Douwe Osinga's Blog: Social Security is broken and you know it

Wednesday, November 26, 2003

Social Security is broken and you know it

Peter S. Heller has written a book about Long-Term Fiscal Challenges, called Who Will Pay? The basic message is: on the long run we're all broke. Governments in the West have taken up them future obligations varying from 100% of GDP in the United Kingdom to 500% of GDP for Canada. Nothing we don't really know; Our governments have promised us social security, assurance against major natural disasters and a pension system, without being able to pay for it. And they are not going to pay for it.

Everybody knows this who has thought about this. We're thirty thousand billion dollars short and pretend that everything is okay and that a budget deficit just above 3% is a problem. But if we would take ourselves and our future serious, we would say, hey, we cannot afford the way we're living right now. Let's make some adjustments. This will probably mean that the government is not going to keep all their promises, but that is going to happen anyway and better now than when it is later.

Instead we'll wait and hope it goes away. On the long run, we're all broke.