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Social Security Bonds and the Concept of Reciprocal Responsibility

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  • William L. Holahan
  • Charles O. Kroncke

Abstract

The current debate and parallel monologues about Social Security suffer from a failure to distinguish between money and bonds. Consequently, it is impossible to discuss intelligently the solvency or affordability of the Social Security system. In this article, we present a new graph that clarifies this crucial distinction. Bonds are evidence of loans to be repaid on a schedule. These loans can be strictly monetary, as in the private sector, or a mix of monetary and moral, as in the intergenerational reciprocity of obligations. To treat public sector bonds as strictly monetary is economic error as fundamental as denying the existence of public goods.

Suggested Citation

  • William L. Holahan & Charles O. Kroncke, 2007. "Social Security Bonds and the Concept of Reciprocal Responsibility," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 10(1), pages 87-92, March.
    • Handle: RePEc:bla:rmgtin:v:10:y:2007:i:1:p:87-92
    DOI: j.1540-6296.2007.00107.x
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    References listed on IDEAS

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    1. Peter Diamond, 1998. "The Economics of Social Security Reform," NBER Working Papers 6719, National Bureau of Economic Research, Inc.
    2. William L. Holahan & Mark C. Schug, 2000. "A Simple Exposition of the Social Security Trust Fund," The Journal of Economic Education, Taylor & Francis Journals, vol. 31(4), pages 340-348, December.
    3. Liqun Liu & Andrew J. Rettenmaier & Thomas R. Saving, 2005. "Private Accounts as a Solution to Social Security's Debt," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 20(Spring 20), pages 97-125.
    4. Peter A. Diamond (ed.), 1999. "Issues in Privatizing Social Security: Report of an Expert Panel of the National Academy of Social Insurance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262041774, December.
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