17. The Economics of Healthcare, Debt, and Social Security

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Welcome to The Rubber Meets The Road
Economics, the podcast where we explore

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the driving forces behind today's economy
and their real world implications.

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Join investor Hunter Craig as he
interviews professor Edwin Burton

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from the University of Virginia,
delving into the complexities of

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economics with clarity and insight.

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Whether you're an economics
enthusiast or just curious about how

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economic policies affect your daily
life, you're in the right place.

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Let's get started.

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Today is February 27th, 2025.

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We're here with world renowned professor
Ed Burton from the University of Virginia.

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Professor, we are in a Economic brew of
rising interest rates, sticky inflation,

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debt, 36 trillion and growing, annual
deficit approaching 2 trillion, Department

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of Government efficiency doge is making
significant cuts in the federal workforce.

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Is this good or bad for economics?

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The economy always suffers when
people lose jobs, whether it's

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through the efforts of Doge or
through the regular economy.

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Those jobs will have to be made
up for folks, and that's not

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going to be easy to do that.

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Now, looked at from a different point of
view, if you're trying , slice the cost

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of government, those are all pluses,
but in terms of the macroeconomic

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effect, That'll add to unemployment.

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We have a deficit of a couple trillion
a year, almost just shy of two trillion.

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Total debt of over 36 trillion,
growing to 50 trillion in the

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next seven to eight years.

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You've stated before that, you
can't move the needle without

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dealing with health care.

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How would you deal with healthcare?

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Let me say at the outset that this
is not uniquely a U. S. problem.

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It's a problem with a couple of factors.

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First of all, we've so greatly improved
the world's health capabilities

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that people live a lot longer
than they did, say, 50 years ago.

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Second, the fertility rates have
dropped throughout the developed

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world and even, China is struggling
to maintain their population as well.

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The number of children born is
not enough to replace what we

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lose from normal mortality.

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So most populations in the developed
world would be shrinking were it

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not for some form of immigration.

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And that's true of the U. S. It's
really notoriously true of a country

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like Japan, which has been shrinking
for quite a number of years.

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But it's also going to be true of China.

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They're going to lose population as well.

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And the population that you have
is getting older, much older.

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The demographics look for further
concentration in the oldest ages.

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And that's where a lot of
your health care concerns are.

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So health care costs, if you
continue to provide the same health

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care we now provide in the U.

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S. It's going to cost an enormous
amount more than it does even today.

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And that's true of England, it's true
of France, true of Germany, it's true

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of China, it's true of Japan, it's
true of every place in the world.

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So that's the nature of the problem.

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Question is how do you solve it?

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And if you dial the clock back 30
or 40 years ago, well, I remember

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many discussions about why don't we
just adopt what goes on in Europe?

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Europe has government provided
healthcare for everybody, and

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that all seems to work fine.

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Well, with an ocean in between us, a lot
of Americans didn't know the reality of

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what goes on in Europe and in the UK.

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People that live in the U. K. will
tell you right away that most low

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income to middle income people
get almost no health care at all.

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And that's true in most
European countries.

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And especially, they don't
have access to surgeries.

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You don't have older people
getting massive numbers of

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surgeries in a place like England.

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And when they list the deaths, they
almost never die on a surgical table

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because they never really get there.

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They just die wherever it is.

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Again, whenever you have a government
controlled health care program.

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Rich people do great.

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They basically avoid the health care
program and they hire private sources

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or fly themselves to India or somewhere
over the U. S., somewhere where they

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can get access to private doctors.

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But the average person, he's stuck with
the government provided health care.

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And what happens over time, as the costs
rise, they just quit doing certain things.

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Every day, the list of things that they'll
do for you in, countries like France or

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the UK just gets smaller and smaller.

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So they're kind of quietly eroding
the national health care system.

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And they'll be the first to admit it.

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That's a huge political issue
in the United Kingdom right now.

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There's a lot of discussion about it.

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In our country, for a long time, we had
essentially a private health care system.

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Prior to 1963, the health care system
in the U. S. was largely private,

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with a number of charity hospitals
sprinkled throughout the country.

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Every major city had a charity hospital,
and a number of private hospitals,

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and when you went to a private
hospital, the first question they

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ask you is, how are you going to pay?

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And if you said, I can't pay,
they said, there's the door.

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And you left.

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That, well, I remember when I was,
as a child, I, we had that kind of a

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confrontation with my grandfather, who
was quite ill, could not get him in

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a hospital, and he died out in some
facility somewhere, because he couldn't.

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afford some kind of surgery.

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And that was quite common.

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That was not an unusual story.

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Then in 1963, John F. Kennedy had
proposed something as a senator

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that ultimately became the Kerr
McGee Act, which became Medicare.

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And originally, Medicare was just to
pay one fourth of health insurance.

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You were, To go out and get your own
health insurance, and then the government

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would pay one fourth of that cost.

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And that was billed to cost the
country as a whole about 2 billion

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a year, as we projected out.

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Wouldn't that be nice if
it was 2 billion a year?

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If it was truly 2 billion a
year, or even a hundred times

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that, we'd be in great shape.

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And what is it today?

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Over a trillion a year.

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It's trillions of dollars, but
it's really where it's going.

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There's no slowing it down because
we have more and more aged folks.

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And by the way, they're
less and less healthy.

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Our aging population feels like they
don't really need to protect themselves

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very well, so they tend to overeat and
get very little exercise, retire as

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early as possible, and the net result
is we spend an enormous amount of

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money on health care for people who
only have a year or two left to live.

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A significant part of the health care
expenditures are in that category,

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and they tend often to be people, some
people have illnesses just because

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they couldn't help it or genetics.

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But America is almost unique in having
a large number of people who kind of

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eat their way into health problems.

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If you go on the streets in a big city in
America and you watch elderly people walk

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down the street, you'll see it right away.

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Compare that to being in
Paris or Rome to what you see.

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You see a lot of thin people
in Paris, thin, older people.

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You don't see a whole lot
of thin, older people.

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In America, the thin, older people
tend to be rich people, and the not

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thin, older people tend to be poor
people or middle income people.

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And they have access through
Medicare and Medicaid, to

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a lot of health facilities.

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So, we don't take proper care of
ourselves, and we're getting older.

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And so we're going to have a whole
lot more people hitting the health

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care system than it there today.

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But the biggest difference between
1963 and today is, before 1963, I told

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you the story of how we tried to get
my grandfather in a hospital and we

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couldn't pay, so he couldn't get surgery.

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Now, somebody would think that was almost
criminal for the hospital to do that.

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Oh, they've got to take him in.

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And in my grandfather's case, not to
throw cold water on my grandfather, but

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he was a hopeless alcoholic and smoked,
two, three packs of cigarettes every day.

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And he was dealt some pretty good
genetics, but he took a sledgehammer

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to the genetics and there he was.

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So, the current thought is if someone
like my grandfather shows up at the

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hospital who essentially created his
own health care problem, which he did,

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taxpayers of the country should foot it.

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And that's what's going on.

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So people feel like their health
care is a right, that you can't deny

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health care on the basis that someone
can't afford it, and it doesn't

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matter why they have bad health care.

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They may have You know, they could
be a bank robber going into a bank,

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trying to shoot up the bank, and they
actually get shot by a policeman.

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Okay, fine.

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That's how they got shot, but then
they go to a hospital, and they

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become the number one project,
and taxpayers paid for all that.

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And they do.

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It doesn't make any difference
why you get into a hospital.

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If you're just an American citizen
these days, they can't turn you away.

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And people know that.

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So if you know that, why
take any special care?

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Why go out for that next run or be
careful about your diet or anything else?

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When you had to pay for your own health
care, and you knew that you might not be

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able to get any, you might have a second
thought about that third cheeseburger

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or about that fifth drink one night.

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But if somebody else is going to cover
all your health care and you don't have

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to worry about it, you just do whatever
you want, there's a tendency to maybe

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not take as much care of yourself.

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So And then when you use the health
care system, what do you want?

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Well, you want everything.

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Imagine if you had a free card
to go to the grocery store.

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If we gave everybody in America a we said,
we think everybody has the right to eat.

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So therefore, here's what I'm going to
give every family in America, a free

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card to buy all the food they want.

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And now they go into
the local grocery store.

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What do they buy?

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And they take the kids with them.

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Well, they just buy everything.

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I might as well buy the most expensive
things you can find or whatever, but

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you're not a very careful shopper.

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You're not going to sit there and compare
the price of this to the price of that.

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You won't do that.

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And people don't do it
in the healthcare system.

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Most people have no idea what
the cost for their healthcare is.

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They go in, they go to the
hospital, they get something done.

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And they have no idea what it costs.

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So Adam Smith said the key to
optimal outcomes is competition.

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How do we instill
competition into Medicare?

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And there's a way to adopt a system
similar to our car insurance, where

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you have catastrophic insurance,

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complicated subject, and you
have to look at it from a number

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of different points of view.

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First of all, from the user
of the health care system.

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The user assumes that it's a right to
get free health care, and therefore

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they do not shop for health care.

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They don't care what they get charged.

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And doctors know that.

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So, if you're, suppose you're in a
business, and you know that the customer

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does not care what he pays, and he comes
in, and he says, I want to buy a shirt,

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well, how about these four shirts?

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You're not paying anyway.

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Maybe you want this one and that
one, and how about ten of them?

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So there's an incentive on the part
of the hospital and the doctor, too.

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So you've got a shopper who doesn't
care what price he's paying.

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And, you know, doctors are only human.

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I mean, it's not evil to suggest
that, well, maybe this test is not

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absolutely necessary, but let's do it.

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You probably wouldn't do it if
you were paying for it yourself.

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You'd say, well, do I need that?

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Do I need really to have that?

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You know, I'm struck by, I went in
myself one time to get an MRI, and when

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I got to the hospital, the lady at the
desk said, your MRI has been canceled.

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And I said, oh, who canceled it?

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He said, it's been canceled.

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You can go home.

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I said, I didn't cancel it.

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She says, it's been canceled.

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I said, who has the right to cancel it?

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My doctor didn't cancel it.

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I didn't cancel it.

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He said, Oh, well, the insurance
company won't pay for it.

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I said, That's not the same
thing as it being canceled.

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I want my MRI.

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The doctor told me I needed
one, and I'm here to take it.

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So I went and had my MRI, and
I came out from the MRI, and

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the lady said, You're in luck.

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The insurance company has decided
they're going to pay for it when they

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found out you just went in and got it.

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And I said, Let me ask you a question.

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Do other patients, when the insurance
turn them down, do they just get told

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it's canceled, and then they go home?

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She said, Yes.

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so much.

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00:12:03,268 --> 00:12:06,648
No one ever gets an MRI unless
the insurance company pays for it.

229
00:12:07,168 --> 00:12:08,218
Well, now that's interesting.

230
00:12:08,268 --> 00:12:10,438
Who decides whether the
insurance company pays for it?

231
00:12:10,948 --> 00:12:14,668
it's not the doctor that's deciding
whether you should have the MRI.

232
00:12:15,108 --> 00:12:19,308
It's some person who has no idea
what the healthcare situation

233
00:12:19,308 --> 00:12:20,728
is, he's making that decision.

234
00:12:21,408 --> 00:12:26,188
And so people are not only paying
too much because they kind of want

235
00:12:26,198 --> 00:12:30,048
everything if it's available, they're
often getting the wrong things.

236
00:12:30,078 --> 00:12:32,098
There's a great study by John Goodman.

237
00:12:32,188 --> 00:12:37,828
He took doctors who saw very similar
diagnoses, and he found out if you

238
00:12:37,828 --> 00:12:42,618
looked at what they prescribed For
the patients, they tended to subscribe

239
00:12:42,618 --> 00:12:46,428
similar things only in the case where the
patients had the same insurance company.

240
00:12:47,598 --> 00:12:50,908
And if the patient had a different,
same doctor had a different insurance

241
00:12:50,908 --> 00:12:55,498
company with the same diagnosis, they're
going to describe something else.

242
00:12:55,688 --> 00:12:57,948
And it fit what the insurance
company would pay for.

243
00:12:58,228 --> 00:13:00,828
So doctors look at what
the reimbursement is.

244
00:13:01,373 --> 00:13:03,582
And they decide on that
basis how to treat you.

245
00:13:04,341 --> 00:13:06,921
people respond to incentives
is the way it works.

246
00:13:07,071 --> 00:13:10,614
And if you tell people that the
price system doesn't matter, go

247
00:13:10,614 --> 00:13:13,274
into the grocery store and just
prices don't make any difference.

248
00:13:13,274 --> 00:13:14,294
You can have whatever you want.

249
00:13:15,019 --> 00:13:17,069
Then they will not shop intelligently.

250
00:13:17,069 --> 00:13:20,499
They will not try to get what's really
appropriate for them, and if the store

251
00:13:20,869 --> 00:13:24,289
realizes they're going to be reimbursed
for everything, they'll just give whatever

252
00:13:24,289 --> 00:13:27,349
they want out, but they won't give
out what they won't be reimbursed for.

253
00:13:27,869 --> 00:13:29,489
They'll keep that, maybe sell it.

254
00:13:30,159 --> 00:13:33,469
And so you have a crazy system
where the healthcare that people

255
00:13:33,469 --> 00:13:35,529
get isn't really very good.

256
00:13:36,014 --> 00:13:41,174
And it's unbelievably expensive, and the
people that get the best health care in

257
00:13:41,174 --> 00:13:44,584
America are the same people that get the
best health care in Europe, rich people.

258
00:13:44,734 --> 00:13:45,444
They do great.

259
00:13:46,354 --> 00:13:51,274
If you're really rich, or somehow
connected, I'll never forget when I

260
00:13:51,274 --> 00:13:55,214
spent a fair amount of time at UVA
the hospital, I don't know if you

261
00:13:55,214 --> 00:13:58,454
remember the room I had, Hunter, but
it was the best room in that hospital,

262
00:13:58,814 --> 00:14:00,594
because I was Professor Burton.

263
00:14:01,164 --> 00:14:05,444
I was treated like the king of Siam,
and I'm sure the guy that comes in and

264
00:14:05,444 --> 00:14:10,384
sweeps the Ground seems to snow off the
sidewalks, I bet he didn't get that room.

265
00:14:10,384 --> 00:14:14,244
He got some room with three other
roommates somewhere in the building.

266
00:14:14,804 --> 00:14:19,624
So, if you don't allocate a
product by price, which is,

267
00:14:19,664 --> 00:14:21,424
well, we don't in healthcare.

268
00:14:21,494 --> 00:14:22,854
Price is not the issue.

269
00:14:23,424 --> 00:14:29,714
Then it gets allocated by who has lots
of money, who has lots of connections.

270
00:14:30,399 --> 00:14:31,819
And that's how you get health care.

271
00:14:31,849 --> 00:14:34,429
And you're, you're gonna allocate
it one way or another because you

272
00:14:34,429 --> 00:14:35,759
don't have an unlimited amount of it.

273
00:14:35,879 --> 00:14:40,179
So do you allocate it by the
price system or the buddy system?

274
00:14:40,399 --> 00:14:43,729
So if you're a well known,
connected politician, suppose

275
00:14:43,729 --> 00:14:46,309
you're the local congressman,
think you get good health care?

276
00:14:46,479 --> 00:14:47,779
Of course, you get the best.

277
00:14:48,309 --> 00:14:51,689
But if you're the guy that cuts his
grass, no, you'll wait 12 hours in

278
00:14:51,689 --> 00:14:53,776
the emergency room to even be seen.

279
00:14:54,391 --> 00:14:58,151
So, you end up with really a very
unfair healthcare system, which

280
00:14:58,151 --> 00:14:59,341
is what we have in this country.

281
00:14:59,716 --> 00:15:02,696
So you've recommended a book
before, Priceless, on healthcare,

282
00:15:02,746 --> 00:15:04,516
who is the author of Priceless?

283
00:15:04,761 --> 00:15:05,671
Uh, John Goodman.

284
00:15:05,671 --> 00:15:09,441
John Goodman, the Claremont Institute,
he's, he wrote a book called Priceless,

285
00:15:09,441 --> 00:15:11,871
which was originally published in 2014.

286
00:15:12,421 --> 00:15:14,951
And I knew John, but
I never read the book.

287
00:15:14,951 --> 00:15:20,011
And then about a year ago, I read the
book, and I honestly couldn't believe it.

288
00:15:20,011 --> 00:15:24,671
That's one of the best research treatments
of American healthcare I've ever seen.

289
00:15:25,266 --> 00:15:30,696
And John suggests a lot of reforms,
but they're mostly, people need to know

290
00:15:31,066 --> 00:15:34,726
that health care costs and they need
to pay for a lot of their health care.

291
00:15:34,736 --> 00:15:37,386
Just like if you want somebody
to take care of their car, they

292
00:15:37,396 --> 00:15:39,256
should pay for their, repairs.

293
00:15:39,476 --> 00:15:40,616
Insurance companies know that.

294
00:15:40,626 --> 00:15:41,916
That's why they have deductibles.

295
00:15:42,446 --> 00:15:45,576
If you know that the insurance company
is just going to cover every wreck

296
00:15:45,586 --> 00:15:48,256
you have, you're going to drive
quite a bit differently than if you

297
00:15:48,256 --> 00:15:50,176
know you're the one that has to pay.

298
00:15:50,706 --> 00:15:52,916
It affects behavior,
knowing who's going to pay.

299
00:15:53,626 --> 00:15:54,166
And that's.

300
00:15:54,766 --> 00:15:56,876
That's what happened, that's
what's happened in this country.

301
00:15:56,876 --> 00:16:00,806
I think our concern about health
care, the drug habits that have gone

302
00:16:00,836 --> 00:16:05,326
completely rampant among young people
in America, and it's not, you know, when

303
00:16:05,386 --> 00:16:09,176
you think of the drug problem, people
often think poor people are using drugs.

304
00:16:09,176 --> 00:16:11,516
No, it's not poor people using drugs.

305
00:16:12,136 --> 00:16:15,446
Go to any major university in America,
go to Harvard and find out how much

306
00:16:15,446 --> 00:16:16,956
drug use there is all over the place.

307
00:16:16,956 --> 00:16:20,036
It's actually people that have a lot of
resources that use drugs quite a bit.

308
00:16:20,046 --> 00:16:22,906
That's what drives the drug
traffic in a lot of the East Coast.

309
00:16:24,336 --> 00:16:27,486
You'd think, do they worry
about the long run consequences?

310
00:16:27,486 --> 00:16:31,066
We know that drugs have a terrible
effect on you over time, and

311
00:16:31,066 --> 00:16:32,326
that's why they're not a good idea.

312
00:16:32,336 --> 00:16:33,206
That's why they're illegal.

313
00:16:33,716 --> 00:16:36,536
And even marijuana, which most
students, if you poll students,

314
00:16:36,536 --> 00:16:37,876
they think marijuana's good for you.

315
00:16:38,776 --> 00:16:42,026
And we have a huge amount of evidence
that it's terrible for you, but the

316
00:16:42,026 --> 00:16:43,406
universities won't tell them that.

317
00:16:43,826 --> 00:16:46,686
And certainly the drug dealers they're
buying from won't tell them that.

318
00:16:46,686 --> 00:16:51,376
And so you have all these health problems
that develop because students feel

319
00:16:51,376 --> 00:16:53,536
like, well, it really doesn't matter.

320
00:16:53,881 --> 00:16:55,761
And besides, I'm not paying
for my health care anyway.

321
00:16:55,761 --> 00:16:59,211
If something happens, I can just go
down to my friendly, hospital and

322
00:16:59,211 --> 00:17:01,411
they'll take me in and I'll be fine.

323
00:17:01,761 --> 00:17:03,701
you're stuck in a quandary here.

324
00:17:03,961 --> 00:17:08,631
The heart of the problem is to run
the health care system correctly and

325
00:17:08,631 --> 00:17:13,361
efficiently and cheaply and provide
good health care means you have to turn

326
00:17:13,361 --> 00:17:15,941
away people that can't sometimes pay.

327
00:17:16,001 --> 00:17:19,721
Now, if those people happen
to not be able to pay because.

328
00:17:20,471 --> 00:17:23,781
They just are poor and never be
able to pay, then there's probably

329
00:17:23,781 --> 00:17:24,931
a place for the government.

330
00:17:25,271 --> 00:17:27,341
But that's not the system we have.

331
00:17:27,861 --> 00:17:30,901
The system we have applies
to everybody, no matter what

332
00:17:30,931 --> 00:17:32,841
their income or anything else.

333
00:17:32,881 --> 00:17:35,401
Everybody assumes that they
don't pay for their health care.

334
00:17:35,401 --> 00:17:38,311
There's not an employee of the
University of Virginia where I work.

335
00:17:38,801 --> 00:17:41,401
It doesn't assume that they don't
pay anything for health care.

336
00:17:41,401 --> 00:17:42,781
They assume they pay nothing.

337
00:17:42,956 --> 00:17:46,653
the U. S. government is
arguably in a debt spiral.

338
00:17:47,243 --> 00:17:51,533
This year, in 2025, , will
spend more money on debt

339
00:17:51,533 --> 00:17:52,963
service than on the military.

340
00:17:53,973 --> 00:17:58,043
We can't solve the annual deficit
problem, which is approaching 2

341
00:17:58,043 --> 00:18:02,023
trillion, without dealing with
healthcare and Social Security.

342
00:18:02,513 --> 00:18:05,913
What would you do with Social Security
to solve that problem and make Social

343
00:18:05,913 --> 00:18:08,043
Security viable for the next 50 years?

344
00:18:08,518 --> 00:18:12,418
Well, I think Social Security is easy
because there's a huge amount of Social

345
00:18:12,418 --> 00:18:17,108
Security payments going to people
over the age of, say, 70, and the vast

346
00:18:17,108 --> 00:18:18,608
bulk of those people are well healed.

347
00:18:19,188 --> 00:18:21,108
They don't really need the
Social Security payments.

348
00:18:21,488 --> 00:18:25,518
So given that much of Social Security,
it's almost a reverse Robin Hood situation

349
00:18:25,518 --> 00:18:30,078
because poor people who work all their
lives die at a much earlier rate than

350
00:18:30,078 --> 00:18:32,638
rich people that just live on forever.

351
00:18:33,248 --> 00:18:37,988
Warren Buffett's still alive and going,
Charlie Munger last is 99, but I bet there

352
00:18:37,998 --> 00:18:39,818
are people that cut their grass didn't.

353
00:18:40,678 --> 00:18:43,818
So poor people tend to die much
earlier, their lives are much tougher,

354
00:18:44,318 --> 00:18:47,802
and they don't have access to health
care and diet and everything else,

355
00:18:47,802 --> 00:18:51,891
so since Social Security is going to a
pretty well heeled group, it would be

356
00:18:52,161 --> 00:18:57,553
pretty easy to You could either do it
through taxes, or you could just outright

357
00:18:57,553 --> 00:19:02,259
say, from now on we just don't pay
Social Security to people whose asset base

358
00:19:02,279 --> 00:19:04,619
is above a certain level or something.

359
00:19:04,699 --> 00:19:05,549
There's all kind of ways.

360
00:19:05,579 --> 00:19:09,139
Or people, a lot of people would just
voluntarily give up their Social Security

361
00:19:09,139 --> 00:19:11,149
if they saw improvement in the system.

362
00:19:11,719 --> 00:19:12,209
I would.

363
00:19:12,699 --> 00:19:17,526
If you told me that I, if I voluntarily
gave mine up, we could begin to end this

364
00:19:17,526 --> 00:19:19,066
system, I would give it up in a heartbeat.

365
00:19:19,786 --> 00:19:25,916
So the Burton family gets 70,
000 a year in Social Security.

366
00:19:26,176 --> 00:19:29,083
And low income people who trigger
it at 62, what do they get?

367
00:19:29,193 --> 00:19:30,613
They get about 18, 000 a year.

368
00:19:31,213 --> 00:19:34,543
So it's not very beneficial to
low income people at all, because

369
00:19:34,543 --> 00:19:36,103
they tend to trigger it early.

370
00:19:37,793 --> 00:19:42,356
35 percent of all Social Security
retirees trigger the benefits early,

371
00:19:42,356 --> 00:19:44,196
and so they get very low benefits.

372
00:19:44,226 --> 00:19:48,930
People that have a lot of money or a lot
of income, they can last till age 69 and

373
00:19:48,930 --> 00:19:51,030
it goes up 8 percent a year per year.

374
00:19:51,520 --> 00:19:54,720
So, Social Security actually
is more beneficial to rich

375
00:19:54,720 --> 00:19:55,660
people than poor people.

376
00:19:55,670 --> 00:19:57,140
Poor people get very little out of it.

377
00:19:57,640 --> 00:20:01,180
Even though it's heralded as income
maintenance program, it's really not.

378
00:20:01,353 --> 00:20:06,083
you got rid of that, suppose you just
got rid of the whole thing and quit

379
00:20:06,123 --> 00:20:10,033
giving benefits to fairly wealthy
people and just gave people who are

380
00:20:10,033 --> 00:20:14,173
poor benefits as they retire, that
would not be a big number, frankly.

381
00:20:15,053 --> 00:20:17,703
Because it all ends when they
die, unless they have a spouse.

382
00:20:18,253 --> 00:20:21,203
I mean, you could work all your life, and
if you die before you start collecting and

383
00:20:21,203 --> 00:20:22,953
you don't have a spouse, that's the end.

384
00:20:23,733 --> 00:20:24,333
You get nothing.

385
00:20:24,563 --> 00:20:25,943
You pay in your entire life.

386
00:20:26,453 --> 00:20:29,753
No affordability, your heirs
get zero, unless they're minors.

387
00:20:29,753 --> 00:20:31,803
And if you're 60, they're
probably not minors.

388
00:20:32,453 --> 00:20:34,253
So it's a terrible system for poor people.

389
00:20:34,273 --> 00:20:36,473
And it's, just look at the numbers.

390
00:20:36,503 --> 00:20:37,523
, it's 13%.

391
00:20:37,523 --> 00:20:40,473
It's six and a half by the employee,
six and a half by the employer.

392
00:20:40,473 --> 00:20:43,433
So if you make 50, 000 a
year Do the arithmetic.

393
00:20:43,443 --> 00:20:45,193
That's 6, 500 a year.

394
00:20:45,193 --> 00:20:46,713
6, 500 a year.

395
00:20:46,713 --> 00:20:50,083
If you put that in the S&
P, oh my goodness, you could

396
00:20:50,083 --> 00:20:51,273
retire a multimillionaire.

397
00:20:52,153 --> 00:20:55,783
And, and a lot of them put
that 6, 500 a year in all their

398
00:20:55,783 --> 00:20:56,843
lives and they get nothing.

399
00:20:57,023 --> 00:20:57,533
Zero.

400
00:20:57,813 --> 00:21:03,663
If you die of a gunshot wound at 59 and
have no spouse, that's the end of it.

401
00:21:04,343 --> 00:21:05,633
So it's a terrible system.

402
00:21:05,683 --> 00:21:08,783
What you need to do is offer
people the opportunity to save.

403
00:21:08,783 --> 00:21:11,373
We need to get the savings
rate up anyway in this country.

404
00:21:11,793 --> 00:21:13,063
And you can do that with taxes.

405
00:21:13,063 --> 00:21:14,343
You can do whatever you want to do.

406
00:21:14,353 --> 00:21:19,083
Just say We'll match whatever you
save up to 10, 000, we'll match

407
00:21:19,083 --> 00:21:22,093
it 50 cents for every dollar
you save or something like that.

408
00:21:22,333 --> 00:21:24,663
It'll turn out that'll be a lot
cheaper than Social Security.

409
00:21:25,163 --> 00:21:27,403
Social Security is just a terrible thing.

410
00:21:28,153 --> 00:21:32,803
And I don't know why it's always
had such a political defense.

411
00:21:32,803 --> 00:21:34,673
It's probably because
people don't understand it.

412
00:21:34,723 --> 00:21:39,123
And I think especially low income people
don't realize that they get almost

413
00:21:39,133 --> 00:21:40,903
no benefit out of Social Security.

414
00:21:41,003 --> 00:21:44,700
A handful of low income people
live long enough to do any good.

415
00:21:45,205 --> 00:21:50,855
The people that live long enough and do
well are white women who make it to 105.

416
00:21:50,925 --> 00:21:51,675
They do great.

417
00:21:51,895 --> 00:21:54,245
There are not too many of
them, but they really, they,

418
00:21:54,295 --> 00:21:55,465
they knock it out of the park.

419
00:21:56,075 --> 00:21:59,625
And, you know, Charlie Munger,
he did pretty well, and Warren

420
00:21:59,625 --> 00:22:02,345
Buffett, he did pretty well, and
I'm sure Bill Gates will do great.

421
00:22:02,495 --> 00:22:05,275
In spite of drinking many cherry Cokes.

422
00:22:05,455 --> 00:22:06,015
That's right.

423
00:22:06,845 --> 00:22:08,945
Well, Professor, you're
the best of the best.

424
00:22:09,355 --> 00:22:12,495
Next podcast, we need to talk about Doge.

425
00:22:12,995 --> 00:22:14,045
Thank you, Professor.

426
00:22:14,355 --> 00:22:15,075
Thank you, Hunter.

427
00:22:16,185 --> 00:22:19,725
Thank you for joining us for the Rubber
Meets the Road Economics Podcast.

428
00:22:20,225 --> 00:22:23,435
If you enjoyed the discussion,
remember to subscribe and stay

429
00:22:23,465 --> 00:22:25,065
updated with future episodes.

430
00:22:25,105 --> 00:22:28,555
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431
00:22:28,555 --> 00:22:30,465
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