The Carob Tree:A Radical Evolutionary Systemic Solution to the Pension Crisis

We propose an original, radical and systemic solution, based on an evolutionary social transformation of present-future choice toward increased saving; a proposal that addresses the roots of the pension crisis, not just the symptoms.   

The purpose of this study is to provide a macroeconomic simulation of our proposal, should it be adopted, comparing no-change and radical-change scenarios for the Israel economy, and urge scholars to carry out similar projections and analyses for individual OECD countries.  next the step shows how an increase in national saving and capital formation can contribute to ‘rebalancing’ the global economy, between low-saving Western nations and high-saving Asian ones.  Finally the study outlines our  “four pillar” radical proposal, which leverages persistent long-run saving and investment, and illustrates its impact with some macroeconomic projections for Israel, comparing two scenarios, one with low national saving, the second with increased national saving. An achievable increase in the national saving rate, implemented through the tax system and accompanied by intelligent capital formation, can have enormous impact, it is shown, not only on elderly poverty but on society as a whole.   

  A research paper has been submitted to a leading journal and accepted pending minor revision.

Gerstenhaber, M., S. Maital, T. Buchnik. The Carob Tree: A Radical Evolutionary Systemic Solution to the Pension Crisis.  S. Neaman Institute: Technion, Haifa, Israel, June 2015.

*Began:  2014.  Ended:  November 2015.  Funding:  M. Gerstenhaber.



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