Wray on the Burden of Social Security

Randall Wray has been engaged in a back-and-forth with John Carney of CNBC.  Their latest exchange touched on the question of the “real” economic burdens of Social Security (distinct from issues of affordability).  Wray responds:

“John Carney agrees with me that supporting our elderly is not an ‘affordability’ problem, but he claims that I fail to see the ‘real’ burden—the dependency ratios and all that. Actually I’ve been writing about that since the early 1990s. The ‘real’ burden is the only thing that matters.

Here’s just a short list of easily accessible things I’ve written at www.levy.org:

The Case Against Intergenerational Accounting: The Accounting Campaign Against Social Security and Medicare [2009]

Global Demographic Trends and Provisioning for the Future [2006]

The Burden of Aging [2006]

Social Security’s 70th Anniversary [2005]

Killing Social Security Softly with Faux Kindness [2001]

More Pain, No Gain [1999]

Does Social Security Need Saving? [1999]

… There are two important issues here. First the total dependency ratio (old + young) peaked around 1965 and will (likely) never reach that level again. Remember that workers had to support 3.7 kids on average back then—so there were fewer grandmas but more Biffs and Buffys. The kind of support needed is different (and yes, grandma support might possibly be more ‘socialized’ than support of kids—but even that is questionable, and that is a political not economic consideration). But kids are a ‘burden’, too. (Believe me; I’ve got some. There are times I’d trade them for a few grandmas.)  Second, on all projections (even pessimistic ones) the real living standard of workers will continue to rise even as workers are called on to support more old geezers. In real terms, they will be better off than today’s workers.

(As an aside, the presumption always is that gramps and grandmas do nothing to contribute to production. False. Even if they do not work for pay, they help out. Indeed, most of the care for the extremely old people is done by women over age 65—and most of that unpaid. The idea that elderly people are nothing but a burden is false. …”

Read the rest here.

For more on the sustainability of Social Security, see here.