These thoughts inspired by NPR's Planet Money story on January 6, 2009.
One of the best, and most important lectures I've ever heard was back in 1980, about how the Social Security System was doomed to fail.
It was by Nathan Keyfitz, one EXTREMELY smart guy, my faculty advisor at Harvard, and professor of a (very difficult for me) course in "Applied Mathematical Demography." (This course was for math freaks that needed to apply their thinking to something useful. Me? I tried to learn the math and got by with a new perspective and the fascinating topics. So, thanks Professor Keyfitz for the VERY generous A-.)
In 1980, the Social Security System (SSS) was very OVER funded. Because the money that was coming out to pay retirees was from THOSE SAME RETIREES' social security "savings" accounts. The lecture was about how the US government was considering shifting to a system whereby retirees would be paid not by THEIR OWN money, but by the current contributions to the system by current workers, AND WHY THAT WOULD LEAD TO A DISASTROUS OUTCOME IN ABOUT 30 OR 40 YEARS WHEN THE BABY BOOMERS RETIRED.
You see, in 1980, there were few retirees, and a lot of baby boomers working. That meant a lot of people putting money in, and relatively few pulling money out.
But when all those boomers started to retire, in 2009, let's say, the cohort of younger people working would be much smaller. So lots of people pulling money out, and relatively few putting money in. Uh oh.
In plain, stark, objective math, he outlined the problem. And then flew off to Washington, DC, where he went every week to testify and advise experts.
And he was VERY sad when they didn't listen. He just couldn't understand them and their illogical thinking.
I guess they didn't understand him either. He was a pretty quirky but special 70 year old mathematician.
Fast forward to today. Our financial system is imploding. And the mathematicians who weren't power hunger and called it like they saw it, saw it all coming. But nobody listened to them because it would ruin the current party. Why do that, when we could ruin tomorrow's party?
The future has caught up.
And, remembering Keyfitz' lecture from 1980, I've been thinking about all the future pension liabilities that would catch up to us about now. Evidently, based on Planet Money's story, and Roger Lowenstein's "While America Aged," I'm not alone.