Saturday, December 18, 2004

A Word on Social Security

Social Security is a hot topic these days. Apparently it is going to be the Bush administration's premier domestic policy initiative. That's great news considering the success he has had with tax cuts, job creation, and the Iraq War.

But, seriously…

Now plan has been revealed, so it's a bit difficult to speak about specifics. However, one thing that is clear is that it will, on some level, include a degree of privatization. And when you get down to it, that's enough to hate it. I mean, it's costly, it shifts risk onto those who can least bear it, it's not clear that it will solve the problem that supposedly justifies it, and it's not even clear that a problem exists. So, that's enough for me.

But, once you get outside all the wonkiness, you can see a real disparity of intent in the two camps. By this I mean that supporters of this policy fail to understand the central purpose of Social Security: preventing poverty in the elderly and the disabled.

Social Security isn't about making people rich. It's about making them financially safe (hence the name). We can all yammer on about how responsible people should save for their retirement and how well they would do if they just socked a little away in a 401(k) every year. But even assuming that everyone was responsible enough to do that and had enough income over expenses to afford to do that, some people are going to make bad choices and/or have bad luck. Those people are going to be old, unable to earn a living, and therefore destitute. Add in the disabled (and all the people we recklessly assumed earlier would be responsible enough to save and responsible enough to earn respectable income) and you have a real problem on your hands.

Like it or not, privatization is a step in this direction. The degree of privatization determines how far you go, but not where you're headed.

The irony of all of this is that when the shit hits the fan, the government is going to step in and bail the retirees out anyway. That's what happened in Chile when their privatization plan failed to prevent elderly poverty. It'll happen here, too. There is exactly a 0% possibility that the most politically active demographic will allow a substantial portion of its population to suffer this sort of severe economic hardship.

So, we pay now for the transition and later for the cleanup. Sounds great. Sign me up.
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