Questioning The Call To Increase Savings
June 3, 1998
Many believe Americans do not save enough and that we are piling debt on future generations. But some economists contend Americans save more than is commonly believed, and that future generations will be better off than current generations -- even if savings do not increase.
For instance, economist Robert Eisner argues:
- Output per worker may be conservatively anticipated to grow 1 percent per year on average -- although it is currently growing more rapidly.
- In 34 years -- when the Social Security System is expected to be in the red -- income per worker will have increased by 40 percent from today's level.
- Even allowing for a drain of some 11 percent to support the increased proportion of retirees, there would still be enough income and output for everybody then alive to consume 25 percent more than today.
Proponents of this view contend it makes less compelling the case for savings and sacrifice now.
Source: Robert Eisner (Northwestern University), "Must We Save for Our Grandchildren?" Wall Street Journal, June 3, 1998.
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