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National Saving Rate -2% in 2009
Old 09-24-2010, 09:06 AM   #1
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National Saving Rate -2% in 2009

This shows you need to understand the numbers. Which most of our news media does not.

Laurence Kotlikoff Interview on Savings Rate, Economy - Video - Bloomberg

Poor Kid on Block Fleeced by the Elderly: Laurence Kotlikoff - Bloomberg
Labeling contributions to Social Security as personal savings makes last year’s rate 9.8 percent, not 4.6 percent. Treating Medicare and Social Security contributions as personal savings raises the rate to 12.7 percent.

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Old 09-24-2010, 01:36 PM   #2
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If this op-ed were a Data Sufficiency problem on the SATs you'd have to answer "insufficient information" if asked to evaluate it.

1) He says the savings rate as calculated by the Commerce Department (currently 6.1%) is incorrect, but then doesn't elaborate on what's wrong with it. He throws up a bunch of unrelated information that has nothing to do with the actual calculation and says "look, we can make the number go up or down by changing X, Y, and Z." Even if that is true, it says nothing about the 6.1% savings rate, as calculated.

Verdict: insufficient information

2) He says the correct savings rate is (2%), but he doesn't show how he calculates it.

Verdict: insufficient information

3) He does offer this tidbit . . .

The right saving rate to consider is calculated by dividing total national savings by total national income.
By which I can only guess he's referring to the economic identity Y = C + I + G.
But if that is the case, than a quick look at the most recent GDP report shows that National Savings (a.k.a. Investment) was $1.59T and GDP was 14.1T for a National Savings rate of 11% in 2009.

Clearly (2%) isn't the same thing as +11%, so this must not be how he's calculating it.

Verdict: insufficient information

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Old 09-24-2010, 01:47 PM   #3
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Originally Posted by dex View Post
Labeling contributions to Social Security as personal savings...
FICA is a tax, not savings. If I have savings, I can give it to another regardless if I live or die. Not so with SS, unless you are considering that my DW can get my (much larger) SS benefit after I pass. Than again, what happens to her SS "savings" (lost in the system ).
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