[1] Numerous details about the Social Security system and its environment may be found in "Retooling Social Security for the 21st Century", by C. Eugene Steuerle and Jon M. Bakija, The Urban Institute Press, Washington, DC, 1994. The authors have concerns and make judgments which in many cases I don’t share, but they’ve been thorough and conscientious with the facts, of which this book is a valuable source. Concerning the baby boom and baby slump, see their Figure 3.1, p. 49, "Total Fertility Rates". [Back to point of reference]

[2] N.Y. Times, Jan. 9, 1990, p. A22. [Back to point of reference]

[3] As reported by David E. Rosenbaum in the N.Y. Times, "Scoring Points On Social Security Tax", Jan. 15, 1990, p. A12. [Back to point of reference]

[4] Actually, there is some controversy as to what was originally intended. It seems to have depended on who did the intending. Peter J. Ferrara, in "Social Security: The Inherent Contradiction", pp. 21-24, cites evidence that President Roosevelt wanted Social Security to be a fully funded insurance system, while lower echelons of his team pushed for "pay as you go". In any case, political pressure to start the benefits flowing soon impelled the system towards a "pay as you go" basis, and by 1950, "pay as you go" was more or less officially accepted. It remained so until 1983. [Back to point of reference]

[5] New York Times, Aug. 1 and Oct. 10, 1990. [Back to point of reference]

[6] Monthly Treasury Statement, U.S. Treasury, Financial Management Service. This is available online at http://www.ustreas.gov/treasury/bureaus/finman/fmsnews.html. [Back to point of reference]

[7] Well, maybe not so readily. My own effort turned into another full-scale article, which will show up one of these days in another issue of A Word In Edgewise. Briefly, the problem is not that Social Security is "off-budget", but that what’s loaned by one part of the government to other parts is not counted in the deficit, though it does show up in what’s commonly reported as the national debt. This applies to what’s loaned by other, "on-budget" trust funds and agencies as well as to the Social Security surplus. [Back to point of reference]

[8] See, for example, the "National Debt Clock" at http://www.brillig.com/debt_clock/. Rounding to the nearest 100 billion dollars, this showed a debt of $5.2 trillion on July 23, 1996. This matches up with the $5.1 trillion "Total Federal Securities" from the May Treasury Statement. After subtracting out the Trust Fund holdings, that same statement figured "Total Borrowing from the Public" as $3.7 trillion. [Back to point of reference]

[9] See The 1996 Annual Report of the Board of Trustees of the Federal Old Age and Survivors Insurance and Disability Insurance Trust Funds, House Document 104-228. [Back to point of reference]

[10] The Monthly Treasury Statement, already cited, does list some financial assets -- cash, monetary assets, and loans from the government to the public --, and subtracts them from the liabilities to show how much the government would have to scrape up if, for some reason, it were obliged to pay off all of its creditors except the trust funds tomorrow. Presumably the statement is prepared for people who must worry how to make the next month’s payments. Long-range planning requires something more. [Back to point of reference]

[11] There are many unique difficulties in counting up the assets of a government. How does one put a dollar value on defense assets, or upon human capital? Part of what makes anything a natural object of government investment is precisely the inadequacy of markets to measure it. Yet there is no way to discuss the government’s future ability to pay, or a fair entitlement for future retirees, without making some estimates of this sort. [Back to point of reference]

[12] N.Y. Times, "How to Pay for Social Security", Jan. 24, 1990, p. A22. [Back to point of reference]

[13] N.Y. Times, "To Save Social Security, Save", Jan. 28, 1990, p. E20. [Back to point of reference]

[14] The private sector regards the purchase of government securities as "investment". When we speak of a fall in private investment due to government borrowing, we’re speaking of what the private sector invests in activities of its own. [Back to point of reference]

[15] "Printing money", in our system, is to be understood only as a metaphor for the expansion of the money supply. Seeing that most transactions are conducted by check or electronic debits, deposits at the bank are just as much "money" as bills and notes, and constitute the major part of the money supply. Money begins its life as ciphers in the accounts of the U.S. Treasury and of member banks at "the Fed" (a collective nickname for the twelve Federal Reserve banks). As it makes its way into the bank accounts of individuals and businesses, they withdraw part of it as cash. Member banks replenish their supply of cash by doing the same thing at the Fed, which replenishes its supply to whatever extent is needed by printing bills and minting coins. Each dollar of cash which is given out by the Fed is matched by a withdrawal from some member bank’s account, so the total supply of "money" is unaffected by the actual printing or coinage. That is, printing and coinage follow passively in the wake of the Fed’s decision to expand or contract credit. [Back to point of reference]

[16] I hold that this is true whether the money is borrowed at home or abroad. If the money is wisely expended upon projects that will leave us richer even after paying the interest and repaying or rolling over the principal, then we do well to borrow it; otherwise not. In past years, we’ve tended to be dismissive about the consequences of defaulting on obligations to our own citizens (especially if the default is obfuscated by taxing away the money which is owed). Now that the Social Security System has matured, we’re suddenly aware: if we only owe it to ourselves, then we’ve only got it coming from ourselves -- a bunch of deadbeats. And we aren’t, now that we think of it, "the rich". [Back to point of reference]

[17] A COLLAPSE IS FORECAST: Boomers must be more responsible with Social Security, by Ted Dimig. Distributed by Knight-Ridder/Tribune Information Services, July 12, 1996; as printed in the Arizona Daily Star. [Back to point of reference]

[18] Op. cit., p. 63. [Back to point of reference]

[19] I should have said, "As I write this section" (late 1996). It took a couple of years for the rest to take form, and for "saving Social Security" to reach the top of the political agenda. [Back to point of reference]

[20] Interview on John McLaughlin’s One on One TV show, November 17, 1996. [Back to point of reference]

[21] Helvering v. Davis, 301 U.S. 609, at 619, and Flemming v. Nestor, 363 U.S. 603, at 616; cited in Ferrara, "Social Security: The Inherent Contradiction", p. 70. [Back to point of reference]

[22] Metaphor alert for a post-agricultural culture: seed corn is a part of this year’s crop which is withheld from consumption in order to have some for planting next spring. Similarly, investment devotes a part of current production to goods or services which will produce consumables some time in the future. [Back to point of reference]

[23] "Town Hall" meeting sponsored by Congressman Jim Kolbe in Tucson, Arizona, October 19, 1996.

Piñera is now associated with the libertarian Cato Institute, from which one may obtain a published account: "Empowering Workers: The Privatization of Social Security in Chile", by José Piñera. The bit about the ATM’s, though, was mentioned only in the talk. [Back to point of reference]

[24] See Steuerle and Bakija, op. cit., note 2 on p 126, and Fig. 5.1 on p. 93. [Back to point of reference]

[25] Disability benefits for drug addicts are already a hot controversy, and in any system would raise questions as to how an addict’s blighted career should affect pension benefits later in life. [Back to point of reference]

[26] For a man who lives to collect Social Security, the average remaining lifetime in 1990 was 15.3 years; for a woman, 19.6. Compared with 1940, that stretches the average retirement by 2.6 years for males and 4.9 years for females. [Back to point of reference]

[27] "Lay not up for yourselves treasures upon the earth, where moth and rust consume, and where thieves break through and steal." Some things don’t change. [Back to point of reference]

[28] Didn’t Senator Moynihan say so? [Back to point of reference]

[29] "Social Security: The Inherent Contradiction", by Peter J. Ferrara, the Cato Institute, 1980. [Back to point of reference]

[30] On p. 137, Ferrara cites Martin Feldstein in support of estimates running up to 15 percent. [Back to point of reference]

[31] Ibid, Appendix B, Table 26. These results are calculated on the basis of "Alternative III", the rosiest of three scenarios which the Social Security Administration uses when making its own estimates. Ferrara also runs the calculations for the other scenarios. Under all three, the private system outperforms Social Security. [Back to point of reference]

[32] Ibid, Table 24. [Back to point of reference]

[33] If you like to play games with words, you can look upon purchase of consumer durables as investment in off-market returns, while consumption of immediate services is a zero-term investment. (The return on the latter might be either zero or infinite, depending whether impatience or time converges faster to zero.) [Back to point of reference]

[34] For the life of me, I cannot find this retort in print, though I think I know who said it. A private request for confirmation elicited no response. [Back to point of reference]

[35] Yes, there are people who oppose economic growth. To some extent, their opposition is based upon a misdefinition of economic growth. More of this later. [Back to point of reference]

[36] It might seem surprising to include medical technology in a list of research efforts which are under-appreciated. After all, haven’t we had decades of campaigns to end polio, cancer, muscular dystrophy, and whatever else might ail us? I am thinking, though, of developments which have a much more immense (and controversial) potential. A recent talk by Gregory Stock gave a name to it: "Humans As Objects of Human Design." The prospect of this has given rise to justified dispute over the propriety of patenting new organisms, which is why I say that we’ll need to invent more appropriate forms of property before private enterprise can reap a socially acceptable share. Similarly, the prospect of a space frontier has raised preliminary questions about private ownership of asteroids, lunar real estate, and the like.

I am also thinking of some likely trends in the focus of government health expenditures. The growing burden of elder care may well give Social Security and Medicare a perverse incentive to make dying easier, rather than make life last longer. Yet life-extending technology is closely related to possible form-changing technology, which has everything to do with beating the limits to growth. [Back to point of reference]

[37] Milton Friedman, for example offered that observation. Gary S. Becker, in his book, Human Capital (University of Chicago Press, Third Edition, 1993), has recounted the difficulties of making the phrase respectable. To the ears of liberals, it sounded as if human beings were being lumped with bricks and pig iron, while those with a Marxist bent resisted the implication that "waiting" might be a factor of production in its own right. [Back to point of reference]

[38] More precisely, the Board of Trustees, Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds. [Back to point of reference]

[39] 1996 Annual Report of the Board of Trustees, etc. [Back to point of reference]