Social Security

As an individual who has a healthy respect for the free market, you might find my view that we should save social security and medicare a bit out of character. In the best of all possible worlds, we would all put aside a bit of our earnings into some retirement fund, and it would grow little by little to a level sufficient to support us into old age.

There are a couple of reasons I consider that economic fantasy. First, recent history tells us that large corporations with an array of financial advisors to envy at their beck and call can't seem to manage a defined benefit plan. The upshot is that we the taxpayers are going to dig them out of their incompetence, even though they received annual compensation as if they were performing in an outstanding manner. The bottom line is that they haven't demonstrated for private managers to produce a reliable defined benefit plan. While the theory supports the idea, the facts simply don't.

Problem two is that even if we take the forced savings that is now social security and put it in private accounts, I know few people who are good at managing money. They'll be too conservative or take too much risk, or do what I do, and just not pay sufficient attention. The upshot is that we will end up with a bunch of people who simple do not have the funds to retire and pay for their health care.

Problem three is that a whole army of charlatans will arise laying out plans to make us well off, but simply making fees on our ill-advised choices. The lawsuits in recent years against various financial services groups are testiment to the likelihood charlatans even in an environment that is relatively constrained.

I believe every American should have the knowledge that out there at age 65 or so is a small amount of cash and health coverage to make retirement possible. Yes, we can afford it. Yes, it is resdistributional. In other words, we do take from the wealthier and give to the less wealthy. What I don't know is when this suddenly became some sort of terrible thing. To be honest, I don't mind that a bit of my money goes to pay for some working person to retire. Nobody gets rich off of social security, and nobody gets poor because of it.

The first step to solving the problem is to make the trust fund truely a trust fund that can't be used to obfiscate the true level of the deficit. The second step is to force employers to make sure that the full share of taxes is paid in. Don't allow under the table, off the books use if illegal labor. It is the young, imigrant that is part of the funding for social security. The third step is to establish a wealth sir tax that goes into the trust fund. These are the guys that ripped off the private sector retirement system, so this should be their penalty.

Of course you can expect the wise conservative economic bretheren to provide all sorts of reasons why these are bad ideas. First and foremost, they will argue that the owners of capital have special gifts to grow the economy that will be lost through redistribution. Maybe, but at least social security recipients will spend their dollars here and not shelter them in some foreign tax haven. Plus, the amount of money is such a tiny amount as to be insignficant. The resistance is ideolgical, not empircal.