Yale economists Robert Schiller argues Social Security payouts should be tied to the nation's economic health.
One alternative that we should consider is a different kind of index switch, linking retirees’ benefits to gross domestic product per capita, in current dollars. This measure responds to inflation just as the C-CPI-U does, but, in contrast, it also responds to changes in the nation’s resources, as measured by real G.D.P. There could also be corrections for other factors, like the dependency ratio, which compares the number of “dependents” (retired people and children) to the number of working adults.
Tying old age retirement benefits to the nation's ability to pay can either be done sooner with formulas as Schiller suggests or will be done later in financial crises. My guess: it will be done later, with more abrupt and painful effects under enormous pressure. Lack of economic growth has caused political stalemate as politicians no longer can find the money needed to buy off and placate political factions.
|Share |||By Randall Parker at 2013 June 10 10:23 PM|