Innovation

As the demographics change the problems with social security become more severe. Between 1945 and 1965, the decline in worker-to-beneficiary ratios went from 41 to 4 workers per beneficiary. In 2010 it was 2.9 and expected to drop to 2.1 by 2030. Social security represents 25% of the budget and Medicare represents 10%. The average cost to the government for social security is $18,000 per retiree and for Medicare the cost is $16,000 per recipient. These two total $34,000 and if two workers are paying then the cost per worker is $17,000 per year. Every day 10,000 workers retire and new babies are not replacing these retirees. There are three things than can be done to work on this problem. First is innovation which will increase productivity to offset the loss in workers. Second improve education and this leads to innovation and third increase immigration. The effect of immigration could be enhanced if it were based on merit as that would also increase innovation. The obvious solution is all about innovation. If innovation does not happen and since no politician wants to address the problem the only course of action is to increase taxes or print the money.