CAMBRIDGE: Social security is the great cash cow of irresponsible governments. At their beginning, when governments introduce a traditional social security system they gain quite a few decades to collect taxes before the first sizeable payouts to retirees show up. But then, yet a few decades later and reinforced by longer life expectancy and sharply lower birth rates, the system goes bust: tax inflows are insufficient to balance the outflows in the form of payments to retirees. What was attractive as a way of financing government in the second half of the 20th century becomes a formidable headache 20 years from now.
CAMBRIDGE: Social security is the great cash cow of irresponsible governments. At their beginning, when governments introduce a traditional social security system they gain quite a few decades to collect taxes before the first sizeable payouts to retirees show up. But then, yet a few decades later and reinforced by longer life expectancy and sharply lower birth rates, the system goes bust: tax inflows are insufficient to balance the outflows in the form of payments to retirees. What was attractive as a way of financing government in the second half of the 20th century becomes a formidable headache 20 years from now.