America’s Senior Moment

Paul Krugman on demographics, Social Security, and health care.

In the March 10 NYRB, economist Paul Krugman uses a review of The Coming Generational Storm: What You Need to Know About America’s Economic Future, by Laurence J. Kotlikoff and Scott Burns, to address demographics, Social Security, and health care.

Krugman’s a dandy writer, but he’s never been at his best in the cramped confines of his NY Times columns. The NRYB format–nearly 6,000 words here–lets Krugman stretch out, and the results are well worth the longer read.

Let’s sneak a peek at Krugman’s wrap-up.

Unless something very unexpected happens, Kotlikoff and Burns’s vision of an America that in 2030 has an older population than Florida today will come to pass. It’s also quite possible that the state of the nation will be as bad as they suggest in their opening account. But one won’t be the result of the other, and in a perverse way exaggerating the demographic challenge makes that grim future more likely.

Here’s how the debate is really playing out, in four easy steps:

1. Talking heads and other opinion leaders perceive the issue of an aging population not as it is—a middle-sized problem that can be dealt with through ordinary changes in taxing and spending—but as an immense problem that requires changing everything. This perception is, alas, fueled by books like The Coming Generational Storm, which blur the distinction between the costs imposed by an aging population and the expense of paying for medical advances.

2. Because the demographic problem is perceived as being much bigger than it really is, the spotlight is off the gross irresponsibility of current fiscal policy. As you may have noticed, right now everyone is talking about Social Security, and nobody is talking about the stunning shift from budget surplus to budget deficit since Bush took office.

3. The focus on Social Security— the one part of the federal budget that is actually being run responsibly—is, in practice, offering the architects of our budget deficit an opportunity to do even more damage.

4. Finally, we’re not having a serious national discussion about the bigger problem of paying for health care, and we probably can’t in today’s ideological climate.

Krugman has long since come over to the universal health care side.

Systems that provide universal coverage, like those of France or Canada, are much cheaper to run than our market-based system, yet they yield better results with respect to life expectancy and infant mortality. Or if you don’t trust foreign examples, consider the remarkable renaissance of the Veterans’ Administration hospital system, described in an important article by Phillip Longman in the February Washington Monthly: he shows that the VA system’s centralization of information and control over resources allow it to provide better care at lower costs than any private system.

Longman’s article is online as well. Read ’em both.

Leave a Reply

Your email address will not be published. Required fields are marked *