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