From: utzoo!decvax!harpo!seismo!hao!hplabs!hplabsb!soreff Newsgroups: net.misc,net.politics Title: Re: Social Security Article-I.D.: hplabsb.1299 Posted: Thu Jan 20 19:26:37 1983 Received: Sat Jan 22 02:08:33 1983 References: hplabs.1124 The most important thing to remember about the social security system is that it is really a transfer payment system. It is not now, and is not going to be a savings system. In an inflationary economy of constant size with steady demographics, it would be perfectly possible for each generation to receive more dollars out of the system than they put in. The thing that would have to balance under those circumstances would be total payments after adjustment for inflation, since that determines what actual flows of goods are taking place. The real situation is not, of course, one of demographic stability. As the baby boom generation (myself included) eventually reaches retirement, we can't expect to do as well as the preceding generation for the same reason as will be true all our lives: our cohort's size will always mean more intense competition for availible resources than in smaller cohorts. Note that this applies regardless of whether our retirement system is a transfer payment one or a savings-based one. If it is transfer-payments-based, then payroll taxes will become very high when the number of retirees peak, with obvious political pressures to cut benifits. If it is savings-based, those savings must be held by someone, and that someone will have a huge debt at the time the number of retirees peak, with consequent pressure to reschedule or default on it. -Jeffrey Soreff (hplabsb!soreff)