First, the problem:
Let me be alarmist for a moment, because the fact is the numbers are truly alarming. We should be worried that large numbers of people nearing retirement will be unable to keep their homes or continue to pay their rent.So obviously the solution is that government must give these people enough money that this does not happen. However:
There are good proposals out there for improving the private aspect of our retirement system.... [b]ut none of these ideas will help people who are nearing retirement. Only the possibility of several decades of compound returns make the personal financing of retirement a realistic idea for most people....So, we have a huge government benefit, Social Security, that -- in spite of being one of the largest expenditures of the United States already -- isn't capable of meeting the minimum standard that Dr. Black would set for it (i.e., no one loses their home). The solution is to increase spending by 20%. However, no one can pay for this spending! The about-to-retire can't do it because they already don't have enough money. The not-quite-about-to-retire need to be saving like bandits to avoid being in this trap themselves. And the young can't do it because the cost of a college education is through the roof, and so they are starting their lives in a hole. They'll have to work twice as hard to get out of the hole, and then have to save for this burden we call retirement.
Even if we do find ways to improve the framework for self-funding retirement, how, exactly, do we expect younger workers, who might benefit from these improvements, to start saving significantly for their retirement? Soaring tuition and fees at universities, combined with the associated soaring student loan borrowing, have led many people to start their working lives already deeply in debt.
Now, Social Security is a kind of generational insurance program (or, if you like, Ponzi scheme). The idea is that the current retirees draw benefits paid for by younger generations, in return for the promise (or, if you like, forlorn hope) that similar benefits will be paid to them in their turn.
We have just learned that this program fails the current generation about to retire, but increases cannot be supported by the next generation in line, nor the younger generation either.
I would take this as an argument that Social Security has failed, and needs to be replaced. Dr. Black takes it for an argument for its expansion.
This is why our system is dying. Black isn't a bad guy. He has charitable interests at heart. He's very well educated, and even in the subject matter under discussion. Joseph Schumpeter was exactly right about him.
(A further critique is here.)