[Ayoob_Reloaded]

Whether you agree or disagree with him, Bill Gross has been an extremely good capitalist over the last 35 years. He's outperformed the majority of his competition, and you can only do that when you have good information.

Here's a snippet of his latest.

Where Social Security and privatization supporters err is with their assumption that retirees’ goods and services can somehow magically be generated or even multiplied by the existence of a certain amount of government or private IOUs. They cannot, at least within the U.S. borders. Production can only come from employed workers and so the basic solution is to produce more workers, either through immigration or postponed retirement for the existing workforce. Productivity gains are often advanced as a solution but employed workers cannot be expected to hand over future advances to retirees without a fight. Having more babies would also turn the trick, but at the moment, making fewer seems to be the going trend. Let’s see Bush try and reverse that juggernaut!



Does this mean that we should all eat, drink, and be merry and leave tomorrow to future generations? Not at all. I mentioned that future IOUs would be of little help in providing senior boomer goods and services but there’s little doubt that the minimizing of those IOUs will make the job a lot easier. By reducing budget deficits now, and especially that portion of the deficit owed to foreign governments, we would be able to keep more of our domestic production within our borders and therefore available to senior citizens, a thought that presumably Pete Peterson of the Blackstone Group and a serious thinker on Social Security would agree with. Similarly, lower deficits ultimately should result in lower future inflation, reducing the burden on seniors with fixed incomes and making it possible to channel more real goods and services in their direction. President Bush’s theoretical prioritization of fiscal conservatism is therefore a promising ray of hope in this Social Security razzle-dazzle, but I remain to be convinced of his sincerity and/or discipline on this particular issue.



It seems to me that the existing set of politicians, both Republican and Democrat, are either shortsighted or legally blind. Common sense would inform even the most inexperienced Washington bureaucrat that Social Security (and Medicare) imbalances are curses of demographics and not financial funding. Keeping the “sizeâ€

[Doly]

The only real solution for the problem is raising the age for retirement. I suspect all the governments are going to do it in the end.

[BabyPeanut]

Does this mean that we should all eat, drink, and be merry and leave tomorrow to future generations? Not at all. I mentioned that future IOUs would be of little help in providing senior boomer goods and services but there’s little doubt that the minimizing of those IOUs will make the job a lot easier. By reducing budget deficits now, and especially that portion of the deficit owed to foreign governments, we would be able to keep more of our domestic production within our borders and therefore available to senior citizens, a thought that presumably Pete Peterson of the Blackstone Group and a serious thinker on Social Security would agree with.

Like I'm so sure that reducing budget deficits will restore natural resources to the Earth so we can exploit them again.

[bart]

The only real solution for the problem is raising the age for retirement. I suspect all the governments are going to do it in the end.

Along the same lines:

Ending social security (which has been Bush's agenda all along)
Ending Medi-Care
Tax cuts for the wealthy and large corporations
Tax hikes for the rest of us (social security taxes have already been raised steeply)
Foreign wars, indirect taxation through the draft

Each of these has been sold as a "reasonable" solution. Why is it that the "reasonable" solutions suggested by Bush, the neo-cons and financial gurus always involve pain for other people?

It is true that there is a demographic bulge with the Baby Boomers and a falling birthrate in industrialized countries. (Japan and many European countries have an even worse problem). This will at some point require some economic and social rearrangements. But it is NOT the most important issue at the moment; Bush's raises it now to deflect attention from his wars and the present deficits. Paul Krugman has written extensively on the subject.

Within the confines of typical financial thinking, the answer to the social security "problem" is clear: cut benefits and lower the standard of living.

There ARE other solutions. For example:

Gross's idea of reducing trade and budget deficits, and keeping industry at home. Of course this puts Gross at odds with Bush (who wants his wars) and the globalizers (who want to out-source American industry).

The social-democratic approach (e.g. Sweden) of egalitarian fiscal policy and lower expenditures on war.

The green solution of satisfying human needs more efficiently with fewer resources.