Tuesday, December 21, 2004

Privatize Social Security

Why does the clown in the oval office think privatizing social security will fix social security?

Because it will eliminate the government's liability to pay your retirement. Instead, you will be responsible for managing your own retirement. If your retirement gets screwed up and you have no money for old age it's either your fault or just bad luck with the stock market timing. Regardless, it's personal responsibility although it's involuntary.

In other word's, it will actually be effective at removing the burden off the government of a program that costs more money than payroll taxes bring in.

If the economy takes a dump and people's private social security accounts lose 90% of their value - oh well. Stuff happens. But you can't blame the government because it's your own private account and your own responsibility, not a government entitlement program.

This is the true reason for privatizing social security. Simply eliminating government liability to pay and replacing it with personal responsibility and personal risk.

It's moving social security toward the idea of a simple savings account but one which you are forced to have. It's a way of forcing idiots who don't want to save money for old age, to save money for old age.

Why should the government force people to save for retirement? Because so many people fail to save for retirement or invest too much money in high-risk adventures like an over-inflated stock market. This is exactly what happened in the 1920's and 1930's which led to the great depression and provided the motivation for F.D.R. to give us our current social security system.

But claims that privatized social security will allow people to earn a higher percent on their money by investing in the stock market is just marketing hooey. That's just a phony carrot to entice people into accepting the idea. It's a lot like HMO's saying they reduce costs by preventing disease rather than treating disease when the real truth is, they reduce costs by limiting access. It's just marketing misdirection.

Personally, I would rather see the government give workers the right to opt-out of social security payroll taxes. In exchange for signing a contract that gives the worker the right to pay only, say, 50% of the normal payroll tax, those workers who agree to sign give up all claims to any future social security benefits. This would fix the system but wouldn't leave us with forced, involuntary savings accounts. This is the true free-market approach to fixing the problem.