Wednesday, February 6, 2008

REVERSE Ponzi schemes: S.S. and Medicare

Just as S.S. retirement benefits constitute a REVERSE Ponzi scheme because the doubling of per-person income over every two generations means your grandkids can soak their grandkids for even more than you are soaking yours for (the sucker generation may be the one destroyed by the alien invasion)...

...the medical REVERSE Ponzi is even more spectacular because scientific knowledge doubles every decade (!) and presumably medical knowledge keeps up something like the same pace (the sucker generation may be the one in which all diseases are eliminated).

Ergo, somebody has to pay for the medical miracle show. Luckily, by 2080 -- almost FOUR generations out -- average income should have almost quadrupled while medical care's share of GDP has only tripled (according to the above chart: meaning care in 2080 cost may twelve times as much in absolute terms (4 X 3) per-person.

Today -- 2008 -- medical care's share of GDP is 3X what it was in 1968 while average income has jumped 2X: making per-person care cost 6 times what we used to spend in absolute terms: anybody want to turn back that clock?

PS. The real crisis is that 25% of American workers now earn less in real terms than LBJ's 1968 minimum wage -- and that a 25% of Americans now live below a real poverty line (not the phony poverty line computed solely as multiple of the cheapest nutrition), up from 15% in 1968 -- after that doubling of average income over two generations. Labor market, labor market, labor market -- a completely unbalanced in management's favor American labor market: that should be the signature economic issue on today's progressives' lips; not some imaginary non-problem at the end of the century.

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