1. What, If Any, Are the Innate or Conceptual Problems in the Social Security System? Are There Structural Changes That Might Address the Problems of Sss? as a Practical Matter, Could They Be Implemented?

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Eco 602-Global context of Business 1. What, if any, are the innate or conceptual problems in the social security system? Are there structural changes that might address the problems of SSS? As a practical matter, could they be implemented? Social Security is an immense problem. But the problem is not the cash outflow of benefits draining the economy; it is political risk, and structural inefficiency. The political risk is that whatever the economic theory, we will not politically be able to continue benefits at planned levels. People who counted on those benefits will thereby be made much worse off, because they will have saved too little on the assumption that the benefits would be there. The structural inefficiency arises because Social Security encourages people to retire as early as possible. We may raise the retirement age slightly, but this takes forever. And even after we've raised it, we're still encouraging them to retire as early as possible; we've just moved that date up slightly. Meanwhile, people are able to work longer than ever, and they're living longer. Retirements cannot lengthen indefinitely without massive gains to productivity, or increases in the supply of younger workers; the math doesn't work. Eventually, living standards start to fall. The combination of the deadweight loss from taxation and the shift of workers from production to dependence makes it harder to pay for the retirement benefits--effectively, Social Security undercuts its own political sustainability. This is the real problem we face, and it's barely hinted at in the Trustees report. 2. The average life expectancy for a 65 year-old person in America is roughly 18 years. The “baby boomers” born in 1945-1955 hit 65 between 2010-2020; in other words, now. Does that mean that social security payments will begin to drop after 2038 (2020+18 years) as the

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