SOCIAL SECURITY AND THE FEAR OF AGING

• Lindsey Grant
• August 16, 2005
• Forum Papers
• Forum Paper
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SOCIAL SECURITY AND THE FEAR OF AGING
An NPG Forum Paper
by Lindsey Grant
August 2005

For a decade or so, we have been besieged by stories about impending population decline in Europe and Japan, the prospect of a worsening dependency ratio and too few workers to support the aged. To this chorus there have now been added urgent proposals to “reform” U.S. Social Security because it is supposedly running out of money — although our Social Security system is presently working well and generating a large surplus to help reduce our unconscionable national budget deficit.

Those fears have silenced concerns about population growth because of the widespread belief that industrial countries need more immigration or higher fertility to support the old. Europe and Japan need to return soon to replacement level fertility, but the United States’ fertility is, if anything, too high, and more immigration is a solution for none of us. I have dealt earlier with the question of aging in Europe.  Here, I will focus on the United States and attempt to show that Social Security is solvent, that there are ways to keep it solvent, and that fears about it should not stand in the way of actions to address our growing problems with energy, water and agriculture.  Retirement policies must be integrated with other policies. That approach is conspicuously missing right now.

Let me assert and then undertake to defend ten propositions.

#1. An Older Population Is a Goal, Not a Threat. We want to live longer, and we have been. As we do, the average age rises.

There is really very little we can do about it. Immigration in the United States is driving our population up, but it isn’t having much effect on the dependency ratio (the number of dependents per 100 people of working age). 2 More immigration would drive population to unthinkable levels, without making Social Security solvent.

Higher fertility would have similar consequences. If we choose to lower fertility to stop population growth, it will actually improve the dependency ratio for awhile, but then the working population will age.

We can’t have a low dependency ratio and long lives.

#2. The “Dependency Ratio” Is a Flawed Measure. It suggests that all “working age” people are working, and that nobody else is. Implicitly, it suggests that prosperity is closely linked to the ratio. Neither assumption is correct.…Continue reading the full Forum paper by clicking here.