Max's screed on social security is quite reasonable. That's exactly what's wrong with it. This is 1998 and capitalism is beyond reason. Put Max in charge of the whole budget show and give me a post as his court jester and the two of us would have the whole thing ticking away like clock work in a decade or two. It ain't going to happen. The baby boom retirement bulge that privitizers relish is, hypothetically, no problem. It's certainly no MORE of a problem for Social Security than it is for the securities markets. The problem is, it's actually more of a problem for the securities markets than it is for Social Security. My crude hypothesis, which I divulged to Max and to Doug Henwood back in August, is that the recently deceased stock market bubble of the mid-1990s could be explained by a demographic anomoly which saw a substantial increase in the working force population at peak earning (and retirement saving) age and a considerable (short-lived) decline in the rate at which people were reaching retirement age. In other words, there was an anomolous short term bulge in the amount of new money coming into the markets. That money (from pension funds, etc.) hasn't stopped coming into the markets. But the rate at which the amount coming in each year is growing has stopped accelerating. That's an awkward thing to say so I'll give an example. An increase looks like this: 100, 110, 120, 130; an accelerating increase looks like this: 100, 110, 122, 136. The situation I'm trying to describe looks like this: 100, 110, 122, 134. This may seem like a fine point unless one considers how compound interest works or the structure of increase needed for a ponzi scheme to work. Even though 134 is still an increase over 122, it's not enough of an increase to keep the ponzi rolling. Anyone who knows how to use a spreadsheet can try this at home. What I'm saying is that baby boom demographics fed the '94-'98 bubble and now those demographics are starving it. For a snapshot of those demographics see my page at http://www.vcn.bc.ca/timework/bearclaw.htm Hypothetically, the markets could bob up and down for the next five years or so, but after that -- no dice. After 2004 [ceteris paribus] the demographics suggest an actual decline in the amount of new money coming into the market each year through pensions and other retirement savings. Since I've never met a ceteris who was paribus, I'd say it's all over, already. The fat lady is singing. Max is 100% right that the panic about "saving" Social Security is bogus. But he's right about it for the wrong reasons. Social Security is in no greater peril than the broader capitalist economy. But that broader economy is in mortal peril. Max is also 100% correct that the increase in the ratio of retired to active working population _could_ easily be offset by increase productivity. BUT it could only be offset if the fruits of that increased productivity go to the workers themselves. It's a worthy suggestion but it isn't likely to happen without a fundamental political sea-change. So Max is right that there is no apocalypse lurking in the numbers -- there is only one lurking in "business as usual." Am I being apocalyptic? No. It would be apocalyptic to proclaim that all boats are at all times on the brink of sinking. It's not apocalyptic to point out that a boat is likely to sink if it hits an iceberg. We have met the iceberg and it is us. Regards, Tom Walker ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ #408 1035 Pacific St. Vancouver, B.C. V6E 4G7 [EMAIL PROTECTED] (604) 669-3286 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The TimeWork Web: http://www.vcn.bc.ca/timework/
