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06/27/2010

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Jim

As a physician, I can attest to the incredible waste in the medical process, specifically Medicare. The absence of primary care familarity with patints and the poor communication of non MD caregivers, the need for speed in practice management and turnover and patient's desire for instant diagnosis and treatment add tremendous unnecessary costs to Medicare, not to mention the 80 billion spent yearly in the last year of life some of which is probably not rational. Even social security shoud be easy to manage. We will ignore the fact that the fund is bare because of "borrowing" for the general fund (another example of mismanagement and political malfeasance). Why not exempt $25,000 in interest income(about the maximum social security annual income)from income tax and not pay social security to those persons with that kind of interest income . It would encourage saving during the work years, maintain the payroll tax and save the entitlement for those who need it. If social security payments are one's only source of income, depending on years and level of contribution, the maximum payment would amount to about $12 per hour for a 2050 hour year. Barely enough for anyone to live on.

Jake

Professor Becker addresses the issue thoughtfully.

Why should the government -- any government -- decide when citizens ought to retire?

Serge Knystautas

The government has to decide when it's program will give benefits. It is not deciding when citizens ought to retire.

Peter Franklin

Why not increase the legal immigration of skilled adult workers, which would increase GNP (over time) and also income and other tax revenues?

Why not increase incentives for financial and human capital investments which (over time) would have similar effects?

Why not focus on growth rather than limitation strategies?

It is both a theoretical and practical error to embrace the usual pessimistic approaches to these questions.

Zack

Peter is right and I think that concern would be better applied to Posner's comments about political expediency.

but I also feel like there are some people running for office who work with ideas more so than the average 'career' politician. Rand Paul, with all of his shortcomings, is one such fella. he might be willing to wait out the waters and act when there is some political pull like his dad is doing for the federal reserve.

Tom Meadowcroft

Social security should be handled as an annuity funded by a lump sum from the SSA on the day you declare yourself retired. Have an actuary determine the retiree's likely lifespan, and thus determine the size of the annuity. If he wants to retire at 60, so be it.

Social security isn't the real problem as far as exploding costs -- Medicare/Medicaid is. Once again there is an actuarial solution. For a given treatment, determine the cost and the benefit (years of extra life, mostly) as a function of age and the details of the diagnosis. Fund only those treatments with the best cost/benefit ratios. Yes, this is a 'death panel', but one that addresses classes of cases and patients, not individuals.

The amount we should be willing to spend on the aged has to have a limit. A society that spends an ever-increasing amount of money on the aged, at the cost of healthcare and education for the young and infrastructure for all, is headed for long term decline. We need to start addressing these questions head on. We all fear death, but by discussing the options together it is possible to arrive at reasonable policy decisions.

Transor Z

What concerns me is the procrustean assumption that overall improved health translates neatly to a retirement age shift from 65-67-70-7X.

Prof. Becker arguing that the benefit is solely a matter of a ratio of productivity/retirement expectation glosses over the fact that bumping the age up necessarily means a reduction in cohort size due to death.

Believe the vitamin supplement/pharma ad hype that "60 is the new 50" all you want, but I suspect a lot of 60 year-olds' daily aches and pains and chronic geriatric health conditions argue otherwise.

The human reality is much more like Colonel Cathcart bumping the required number of bombing missions to rotate out every time Yossarian closes in on the current number...

NEH

And what did Yossarian finally do? Went nuts, jumped into the Mediterranian with a rubber boat and paddled to Sweden. They must be doing something right. Welcome to Catch 22. Just remember, "We have to destroy it in order to save it"; The favorite catch phrase in the dark, dank jungles of Vietnam. ;)

It's all about the "Late Great U.S." and irrationality masquerading as reason and rationality. Sound familiar?

David B

Yes, of course raise the retirement age. We index benefits for everything else - why have we never indexed for increases in longevity?

But the individualized defined contribution - not a good idea. That means that every individual has to save for the worst case, living to age 100. That results in over-saving. And it simply won't be enforced -- if millions of grandmas run through their savings, no one will tolerate throwing them to the wolves.

The political will to put the system on an actuarily sound basis is difficult but feasible. The polictical reality of individualized defined contribution is zero.

NEH

David, One question, "Will business and industry ratchet up their retirement ages"? I think not and the effectiveness of the solution plan of increasing retirement age for benefits hinges on business and industry's actions. And the end result will be numerous individuals falling over into the abyss when they lose their jobs due to forced retirement.

Jim

David B:

Interesting comment. Barry Goldwater used to say that the solutions are simple but difficult. We will have to wait for the crisis for anything to be done particularly if the voters keep electing the same old sqame old which is the likely scenario. Or as some other wag said,"The problem with the gene pool is that there is no lifeguard".

Joey

Why shouldn't the government have a say in when people retire? I mean this country is already head toward a more draconian regime. Even though people have filed numerous lawsuits against the health care changes: http://lawblog.legalmatch.com/2010/05/28/the-growing-lawsuit-against-health-care-reform-measures/ The government when ahead and approved the bill despite it not reflecting the so-called "people's will."

NEH

Joey, Vox Populi vox dei? More like Vox Populi vox humbug. Welcome to the Mobocracy...

saigawa

I'm 38 years old, so maybe a couple of years left of being a "young person." The simple fact is that economists like Orszag and almost everyone else doesn't take technoogy improvements into account, so that by even 2030, their estimates will be shown to have been widly off. Economists know almost no natural science, and it shows when they project out to 2030 and 2080.

Almost everyone assumes that new medical technology will always cost more, but this isn't necessarily true. Their are drugs in trials that will likely significantly lower rates of and treat cancer, diabetes, heart disease, Alzheimer's disease and stroke, all of which are extrememy expensive to treat.

And this is just 2010. What will preventative medicine look like in 2020 when computers are a thousand times faster, or in 2030 when computers for modeling medicine and the body will be a million times faster? (1,000 x 1,000)

The job market by the time I would be expected to retire at in the mid 2030s will also be radically different.

From a policy perspective, don't let my generation get away with complaining about working extra years. Those who are 40 today will be far, far healthier in 2035 than 65 year olds are today.

Phil

In response to Jim. I am a physician assistant and see several patients a day and can alway find time to explain to patients about their conditions and in my dictation, I always followup with a letter to the referring provider about the plan of action that I am giving the referred patient. Several times a day, I hear patients tell me that they have pain or discomfort here, here and here and my Doctor stays in the room for less than 30 seconds and then tell them that they need to see a specialist because they don't know what's wrong.The waste comes in when physicians, who try to see too many patients in a given schedule, refer patients unnecessarily to a specialist ( or they could stay in the room long enough to diagnosis the patient and then manage them themselves) or the Doctors freely give out diagnosis to give someone 100% disability. I see several patients a day in a orthopedic/sports medicine clinic and I am amazed at the number of patients that are in there 20's, 30's, 40's that have total disability for their condition of "I'm nervous or I have arthritis". What a complete waste of tax payers dollars!!! Some patients then have to come to a specialist for simple care because their Doctor gave them disability, and now won't see them for any condition ... Those who do this, should be ashamed.

Stephen Pinner

Now I think that the stock market and the fiscal problem within BP are slightly to do with the oil spill, if you look and the online trading side of thing you will see how much it has dropped in value you can see a comprehensive list of stock rates on http://www.simplystockbroking.com/

Katy

Enjoyed this perspective and cited to it in my blog post today about risk homeostasis. Thanks!

What an old Malcolm Gladwell article can tell us about the Gulf spill.

http://www.rosporkad.com/2010/07/09/what-an-old-malcolm-gladwell-article-can-tell-us-about-the-gulf-spill/

Spork in the Road

shakib

Thats not right to send anyone to retirement when he.she can work for better society.
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syria

Very beautiful

sesli chat

Peter is right and I think that concern would be better applied to Posner's comments about political expediency.

but I also feel like there are some people running for office who work with ideas more so than the average 'career' politician. Rand Paul, with all of his shortcomings, is one such fella. he might be willing to wait out the waters and act when there is some political pull like his dad is doing for the federal reserve.

spel gratis

Intresting indeed.All Humbug.

fred kloot

I do not disagree with this

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James Morgan - Puritan Financial Advisor

I propose that the US and other countries greatly raise over time the retirement age before the average person became eligible for either social security retirement income or publicly-funded health benefits.

Pandora Bracelet

At that time, the average life expectancy for 65 year olds was a mere 12 years. Therefore, years in retirement amounted on average to about one quarter of the 47 years that men typically worked in the 1920s (before the Great Depression) prior to reaching age 65

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