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)