Why Social Security Can’t go Bankrupt: Rerun

Reader mmcosker sends this e-mail pointing to Why Social Security Can’t go Bankrupt: Rerun at Forbe’s Magazine:

John T. Harvey’s Pragmatic Economics column at Forbes is one of the best. He is a Professor of Economics at Texas Christian University, and has a knack for breaking down politically charged “third rail” economic topics into terms that most anyone can understand. Below is just such a topic that deals with the myth that Social Security is broke – or even broken. Not entirely sure how widely read John is, as this article has 910 views.

“Why Social Security Can’t go Bankrupt: Rerun”

It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to suspend or eliminate the program, but it could never fail because it “ran out of money.” This belief is the result of a common error: conceptualizing Social Security from the micro (individual) rather than the macro (economy-wide) perspective. It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today. That’s what it has always been and that’s what it has to be–there is no other possible way for it to work.

Read the full story here.