Just Putting a Toe into the Social Security Water...

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I'm four-sqaure behind Kevin's policy prescription. (And I'll here note that a similar notion was advanced over at Division of Labour some days later. Advantage, Kevin!) I also, unfortunately, agree that the idea simply has no political legs. Seems to me there's going to be some tiny marginal change coming, one side claiming it a resounding victory for the ages, the other side calling it the onset of national collapse. And the world will go on.

That said, I did want to toss out one notion that I think is pertinant. Whenever the idea of SocSec comes up, someone invariably jumps to point out that the real problem is, of course, US national savings rates for individuals. Here's an example from Steven Landsburg:

In other words: If you want to address the Social Security crisis of the future, you must adopt laws that encourage saving in the present. There's nothing else you can do.

Well put, Steven. And a fair point. But how do we address the fact that SocSec itself seems to be a considerable contributing factor to the reduction in private savings? Might I suggest, it this case, that a reduction in government control, rather than a reliance on ever-accreting legal regulation might be a sound policy choice?

LATER... Just to clarify, this is an example of the "history provides no counterfactuals" kind of argument. It seems odd to me to argue that the low savings rate of people in the US is of primary concern, knowing that the very presence of guaranteed retirement income almost certainly reduces people's incentives to put additional money aside on their own. If we are interested in having a system that provides a measure of safety for those who were unable to save adequately, or face a circumstance that forces expenditures at a rate faster than they -- or anyone -- had anticipated (catastrophic health care issues, for instance), then perhaps the fact that this system drive people towards under-savings should be addressed at the source, rather than looking elsewhere for ways to correct the problem.

2 Comments

I agree wholeheartedly. Those who defend the current system do not realize the deadweight cost as it exists today. We would ALL be vastly more well off had the bloody system never been created in the first place. On a per capita basis we would be a lot richer, we would have higher savings, be more productive, etc. etc.

But then the Democrats would not have ruled Congress with an iron fist from 1932 to 1994 had it not been for Socialist Insecurity.

Anyway, we can fix the problem over the long term by privatizing.

It is really an important factor that we have to be aware of all these things that could really be helpful for all of us. - Lindsay Rosenwald

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This page contains a single entry by published on February 22, 2005 9:55 AM.

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