Wednesday, April 27, 2005

Social Security

Lew Rockwell has a top 10 list (of Bush's economic errors) in an article called What Made The Next Depression Worse. I am including number 8 which deals with Social Security.

Number Eight: The Social Security Reform Hoax. Genuine privatization would be a grand idea. But that is not what the Bush administration proposes. Not anywhere close. They are proposing to partially convert the existing tax and spend system into a forced savings program. This is not choice but rather a species of socialism. The forced investments would be fed to approved funds with approved companies and be guaranteed a rate of return.

So in the end, Bush-style privatization would partially socialize the most important sector of the American capital markets, and we aren't talking about small change. And how would this transition be funded? Bush has suggested that he would be willing to lift the FICA cap, which would mean the worst tax increase in US history. Debt, taxes, inflation—take your pick. The costs are in the trillions.

16 comments:

marco said...

This is another example of the 'nirvana fallacy'; compare policies to their alternatives, not to the ideal.

Allen said...

"Collapsing Social Security System" vs. "Prolonged Social Security with Inevitable if not Immediate Government Regulation of the Finance Industry"

My vote is for the former because it provides an actual end to the whole system. It isn't idealism either because my plan involves doing nothing.

Jeff said...

Social Security won't just die though. People don't just go to sleep for 20 years while SS dies. All they're going to do is keep raising the retirement age and increasing the cap... SS will never die, poor people will just continue to get smaller and smaller returns.

Dan said...
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Dan said...

What Jeff said.

Libertarianism will go nowhere until the Libertarian establishment realizes that the philosophy of being a heartless bastard isn't all that appealing to most Americans.

marco said...

Too true...

Clara said...

Ouchie.

Look at Cato's website. It's all about how best to help people, to create wealth, to provide individuals with more choices and fewer constraints to growth and personal happiness.

We ARE the party of compassion, people.

Allen said...

I think my point over and over again is that making SS private in any way is just government's covert attempt at getting its hands on the financial industry. I will always feel this way towards anything the government will consider a "fix" for the program... unless of course the fix is abolishment. You might all in fact be right that leaving the program alone will not let it die, but I do not see any alternative that fits the above descriptions as being better. What I mean is that I would rather have Social Security stay the way it is, and know EXACTLY how it works, then have it move into other unchartered areas. Thus, my solution is either abolish it or don't touch it (beyond the usual minor adjustments like age, cap...).

Dan said...

Clara- I (and I believe Marco and Jeff as well) agree with you, that libertarian policies are ultimately compassionate. However, doing nothing about social security in the hope that it shrivels up and dies, thereby leaving lots of poor folks who have paid a large portion of their income in social security with absolutely nothing- that's not compassionate.

Jeff said...

I remember reading about a Yale professor in 2003 talking about how he wanted the economy to tank, because that would get Bush out of office. He was afraid that if the economy did well that Bush would get re-elected (which is, in the end, what happened). I remember, at the time, thinking that this was horrible and heartless - putting his own political ends before his cares about others.


Libertarianism is THE party of compassion. It is the other parties that rely on selfishness - assuming that people will vote for you if you just toss them a bone of money or entitlement. Assuming that people will never give charity unless we force them to. Our party is the party that thinks that all people are treated equal and that all people need to be given equal opportunity to succeed (and, maybe, fail).


Let's not become as bad as everyone else...

Allen said...

I'm not sure if the not-compassionate comments have been aimed at me but I would like to say first, that I have stated before that anyone who has put in a single dime in that horrible system should get their fair share. What this means is that if this horrible system continues to function, then people should continue getting their money. If it fails, then only the people who put money in up until that very day are the ones who should get benefits. I don't think this is heartless. If you don't think making SS private thereby giving the government control over finance in America is heartless, then I don't know what is.

My second comment relates to what libertarianism is. Granted, I am no full fledged libertarian but Murray Rothbard was probably the most libertarian libertarian and his ideological duplicate (Lew Rockwell) seems to agree with me... so if anything, opposing SS reform on my grounds is more libertarian than all the compassion talk I hear about (if you are indeed calling me heartless). In fact, I'm not sure Murray Rothbard ever uttered the word compassion.

Clara said...

I don't think anyone was calling you heartless, Allen -- not at all. It's just that it would *seem* heartless to propose sweeping the rug out from under everyone who's been paying into Social Security for years.

Nothing personal at all!

By the way, I agree with what everyone's been saying about the beauty and fairness of libertarianism. Go, us.

Dan said...

Hurray, indeed.

Adam Scavone said...

Dan, I'm not sure who you mean by the "libertarian establishment."

Is Ed Crane's Memo to Karl Rove an example of "the libertarian establishment" being "heartless bastard[s]"?

Seriously, this should be an emotional issue about liberty and opportunity, not solvency dates. The concept of an Ownership Society is brilliant. Unlike the New Deal, the New Frontier or the Great Society, Ownership Society actually means something integral to the essence of America. That essence is a respect for the dignity of the individual, which is axiomatically enhanced when one has more control over one's life. That is what personal accounts provide.

You want to get people excited about personal accounts? Tell them about the 1960 Supreme Court case, Flemming v. Nestor, which explicitly says Americans have no ownership rights to the money they pay into Social Security. It is, the Court ruled, a social program of Congress with absolutely no contractual obligations. What you get back at retirement is entirely up to the 535 members of Congress. Where's the dignity in that?

Adam Scavone said...

(for what it's worth, I have a faint glimmer of hope that tonight's Presidential Prime Time News Conference is because Rove got Crane's memo and they're going to give it a whirl!)

Dan said...

Well Adam, since you asked, when I say "establishment," I am talking about that LP and the Mises Institute. I suppose 'purist' would be a better term than establishment. That said, I think "establishment" is fitting in the sense that the people who I look up to, like Hayek, never considered themselves libertarians, but rather part of a long tradition of classical liberalism. Reason and Cato aren't libertarian establishment in that they are not puritanical.

I've had conversations with a number of leftists and rightists who view libertarianism as this fringe radical idea. I have to calmly explain to them that no, in fact, I don't view all tax as theft or view the Confederacy as an individualist utopia. Unfortunately, certain groups that have commandeered the L-word without consulting me.