The Myth of the US Social Security System

With the coming of the 2012 political year because of the elections, politicians tents to bring to the top everything that could help then to gain news coverage. Well, among other subjects there is one that attracts the attention of many because of its influence in their own lives. This is the US Social Security System (SS System) and its apparent failure.

Before I start with the subject, I would like to share something that I use to comment in my classes every time that I have the chance: the single most important step to accomplish when someone is trying to solve any problem is actually to identify what the problem is! It might sound obvious but, particularly in politics (or demagogy rather), it is incredible how much resource are waste solving problems that don’t even exist. The Social Security System in many politicians mind is one of these cases.

Humanity for the past century have been subjected to a “dynamics”, and increasingly accelerated pace changing environment, making things that were good once not so good later on. This means that initially many things work perfectly well until conditions started to change, those conditions where originally assumed either statics (non changing) or, probably, because at that time we don’t even know about their existence. However, depending on the subject: the natural environment, advances in science, new technologies, even changes in human behavior and politics may create new conditions and constraints that makes old practices to lose validity through the time. In fact, this is an accelerated process that moves very quickly.

The US Social Security System is not an exception. The Social Security System was initially created under certain premises that at the time were not considered “dynamics” (static through the time). But, again, reality behaves differently; the truth of the matter is that The SS System has been subjected to a very strong and accelerated dynamics. Some of these dynamic factors are:

·      Changes in the basic factors that affect the composition of the US population; these factors are:

o   Birth rates: while during the WWII and the post war, US was subjected to an exceptional high birth rate that through the years, as many other developed countries, has sharply decreased.

o   On the other hand, with the improvement of the medicine science, prevention, and other related factors; live expectancy has also increased sharply. This means alone, that “retired” people or SS beneficiaries population segment is also growing.

·      Besides the natural elements that drive population behavior, there are other factors non-natural or rather political factors. These factors are:

o   One important non-natural factor is immigration. The immigration, for a country like US, is a major one element to consider. It could also be considered a political component since politicians have been trough the years have suffered of “myopia” in relation to the immigration growth specifically, the illegal one. This phenomenon alone is adding a substantial number of SS dependents.

o   The other, not least important element, is political demagogy that have been creating a new class of individuals that once they try the benefits of the system become lazy and dependable thus creating a heavy load that the rest of the population have to pay for.

As a matter of illustration, but utilizing actual data, it was created a model to visualize what has been happening with the composition of the population. In our model, we segmented the population in three different major groups: younger population (between 0 and 18 years old) not supporting the SS System; working class population (between 19 and 65 years old) the supporting class for the SS System; and, the SS dependent population (66 and older) mostly dependable from the SS. The graphic illustrates how the proportions for each of the mentioned segments of the population have been changing through the years. It is clear that the growing segment (proportionally) is precisely the one associated to the most dependable population from the SS System. It is important to keep in mind that since we are talking about proportions this is a “0 Sum Game”. In other words, while there are more people demanding SS benefits; there are less providing resources to it.

In addition to the above, the growth of the US population as a whole have also slowed down its pace conceivably; these factors are moving the average age from 34 in 1994 to about 37 in 2010. Which is something actually good if we see the problem with the “sustainability” concept optics. This might be another interesting article to develop.

As a conclusion, I believe this is really neither good nor bad; and for sure, it should not be used as a political argument to blame anybody. This is something that just happened and that we have to learn from.

Now, what politicians have to do is understand what the problem really is with the System and fix it. The sooner the better since the way it is working is not sustainable.