Tuesday, February 08, 2005

Republicans only: Please comment here.

The relevant Jim Lehrer episode has been deleted, so please tell me this. I'm undecided on this issue and want to hear some answers.

--Why is privatizing Social Security a good idea? Explain to me how this is more likely to help me in my later years. I hate economics, but I'm a smart guy who's not afraid of math, so make your case.


Joe said...

OK, I've already said that I don't buy the "privatize Social Security" argument. But I try to see both sides of the argument, and I was a registered Republican until I moved to a state without party registration, so I'll make _an_ argument.

Social Security is a fraud. If you ran it in the private sector, they'd call it a Ponzi scheme and haul you off to jail. This whole "trust fund" idea is bad math and worse policy.

Yet people believe it. They think they're actually "saving" their social security taxes, and yet they're burying them in a big Federal program which doesn't actually generate any wealth.

So, let's let people generate some wealth with it. Take that capital and let the economy have access to it. As a general rule, if you're holding money for more than about 7 years, broad-based market indexes have outperformed any other financial instrument. So let people make that choice.

As I've said, I think this is a wrong-headed approach to Social Security. However, I do think that the government should look for ways to (a) encourage higher levels of retirement investment through increased tax deductions and (b) look for ways to make setting up an IRA/401(K)/whatever easier for the large numbers of people who can't set one up as direct deposit at work. In fact, I think these are very good goals which, along with means testing, would relieve a lot of the pressure on the Social Security system.

Hugh said...

Y'know that big chunk of dough, under the heading "FICA" that comes out of your paycheck every two weeks? Unless we reform SS, that is money down the drain. Traditional Republicans are small-government types, and SS is about as big-government as you can get.

People should be responsible for themselves, that's the long-standing tradition in this country, and fooling people into believing that the Federal government is going to take care of them in their old age, is immoral. No one is under any obligation to set up these accounts, they only have the option to. Unleashing all this money into the great wide open is better in the long term. The more control over their own money we give people, the better it is in the long term.

The more we treat people like babies, the less they are going to be productive members of society.

All this having been said: it is a good idea for you, because the difference between what you would get under the present system, and what you could get under a marginally privatized system over the 30 years between now and your retirement is huge.