Thursday, 9 June 2005

State pensions still a pyramid scheme -- Friedman

A new interview with Milton Friedman has appeared on the San Francisco Chronicle site. He still maintains that what Americans call 'Social Security' and we call Superannuation is a dishonest and immoral pyramid scheme. Asks the interviewer,

What about the fact that Social Security has reduced poverty among the elderly?

"Well," he replied, "what it has done is transfer a lot of income from the young to the old. It is certainly true it has made the old people of the United States the best treated old people in the world."

But why is that a bad thing? "Oh," he replied. "It's not a bad thing for them, but what about the young?"


  1. Maybe these comments should be seen in the context of Milton Friedman's consistent advocacy of the idea of negative income tax

  2. The NZ Super scheme is definitely a transfer from workers to the elderly. The problem is that the governments of the past have effectively promised Super to past workers. The debate about Super should have been seen as an opportunity to reduce this unfortunate pledge. But, this being the triennial cycle back to the Year of Dear Winny, they all run the other direction. While there may be a case for a safety net for the elderly, New Zealanders generally have their heads buried in the sand when it comes to retirement savings. And if anyone thinks that KiwiSaver will solve anything, they deserve to have Michael cullen as their Finance Minister.


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