Thursday, March 03, 2005

I have a theory, it could be bunnies!

Just as I promised you, an example of what is most likely a hideous idea, presented for your commenting pleasure.

Are the Social Security and Medicare systems victims of their own success? The Social Security system is, essentially, the world's largest and most successful pyramid scheme. It doesn't produce anything, thus it has no means of creating income. Instead, it depends on the payments from current workers to support current retirees. As a pyramid scheme, Social Security needed an ever expanding base population to maintain its benefit levels (only thus could it achieve that elusive goal of having everyone take out more than they put in). Medicare is also funded by current contributions.

The "crisis" of Social Security and Medicare is the result of a base population that has slowed its expansion. In other words, people stopped having so many children. Why? Children are the poor man's retirement plan, and the decision to have children seems to follow economic thinking quite well. When there is an uncertain future, people tend to have more children--they invest in resources that will (probably) pay off. When the investment in children is uncertain (aka, high infant mortality) people tend to have more children--they diversify their portfolio. Thus an uncertain environment with high infant mortality (a common measure of health-care quality), will lead to an increase in the number of children. Removing the uncertainty (social security) and reducing the risk of infant mortality, and thus the need to diversify (Medicare), has created a situation in which children are net drains on resources, and are thus not produced in significant quantities. Thus, along with other factors such as the cost of education in a modern economy, Social Security and Medicare created their own demise.

1 Comments:

Anonymous Roswell T. Bonovitz said...

It's also racist. One third of black men die before they ever get a nickel; the greatest beneficiaries are white women of the middle to upper classes, who live and collect the longest.

So young black men are supporting elderly white women. I guess that means Michael Jackson just takes it out of one pocket and puts it into another.

1:15 AM  

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