Transfers From the Young to the Old

Robert Samuelson writes yet again about the conflict between the young and the old in our society, bemoaning the “huge” transfers of wealth from the young to the old in the form of Social Security, Medicare, and Medicaid. According to Samuelson, the young subsidize the old, but he’s not convinced that the young, when they themselves are old, will receive similar subsidized benefits.

But there’s another way to argue that the young are not necessarily exploited. According to Samuelson, the young pay more than they should and oldsters pay less. But if oldsters pay less, then they are saving more than they otherwise would, which in turn means that when they die, their heirs will receive more. So the younger generation may be paying more now, but they will get back whatever the oldsters don’t need for living expenses. Because they get it back, the difference between what the youngsters pay and the lower amount that they would pay (in Samuelson’s ideal world) can be seen as contributions to their retirement fund.

Samuelson should chill out and stop being “rattled;” things simply aren’t as bad as he thinks for the younger generation.

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