Content area
Full text
Demsetz: Welcome to "Welfare Across the Generations." In accord with the topic, the panel members represent different generations. Those who know me know that this topic is not a specialty of mine. I chose it because of its contemporary importance. It is very topical--in the newspapers and on government officials' lips. I also chose it because my children would like me to learn more about intergenerational wealth transfers. I would like them to learn more about wealth creation.
I am enthusiastic about the panel. The age and idea mixture is a good one, and I really look forward to hearing what they have to say.
The first panelist, Larry Kotlikoff, as you know, is from Boston University and is a research associate of the NBER. In 1981 and 1982, he was a senior economist for taxation and Social Security on the Council of Economic Advisers, so he comes well versed in his topic.
Henning Bohn, the second speaker, is from the University of California, Santa Barbara. He has written several fine articles in the last couple of years on this topic.
Earl Thompson, the third speaker, is my UCLA colleague and one of the most innovative economists I know. He always has interesting things to say about government policy and the family, and I am sure he will not disappoint us this time.
Andrew Samwick, who represents the next generation, is from Dartmouth College and is a faculty research fellow at the NBER. He also has written several very good papers on saving, Social Security, and tax policy. He recently has been thinking about the topic of privatizing Social Security.
Larry, please step up to the podium.
Kotlikoff: I would like to talk about U.S. fiscal policy, U.S. national saving, and U.S. domestic investment--specifically, how they are connected to U.S. generational policy.
First, it is fair to say that we are facing two crises, one with respect to national saving and investment and growth and the other with respect to fiscal policy. And these crises are really very much interrelated. On the saving side, we have a national saving rate that since 1990 has been running at 2.7 percent per year. That is dramatically lower than the saving rates observed in the past. For example,...