Question
In his book 'Arguing with Zombies: Economics, Politics, and the Fight for a Better Future', Paul Krugman presents several innovative ideas. One of them is the concept of 'Zombie ideas', which are ideas that refuse to die despite evidence disproving them. He also discusses the economics of social security, arguing that privatized systems lead to higher fees and increased risks, while not necessarily reducing government spending. He uses examples from Britain and Chile to illustrate his points. Furthermore, he debunks common economic misconceptions and advocates for evidence-based policy making.
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The economics of social security is not too complicated: over 99% of social security's revenues go toward benefits and less than 1% for overhead. In countries with privatized systems, the fees are far higher. In Britain, alarm over large fees charged by investment companies led to government regulators imposing a "charge cap." A system with British-level management fees will reduce net returns by over a quarter while increasing risks. Worse, in countries with privatized systems like Britain and Chile, government spending is still necessary to avoid widespread poverty among the elderly.
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