October 23, 2013
The problem with the Social Security, Medicare, and Medicaid programs is that far more people will be collecting benefits than will be paying in to the system in the coming decades. This situation did not sneak up on us – remember Al Gore’s lockbox from the 2000 presidential campaign? – but we’re getting closer to the day of reckoning, and we haven’t yet implemented a solution.
An empty lockbox.
The most commonly proposed solution is to cut future spending on these programs by raising the Social Security retirement age, or cutting benefits, or some combination thereof. This bit of exceptionally conventional wisdom is getting a new round of press today thanks to Stanley Druckenmiller, a “legendary hedge fund manager, former partner of George Soros, and billionaire investor,” whose dire warnings about entitlement spending are being taken quite seriously in all corners. From Gawker:
“Druckenmiller’s basic warning: the old people of today are sucking us dry, and leaving nothing but a pile of debt for future generations. As he told Bloomberg:
The mushrooming costs of Social Security, Medicare and Medicaid, with unfunded liabilities as high as $211 trillion, will bankrupt the nation’s youth and pose a much greater danger than the country’s $16 trillion of debt currently being debated in Congress [and] unsustainable spending will eventually result in a crisis worse than the financial meltdown of 2008.
In other words, if we don’t find a way to fix out of control Social Security spending, we will all die broke. Imagine a crash far worse than 2008! Unemployment Stories, Vol. 264. Druckenmiller also predicts that the current stock rise is artificial and temporary, so there is essentially little hope for you to invest your own way out of this problem.”
These warnings may prove prescient. They may not. Either way, cutting spending is not the only way to avoid this potential crisis. If we have too many old people and too few young people, we could always just get more young people. For most countries, this is not so easy to accomplish. Sure, you can encourage larger families with propaganda or direct cash payments, but even when that works, it takes a long time for that added population to enter the workforce. Rather than creating new people and waiting for them to age, the much better, cheaper, and quicker solution is to “import” people who already are working-age.
Of course, most countries don’t have the sorts of things that can attract these highly-coveted working-age people (economic opportunity, freedom, infrastructure, stability, climate, cache, etc.). Luckily for the United States, we do have those things, and many millions of working-age people already want to move here. What’s more, we have plenty of space to accommodate them. So we should let them come! Because unlike cutting retirement benefits for older Americans, increasing immigration is also worth doing for many other reasons.
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