Capital Gains, Pension Funds and the Low Savings Ratio in the United States

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Capital Gains, Pension Funds and the Low Savings Ratio in the United States

Author:: Steindl, Josef

Scope:: Typoskript, 13 Blätter, mit zahlreichen Anstreichungen und Anmerkungen sowie 7 Blätter statistische Tabellen (GDP) und handschriftliche Auswertungen

Year of publication:: 1990

Source material date:: [vermutlich um 1990]

Language:: English

Description:: Reliability of statistical data, household savings as contributions to pension funds or life insurance companies.

Note:: Unveröffentlichtes Typoskript.

Related work:: Steindl, Josef: Capital Gains, Pension Funds and the Low Savings Ratio in the United States. In: Banca Nazionale del Lavoro Quarterly Review, Vol. 43, Issue 173, June 1990, S. 165-177

Topic:: Saving and distribution

JEL Classification:: E01 [Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts] E21 [Macroeconomics: Consumption, Saving, Wealth] G23 [Pension Funds, Non-bank Financial Institutions, Financial Instruments, Institutional Investors]

Shelfmark:: S/M.49.1

Access:: Free access

12 III After so much statistics a word on economic policy. There has been a system of national old age insurance even before there existed pension funds. Its principle has been that the active people support the retired old ones ( pay as you go ). This is in fact as it always has been, and as,in essence, it must be under any system; but it was made into a national institution with fixed contributions by employees and their employers and settled benefits for the retirees. If there is a short term gap the government directly or indirectly has to fill it. In the long run any imbalance has to be dealt with by changing either contributions or benefits. Thus the pensions are financed by a shift of income from one part of the population to the other and time does not enter in any relevant sense. The old peoples bread is not accumulated for them over a life time, it is delivered to them fresh from the baker. There is no capital and no interest. (Since the Social Security Law 1983 which changed from pay as you go to accumulation this is not true any more and there is a yearly excess of security taxes over benefits, in 1989 $ 52 billion) Why has it been necessary to supplement this system by another one with 2.6 trillion dollar financial assets ( one and a half for the private pension funds alone ) which has had a profound influence on the whole economy? While the accumulation has been going on, in the build up period, there had to be a corresponding amount of saving which has been at the expense of consumption. The effect of this has been described in my earlier paper on household saving (1982). It depressed the national product and in this way produced the budget deficits which indirectly were financed by the pension funds. This effect

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