in $1000/year for 40 years and then collect $5000/year for 8 years. In this case the ammounts put in and taken out are the same. If this happened for everybody and there was a constant population, the system would work. Income each year would exactly match expenses. Now, assume there is an inflation rate of 10% per year and that all collections and payments are indexed. The figures would then show that a person puts in a little more than $440,000 and takes out almost $2,600,000. In spite of the apparent imballance, the system still works since the collections and payments in a given year have the same 1 to 5 ratio as they did when the system started. Income each year would still exactly match expenses. In order to get make the Newsweek figures meaningfull you have to have a lot more information and do more compilcated things to it. I suspect that meaningfull figures would show collections and payments about even (except for the first generation). It is not a pyramid scheme. Social Security does have some problems, mostly due to the fact that are society is getting older. There are fewer and fewer people paying Social Security and more and more collecting. It used to be around 5 workers per collector. The ratio is somewhere around 4 to 1, will drop to 3 to 1 in the next decade, and finally drop to 2 to 1 somewhere around 2020. [caveat - all the numbers in this article are from memory (except for the $44,000 and $2,600,000 which I just calculated). If you discover minor errors in the numbers, please notify /dev/null.] Do you think it would be fair to reimburse everyone whatever they have paid into the system so far and then shut down the system altogether? I won't make a judgement about fairness, but I do not think is should be done. One reason is that the government could not to afford to. It has less than one years income at the present time, it could never pay back all the money it has collected (plus interest). Another reason is that the goverment does a better job of supporting people than they would do. If you gave the money back, millions of people would spend it rather than investing for later. B.J. decvax!yale-comix!herbison-bj