Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Why aren't young people in their 20's and early 30's more furious? Why aren't they marching in the streets for Paul Ryan's budget?
They're nothing less than victims of a vast, Madoff-like Ponzi scheme. From John Goodman's Health Policy blog (with a major hat tip to James Pethokoukis, who for my money is the best financial reporter in America):
Think about everything you will pay to support Medicare: the payroll taxes while you are working, the premiums during retirement, and your share of the income taxes that subsidize the system. Then compare that to the benefits of Medicare insurance, say, from age 65 until the day you die.
Are you likely to come out ahead? That depends in part on how old you are. If you are a typical 85-year-old, for example, you can expect about $55,000 of insurance benefits over and above everything you have been paying into the system. If you’re a typical 25-year-old, however, you will pay an extra $111,000 into the system, over and above any benefits you can expect to receive.
If you're young, you're being ripped off:
Why does Medicare favor the old and discriminate against the young? Because like Social Security, Medicare finances work like a chain letter. Although workers have been repeatedly told that their payroll taxes are being securely held in trust funds, they are actually being spent—the very minute, the very hour, the very day they arrive in the Treasury’s bank account.
No money has been saved. No investments have been made. No cash has been stashed away in bank vaults. Today’s payroll tax payments are being spent to pay medical bills for today’s retirees. And if any surplus materializes, it’s spent on other government programs. As a result, when today’s workers reach the eligibility age of 65, they will be able to get benefits only if future taxpayers pay (higher) taxes to support them.
Just as Bernie Madoff was able to offer early investors above-market returns, early retirees got a bonanza from Social Security and Medicare. That’s the way chain-letter finance works. But in the long run, there’s no free lunch. That’s why things look so dismal for young people entering the labor market today.
And yet: no protests in the streets. No marches. No student sit-ins. No youth agitation at all, really, except for a couple of College Republicans in blue blazers. What? Are they stupid? After all of that college tuition? Are young people in their 20's just dumb?
At a certain point, as the Bernie Madoff saga unfolded, a lot of us wondered if there wasn't some blame to be shared with the folks who believed his nonsense, who credulously cashed the checks in good years and bad, who never asked how he managed such stellar and consistent returns.
As a man in his 40's who is currently participating in the great swindle, I've got to say to the kids in their 20's: thanks for making it so easy.