Are contributions to Social Security part of a larger scheme of national savings and investment?
As Social Security assets have grown, they have become a favorite target of economists in their debates about national finances. Suggestions of impending financial crisis in Social Security finances prompt proposals for reform — whether the crisis is shown to be real or not — and then debates over those proposals take on a life of their own. For at least several years, the American Economic Review has been carrying articles devoted to the implications of “Social Security’s Long-Term Funding Crisis.”(29) These articles cover topics ranging from pension reforms in Europe to factors that promote growth in U.S. GDP — and all of them include proposals for reforming Social Security. A 1997 Symposium on “Social Security Reform” sponsored by the Federal Reserve Bank of Boston discussed such things as “How reform would affect labor markets” and “The impact of demographic change and Social Security reform on financial markets and risk-bearing.”(30) The editors of the report on the symposium w
