|
Reader's Favorites
Media Casualties Mount Administration Split On Europe Invasion Administration In Crisis Over Burgeoning Quagmire Congress Concerned About Diversion From War On Japan Pot, Kettle On Line Two... Allies Seize Paris The Natural Gore Book Sales Tank, Supporters Claim Unfair Tactics Satan Files Lack Of Defamation Suit Why This Blog Bores People With Space Stuff A New Beginning My Hit Parade
Instapundit (Glenn Reynolds) Tim Blair James Lileks Bleats Virginia Postrel Kausfiles Winds Of Change (Joe Katzman) Little Green Footballs (Charles Johnson) Samizdata Eject Eject Eject (Bill Whittle) Space Alan Boyle (MSNBC) Space Politics (Jeff Foust) Space Transport News (Clark Lindsey) NASA Watch NASA Space Flight Hobby Space A Voyage To Arcturus (Jay Manifold) Dispatches From The Final Frontier (Michael Belfiore) Personal Spaceflight (Jeff Foust) Mars Blog The Flame Trench (Florida Today) Space Cynic Rocket Forge (Michael Mealing) COTS Watch (Michael Mealing) Curmudgeon's Corner (Mark Whittington) Selenian Boondocks Tales of the Heliosphere Out Of The Cradle Space For Commerce (Brian Dunbar) True Anomaly Kevin Parkin The Speculist (Phil Bowermaster) Spacecraft (Chris Hall) Space Pragmatism (Dan Schrimpsher) Eternal Golden Braid (Fred Kiesche) Carried Away (Dan Schmelzer) Laughing Wolf (C. Blake Powers) Chair Force Engineer (Air Force Procurement) Spacearium Saturn Follies JesusPhreaks (Scott Bell) Science
Nanobot (Howard Lovy) Lagniappe (Derek Lowe) Geek Press (Paul Hsieh) Gene Expression Carl Zimmer Redwood Dragon (Dave Trowbridge) Charles Murtaugh Turned Up To Eleven (Paul Orwin) Cowlix (Wes Cowley) Quark Soup (Dave Appell) Economics/Finance
Assymetrical Information (Jane Galt and Mindles H. Dreck) Marginal Revolution (Tyler Cowen et al) Man Without Qualities (Robert Musil) Knowledge Problem (Lynne Kiesling) Journoblogs The Ombudsgod Cut On The Bias (Susanna Cornett) Joanne Jacobs The Funny Pages
Cox & Forkum Day By Day Iowahawk Happy Fun Pundit Jim Treacher IMAO The Onion Amish Tech Support (Lawrence Simon) Scrapple Face (Scott Ott) Regular Reading
Quasipundit (Adragna & Vehrs) England's Sword (Iain Murray) Daily Pundit (Bill Quick) Pejman Pundit Daimnation! (Damian Penny) Aspara Girl Flit Z+ Blog (Andrew Zolli) Matt Welch Ken Layne The Kolkata Libertarian Midwest Conservative Journal Protein Wisdom (Jeff Goldstein et al) Dean's World (Dean Esmay) Yippee-Ki-Yay (Kevin McGehee) Vodka Pundit Richard Bennett Spleenville (Andrea Harris) Random Jottings (John Weidner) Natalie Solent On the Third Hand (Kathy Kinsley, Bellicose Woman) Patrick Ruffini Inappropriate Response (Moira Breen) Jerry Pournelle Other Worthy Weblogs
Ain't No Bad Dude (Brian Linse) Airstrip One A libertarian reads the papers Andrew Olmsted Anna Franco Review Ben Kepple's Daily Rant Bjorn Staerk Bitter Girl Catallaxy Files Dawson.com Dodgeblog Dropscan (Shiloh Bucher) End the War on Freedom Fevered Rants Fredrik Norman Heretical Ideas Ideas etc Insolvent Republic of Blogistan James Reuben Haney Libertarian Rant Matthew Edgar Mind over what matters Muslimpundit Page Fault Interrupt Photodude Privacy Digest Quare Rantburg Recovering Liberal Sand In The Gears(Anthony Woodlief) Sgt. Stryker The Blogs of War The Fly Bottle The Illuminated Donkey Unqualified Offerings What she really thinks Where HipHop & Libertarianism Meet Zem : blog Space Policy Links
Space Future The Space Review The Space Show Space Frontier Foundation Space Policy Digest BBS AWOL
USS Clueless (Steven Den Beste) Media Minder Unremitting Verse (Will Warren) World View (Brink Lindsay) The Last Page More Than Zero (Andrew Hofer) Pathetic Earthlings (Andrew Lloyd) Spaceship Summer (Derek Lyons) The New Space Age (Rob Wilson) Rocketman (Mark Oakley) Mazoo Site designed by Powered by Movable Type |
Intergenerational Wealth Transfer At 2.3% per capita real income growth, real income doubles every thirty years. That is, we can expect our kids to be roughly twice as rich as we are. In particular, we should stop worrying about them supporting twice as many retirees per capita. We should also stop worrying about their environmental legacy. They will have twice as many billions to devote to environmental cleanup and upgrade even if population remains constant. One thing that would cause the social security crisis to come back in spades would be if, as is proposed in the UK, that social security is indexed to wages instead of prices. If wages are used, social security payments will double when wages double and longevity and early retirement will bear down on workers. How much do we owe retirees? Is it the same absolute standard of living as they had when they were working? Their same relative position in the economy? These are expensive moral questions. But recognize a promise of a wage indexed gain for what it is: it is a heavy tax on the working to give more real dollars to the retirees than they gave to the retirees while they were working. I am still in favor of privatizing government pensions, but that would in effect be a huge cut in subsidization of government borrowing. That is, without the whole social security trust fund invested in government bonds, it will be more expensive to finance government borrowing. That will either require higher taxes, increased borrowing or reduced spending to offset. One thing I can say about that is that my daughter's generation will be twice as able to deal with it as mine per capita. Posted by Sam Dinkin at December 15, 2005 03:50 PMTrackBack URL for this entry:
http://www.transterrestrial.com/mt-diagnostics.cgi/4697 Listed below are links to weblogs that reference this post from Transterrestrial Musings.
Comments
I wish I could be as optimistic about the general growth trends, but part of my job at the bank is to be skeptical and try to figure out what could go wrong. A couple of the issues that I see are the generational transfer of wealth. The Greatest Generation are starting to die off in increasing numbers, and those assets will be transferred to the Baby Boomers. This is good for the Baby Boomers, as they'll certainly be looking for an inflow of assets right about now. The question is how that will affect the Baby Boomers sense of entitlement to a prosperous and healthy retirement. They've laid the groundwork for a robust medical system, so their life expectancy is terrifying in terms of how long we're going to have to support them. The next generational transfer of assets probably won't happen for thirty years. Their first (GenX) and second (GenY) wave of kids are going to have to work very, very hard to support their parent' retirement while maintaining the vast infrastructure that has been put in place. I know our water infrastructure is creaking, and how much are we going to have to sink into maintaining the vast amounts of concrete we've poured? One solution is massive amounts of immigration. There just aren't enough GenXers to fill all the cubicle chairs being emptied by the Boomers, and GenY won't be able to infill fast enough. Of course, since their kids aren't being well prepared, most of the more influential Boomers' jobs will be going to immigrants. These immigrants will also settle and start voting. And their votes might not be so favorable to the social security structure we've put in place. Posted by ken murphy at December 15, 2005 06:38 PM"One thing that would cause the social security crisis to come back in spades would be if, as is proposed in the UK, that social security is indexed to wages instead of prices." Um. From what I have read, SS is indexed to wages, not prices. Hence the problem. See Asymmetrical Information for a link to a SS reform proposal that discusses it. Ech: SS is indexed to COLA=cost of living adjustments; prices not wages. Ken: Kids won't have to work hard. They will be very rich and buy robots or prefabs or whatever. Things go wrong occasionally, but very rarely consistently for 30 years. Per capita growth has been higher than 2.3% and is as likely to accelerate as decelerate. Posted by Sam Dinkin at December 16, 2005 12:51 PMProductivity growth in the US has been on an increase in the last decade or so. I'm optimistic this will continue. The 'information revolution' has finally been having its effect on productivity. Major intergenerational transfers of wealth start well before the parents die. College education is just such a thing -- a transfer of wealth from the parents' bank account(s) into their children's human capital. Posted by Paul Dietz at December 16, 2005 12:59 PM"COLA=cost of living adjustments" Yes, but the COLA formula is based mostly on wages. I've had this confirmed by a couple of economists that have SS expertise. Sell stock in those economists. "The Social Security Act specifies a formula for determining the COLA. In general, the COLA is equal to the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the next. " http://www.ssa.gov/OACT/COLA/latestCOLA.html Posted by Sam Dinkin at December 16, 2005 04:07 PMI suppose this all assumes that energy prices don't become excessive. Posted by Kevin Parkin at December 17, 2005 04:14 AMNo assumption about energy prices. Prices have risen and fallen on lots of things, but real per capita income keeps rising ahead of prices. Posted by Sam Dinkin at December 17, 2005 12:52 PMThese immigrants will also settle and start voting. And their votes might not be so favorable to the social security structure we've put in place. Why should they be? Social Security will cost more than it returns (compared to a reasonable investment) by then. I think it would be rather pathetic to import workers for the express purpose of balancing Social Security only to have them vote in the not so distant future to dismantle it. No need to import immigrants--robots, teleoperation, virtualization and other productivity increases will make my daughter twice as productive as I was. Posted by Sam Dinkin at December 18, 2005 11:42 PMPost a comment |