Aug 28 2006

The Risk Pool

Published by at 5:52 am under General

An article, “The Risk Pool”, in the August 28th. issue of the New Yorker provides a very interesting description of some demographic aspects of national and corporate financial competitiveness. While the preceding sentence probably makes the subject sound boring and probably unimportant, the article and ideas in it are not boring and are important.

The topic concerns the ratio that describes how many current workers are supporting non-working people (mostly retired employees in the case of companies but including young kids when considering countries). The case for spreading pension and health care risks more broadly is well made. In the telling, the author provides some interesting history on how and why the current private pension system came into existence. One striking comparison is the very number of retired workers supported by GM workers vs those supported by Toyota, newly arrived, in the US and how that will change in 20-30 years. I won’t repeat other examples nor recreate his story. Overall, I highly recommend it.

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