Doug's LBO article: Preposterous economic projections or unstated logic?

[John K. Taber]

Nobody has commented on Doug's LBO article, "Sloth and discipline".
I liked it very much but I suspect Doug's thinking hasn't jelled
yet between dismissing the Social Security Administration's
economic projections as "preposterously glum" or accepting them
as having some "unstated logic" that would make them in some
sense true.

For the sake of argument, let me assert that they are true to
see what unstated logic we can find.

First, the SSA projections do not use past performance. They
used their demographic projections to figure the size of the
working population, some unexplained projection of low growth
in worker's productivity, and some unexplained projection of
a low immigration rate.

Second, their projections must have troubled the SSA actuaries
because they called in outside experts to examine their methods.
This in approx 1993-1994. Their report is available at
ftp://www.ssa.gov as am.exe. Download it and execute it to get
a printout.

The experts had quibbles, and made the important point that
there is no chance that any single part of the projections
can be correct. But, in essence the experts found nothing
wrong with the SSA methods.

I take that as a strong endorsement.

So, can we as an exercise assume that GDP will likely grow
anemically at about 1.4%, and degrading towards the end of the
seven decades to 1.2%?

And can we assume that Dean Baker's projection of equity
returns will be halved from the historical 7% to 3.5%?
Where will that leave us?

And take it from there?

Suppose that an unstated goal of our leaders *is* a near
stagnant economy? Is suspecting that so crazy on my part?

--
Man kann nicht auf zwei Tänze mit einem Popo tanzen.