Re: Big purple digit

In article <3ZZCRqIvv8DIFwlH@[EMAIL PROTECTED]
>,
 Brett Paul Dunbar <brett@[EMAIL PROTECTED]
> wrote:

> In message <ddfr-C2AD68.09271323042008@[EMAIL PROTECTED]
>, David 
> Friedman <ddfr@[EMAIL PROTECTED]
> writes
> >It wouldn't be an issue at all if Social Security had been set up on an
> >actuarially sound basis, with participants, on average, getting out a
> >sum with the same present value as what they put in. It's only because
> >it was done as a pyramid scheme that the failure of the population to
> >grow fast enough is a problem.
> >
> 
> It isn't really an investment based scheme or a pyramid scheme. It works

> more as a pay-as-you-go scheme. As long as the tax income and the 
> expenditure balance it can carry on indefinitely.

It can't carry on indefinitely with the ratio of payout to payin that it 
started with unless you have a pretty rapidly expanding population. 
Obviously it can carry on indefinitely with some ratio--if new people 
are required to pay in more than they get out, which I think is the case 
with current schedules, then eventually they will pay off the debt from 
the early years when it was strongly the other way.

That's true of any pyramid scheme. As long as you can force people to go 
into it, all you need do is charge then ten dollars, give them five 
dollars back, and eventually you will be back in the black.

> AIUI there may need to 
> be either a small increase in tax or a cut in benefits eventually in 
> order to keep the account in balance.

-- 
 http://www.daviddfriedman.com/
http://daviddfriedman.blogspot.com/
 Author of _Harald_, a fantasy without magic.
 Published by Baen, paperback in bookstores now