Social security hobbles our capital formation.

SOCIAL security & economics; SAVINGS; CAPITAL; TAX incentive policy; OLD age pensions; UNITED States economic policy; DEMOGRAPHY; OLD age assistance; PENSION trusts; SAVINGS accounts; GOVERNMENT policy

The author suggests that that the U.S. social security system discourages private savings and dries up sources of capital with profound effects on the U.S. economy. Although tax incentives for saving and investment can increase the rate of capital formation, the author believes that that rate will continue at a low level until the country reduces its dependence on social security. The author discusses the implications of the changing demographic structure of the U.S. population, concerns about the Old Age and Survivors Insurance program and the political acceptability of shifting to private savings.