“I Knew Ida May Fuller; Ida May Fuller Was a Friend of Mine”
OK, I never met Ida May Fuller but the fellow who wrote this WSJ oped in July 2000 claims to be a friend of hers. I metion this in light of the latest from James Glassman (see the comment from Brad DeLong).
It would seem that Glassman continues in a long line of those who declare Social Security to be a Ponzi Scheme using Ida’s good name to do so (do they even know what Ponzi’s scheme was). This PonziSquad seems a bit mixed-up as to what Ida paid in contributions ($25 or $44) and what she got out in undiscounted cash flows ($21,000 or $23,000). While they don’t say what the timing of these cash flows were, they know somehow magically what the return on investment was.
OK, Ida did well – no doubt. But then she lived past her 100th birthday, which is certainly longer than the “life expectancy of a newborn” born in 1874. OK, Glassman’s life expectancy concept is the wrong one, but the life expectancy of those who retired at age 65 in 1935 was not to live to 100. If Glassman does not get the point here, have him call Angrybear.
Now it is appropriate to say that the first cohort got a good deal, but then that has been long recognized by economists who would also note that the Reagan-Greenspan Social Security Commission raised the payroll contribution 20 years ago so my generation would actually prefund our retirements with those Social Security surpluses that the Glassman crowd wish to steal for income tax cuts. So what does the first cohort have to do with the 2005 debate? Unless Glassman can find a time machine and make a young Ida circa 1900 pay more into the system. Dear sweet Ida has long departed so trying to get her to pay more into the system is not a solution to the Social Security crisis that does not exist.