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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: i-node who wrote (608673)	4/22/2011 6:28:14 PM
From: TimF	Respond to of 1575614

Funded vs Unfunded vs N/A EconLog \| Arnold Kling \| My Perspective on the Budget Fight I don't think of the long-term budget fight as being between Democrats and Republicans or between rich and poor. I look at it as a fight between people with funded retirements and unfunded retirements. If I have saved enough to support my lifestyle in retirement, then I have a funded retirement. If my neighbor who teaches in public school wants to support a similar lifestyle based on her pension, then she has a retirement that is somewhat unfunded. That is, as of now, her pension plan has only about fifty cents for every dollar of promised benefits. Social Security and Medicare also are unfunded. Their "trust funds" consist of government bonds. If I took care of my own retirement the same way, the drawer where I keep statements from mutual funds that I own would instead be filled with IOU's from myself. More important, the actuarial shortfall in Social Security and Medicare, like that in my neighbor's pension plan, is very large. Down the road, someone is going to get the shaft. It could be my neighbor, it could be me, or it could be both of us. That is, people who are relying on the unfunded systems--public sector pensions, Social Security, and Medicare--might find their benefits cut. Or people who are relying on personal savings could wind up having those savings taxed away in order to address the shortfalls in the public systems. Or all of us could have our savings eroded by inflation, from which we may not be able to protect ourselves. Have a nice day. ----- Recall the One and Two Marshmallow Eaters. I would add a wrinkle to Kling's analysis which strikes me as very important, perhaps because I am younger than he is. In this struggle between those with funded and unfunded retirements, with whom will people who have not yet had a chance to fund retirements throw in? Let's say people with an age less than 30, including those with a negative age. (Sidenote: the not-yet-conceived have got to be the single most unrepresented, powerless group in contemporary democracies.) I fear my generation and the ones behind us will throw in with the unfunded retirements, because (a) it is the trendy and cool and progressive thing to do, (b) we are not as willing to fight for our generation as the Boomers are, and (c) most of my cohort do not want the opportunity to save for their own futures because that entails the responsibility to do so. No matter who we throw our collective lot in with, and what method of retirement financing other people choose, we will be the ones who will have to consume less than we produce to make retirement possible for those older than us. This will be easier or harder depending on how much more production than consumption (and thus investment) they have chosen to do, but any way you slice it we're the ones who will have to do the excess production. This ought to be a much bigger issue for my generation than it is. southbend7.blogspot.com