Re: Big purple digit

Karl Johanson <karljohanson@[EMAIL PROTECTED]
> wrote:
> "Keith F. Lynch" <kfl@[EMAIL PROTECTED]
> wrote
> >> IF Social Security is really endangered, it's because of the
> >> government occasionally raiding the fund to pay for other things.
> >
> > No, it's because it's a pyramid scheme.  Pyramid schemes can't
> > last forever.
>
> Only if population growth can't last forever.

True for pyramid schemes, but not necessary for social security.

Indeed, no population growth is necessary for social security to go on
indefinitely.  Nor is economic growth, although both of them make
affording
any given level of benefits much easier.  If both of those were static, as
long as other demographic factors (*) remain constant, then in priciple
you
should be able to get some constant level of benefits for a constant level
of taxation.

(* life expectancy, income distribution percentage of population working,
percentage of population retired)

While the present system is a good bit more complicated, you can
demonstrate
the basic principle with a simpler system:
* tax everyone working at a given rate
* take that monthly income, and divided it into equal shares by the number
  of people eligible to collect social security and mail them a check for
  one part.
* Repeat monthly.

While benefits can change in either direction (or the tax rate can be
adjusted in either direction to keep benefits constant), it should be
clear
that there's no problem keeping the plan up indefinitely.

Yes, there are "free riders" in that those people who are eligible when
the
plan is started didn't pay into it, but then again, neither do orphans who
collect social security up until age 18 (meanwhile, their parent who died
young never collects anything. Them's the breaks.)


-- 
Nate Edel                               http://www.cubiclehermit.com/
 preferred email  | 
 is "nate" at the | "I do have a cause, though. It is obscenity.
 posting domain   |  I'm for it." - prologue to "Smut" by Tom Lehrer