> Date: Wed, 4 Dec 1996 12:58:10 -0800 (PST) > Reply-to: [EMAIL PROTECTED] > From: [EMAIL PROTECTED] (Doug Henwood) > Subject: [PEN-L:7726] Re: Social Security > Saved? As Keynes said, we cannot as a community make financial provision > for the future. What would these "savings" mean, other than inflated equity > values, unless the rate of real investment were increased? And whatever Please don't make me out to be an advocate for the notion that more savings grows the economy, with all the policy nostrums thereby entailed. I meant that a privatization scheme which successfully increases savings could raise economic growth (level, not rate), granting lots of additional assumptions or qualifications. In such an admittedly fictitious context, the worker-retiree ratio isn't at issue. A larger capital stock will find the workers it needs to produce more than otherwise, other things equal. In this narrow respect, I think Brother Devine was in error. > your position on the S<->I precedence issue, I don't see U.S. business as > particuarly finance-constrained - meaning a significant increase in I/Y > seems highly unlikely. Just what is the mechanism whereby higher S would > mean higher Y in 2020? I don't either. I interpreted JD, perhaps wrongly, to mean that an increase in the personal savings rate could not expand the economy down the line. I think it could, but how one raises savings clearly has a bearing on the ultimate effects on growth, and I doubt that any practical scheme for doing so will work. > Since the U.S. has one of the mildest aging problems of the OECD countries, > where will the outside money come from? Malaysia maybe? If there's more capital working in the US it doesn't have to come from outside, although more savings with no added investment could be redeemed by income produced elsewhere. That may be an unappealing prospect, but it is not implausible. > Countries with slow population growth tend to have higher productivity > growth than those with rapid population growth. But forecasts of social > security's bankruptcy rest on both slow productivity and slow LF growth. Right; actually, slow productivity and zero LF growth, but so what? We know that we don't know what productivity is going to be in 2020, or next week, for that matter. I don't think it affronts Keynes to accept that more real capital expands income possibilities. I think you're overreacting. Maybe I overreacted to JD. MBS =================================================== Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] 1660 L Street, NW 202-775-8810 (voice) Ste. 1200 202-775-0819 (fax) Washington, DC 20036 Opinions above do not necessarily reflect the views of anyone associated with the Economic Policy Institute. ===================================================
