Baseball Crank
Covering the Front and Back Pages of the Newspaper
February 2, 2005
POLITICS: World? What World?

If you're interested in the Social Security debate, you must read the Minute Man on a daily basis. Today, he points out that Paul Krugman's economic analysis completely ignores the international nature of the capital markets.

Of course, as Krugman's analysis admits, many of the arguments being made on both sides depend on economic projections far into the future, and the only thing we know for sure about such projections is that all of them are certain to be wrong. The difference is that a private-accounts model contains, within its design, an inherent check on fiscal catastrophe: the number of people who draw on personal accounts can never exceed the number who paid into them. The system thus has the flexibility to grow or contract with the population, and is therefore more stable over the long term than a system in which benefits are tied to yesterday's workers, while revenues are tied to today's. As a result of this self-correction mechanism, a private accounts system is less likely to generate a renewed fiscal crisis if the future fails to meet a specified set of financial assumptions than is the current system.

Posted by Baseball Crank at 12:32 PM | Politics 2005 | Comments (0) | TrackBack (0)
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