Economics:
According to Lord Robins, “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” Economics is subdivided into microeconomics (study of individual markets) and macroeconomics (study of the entire economy).
Understanding how an economy works is a daunting task. Despite that, the economy is further subdivided into several complex sub-units which may comprise whole systems, one of which is the Social SecuritySystem. From a lay man’s point of view, Social Security is a simple pension scheme. But there is more to the Social Security System than a mere pension arrangement. The economic gait is that Social Security is a mechanism whose functioning ensures the provision of revenue for disfavored members of the society such as the old, the handicapped, the ill and the unemployed, so as to enable them meet up with basic necessities. Like the Balance of Payment (BOP) and the business cycle, the Social Security System experiences many set backs but there exists a Social Security problem. The interest here is to identify this problem and propose a way of fixing it. It shall therefore be important to view the functioning of the Social Security System then identify the Social Security problem before proposing a possible solution to this problem.
In an article entitled ‘Solving the Social Security Problem in America’, published in his website; Russell Bailyn’s Financial Planning Blog, the New York Wealth Manager, states that: ‘Social Security is a federal program which provides retirement and disability income to workers through the collection of Social Security taxes. Every worker in the United States is responsible for paying these taxes during their working years and entitled to receiving benefit checks when they are eligible for retirement.’ Bailyn’s explanation is a perfect illustration of
The Term Paper on The Decline Of Social Security
The Decline of Social Security Introduction Social Security is a contributory social insurance providing benefits to millions of Americans. Every state bears responsibility for its citizens. Social security is the way to help people who need state support. In every country there is more or less developed social security system, and it is states duty to make a social security efficient. Although ...
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how the Social Security System functions. In effect, civil servants, workers in (registered private and public) companies have their salaries slashed by a defined percentage every month. This money is then placed in a common Social Security pool and is then used to serve the disfavored members of the society. Bailyn further explains that the people who are most concerned with the system are often unaware of it. ‘I’m unaware that 12.4% of my paycheck goes towards these taxes, I’m just too far from receiving benefits to worry about it. Perhaps part of that irresponsible logic stems from how the system is organized. Rather than each taxpayer’s Social Securitydollars getting earmarked for their own retirement, they get paid into a common pool of money allocated by the federal government. (Bailyn, Russell. ‘Solving the Social Security Problem in America’).
The Social Security is an ‘unjust’ system as it the origin of a major problem. The problem of the Social Security lies in its impracticable nature and its tendency towards monetary difficulty. In effect, the problem lies in the fact that for any given economy, if there exists a rapidly increasing ageing population and a small working population, then the amount of money placed in the Social Security fund will not be enough to salvage the problems of both the present and future ageing populations as well as other disfavored sections of the population. In the same line, the system is not a viable one since those who are currently paying their money into the system may later not benefit from it. This is explained by the simple fact that the Social Security system is not like a private bank account where one places his income and later on retrieves it at will. On the contrary, the money one pays into the Social Security is used for the needs of others and if later on the payee is unable to also benefit from the system due to a lack of funds then the system is clearly an unworkable one. ‘Perhaps part of that irresponsible logic stems from how the system is organized. Rather than each taxpayer’s Social Security dollars getting earmarked for their own retirement, they get paid into a common pool of money allocated by the federal government. It’s a controversial system because workers currently in their 20’s and 30’s may not ever see the money they’ve paid in.
The Term Paper on Information System Security Principles
Availability Availability assures that a system’s authorized users have timely and uninterrupted access to the information in the system and to the network. Other important terms Also important to network security are the following four C-I-A–related terms: ? Identification—The act of a user professing an identity to the system, such as a logon ID ? Authentication—Verification that the user’s ...
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It’s also impractical because of the baby boomer generation. Millions of people will soon be applying for benefits and the program needs some sort of reform if it wants to remain financially solvent’. (Bailyn, Russell. Solving the Social SecurityProblem in America’).
The Social Securit ySystem experienced its apex around the world and especially in the USA during the Great Depression. ‘In 1935, when Roosevelt signed the Social Security Act into law, there were a lot of people who needed benefits (because of the Great Depression), but there was no money to pay those benefits with. The idea at the time was that people currently working would pay into the system, and their money would immediately go back out in the form of benefit checks. Each generation of retiring workers would get paid by the people currently working, and therefore the system would fund itself forever despite the fact that the system had no money to start with.’ (howstuffworks: ‘How does the Social Security Sytem Work’. 23 – 04 -08.
Increasing the income tax deduced to supply the fund has been suggested and used as a solution. ‘It just doesn’t seem to work. It postpones the problem and costs us money in the interim’ (Bailyn).
Another suggested solution is to increase the retirement age which is referred to by US Federal Agents as the Full Retirement Age (FMR).
If the FMR is increased from say 65 years to 70 years then the number of persons receiving funding from the Social Security obviously reduces. But this solution is inappropriate. Perhaps Bailyn’s explanation of the inappropriateness of this solution is the best: ‘let’s hypothesize that raising the retirement age to 68 years old for those born after 1970 would add 25 years of liquidity to the Social Security system. That would cost a person receiving $1,600 per month a total of $38,400 over those two years. So, all we really did was cut their benefit.’ (Bailyn).
The Essay on Proposal For A Replacement Of The Failing Social Security System
My assignment was to imagine that the Social Security system was about to go bankrupt and to create a plan or program to replace it. 1. Institute more job training programs for disabled. 2. Many disabled individuals are punished for working. Their social security checks are halted if they are employed. Even the paycheck from a 40 hour workweek is not enough to cover their medical and special ...
Reducing government spending in other domains is another idea but this requires a lot of reallocation of resources
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which may cause more damage than good to the economy. What if Social Security was privatized? Could it be a better solution? The salary cut would therefore be placed in the name of the worker and he would serve himself from his Social Security account during retirement or if he had some misfortune; but what about the unemployed and the disfavored? Such a system would simply lead to the doom of a vast majority of citizens.
Considering the fact that they are practically unworkable nature of the above suggested solutions, perhaps the best way to solve the dilemma is to acquire study and equip the system with more accurate calculations on demographic changes. Such solutions as mentioned above are rather short term and will further enhance the problem. A first step may be to set up an efficient National Demographic Bureau. This Bureau shall be in charge of collecting data relative to the demographic trends of the nation over a relatively long period of time. Such data must be in line with the level of development of the country in question. If one considers that the disfavored population of a country varies from 1000 persons to 500 persons every ten years and that the equivalent of 10 million US dollars are needed for the up keep of this population. If such considerations equally show that the working population varies from 500 persons to 1000 persons every year and that 15 per cent tax on income is needed to maintain the funds, then estimates are made to ensure a workable system.
The Essay on Social Security 4
Financial Concerns About the Future of Social Security "Will Social Security Have future financial difficulty?" In my view, Social security doesn't face a true financial crisis. But it does face a crisis of confidence among younger workers. One widely publicized survey showed more young workers believed in UFOs than believed Social Security would pay them full benefits when they need them. By the ...
It is through the Social Security system that the ill-favored members of every society are supported. Several unsuccessful solutions have been proposed towards solving the Social Security Problem but a better and more practical solution would be to possess better demographic data. Such data permits the appropriate re-allocations in the Social Security Budget and therefore a better handling of the problem. Proper functioning of the system is still a major debate topic as the question is that of knowing the proper Social Security Reform to adopt in order to solve the Social Security Problem.
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References
Russell Bailyn; Russell Bailyn’s Financial Planning Blog. ‘Solving The Social SecurityProblem in America’. Retrieved on the 23rd of April 2008
The Economics of Social Security. Retrieved on 22nd April 2008-04-24
howstuffworks: ‘How does the Social SecuritySytem Work’. 23 – 04 -08.
Japan International Cooperation Agency, JICA: Social Security. 21 – 04- 08
