Motto: The surest way to get a reputation for being a trouble maker these days is to go about repeating the very phrases that the Founders used in the struggle for independence.
-- C.A. Beard
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On last month's Fix;
the answer to last month's Fix,
""Is it time to privatize Social Security?"
Yes. A detailed economic and historical analysis is in this month's
Guest Editorial (the full paper is a 20 page PDF). In a couple of days
we will be celebrating Independance Day. How many people today, I
wonder, would have had the courage to sign the Declaration? Today, most
people don't have the guts to manage money for their own retirement.
What "freedoms" have we bled for that are encoded in the Social
Security System that so many are keen to keep?
a) We are free to not pass on our remaining funds to our children if
we die before we have used up our Soc. Sec. account. The balance goes
back into the general fund.
b) We are free to not have a choice in seeking better returns on our investements that are siezed from our paychecks
c) We are free to have over 2/3 of our estate value above $600K siezed and given over to "society."
Opponents of President Bush's proposal to make individually owned personal retirement accounts a part of the Social Security program routinely charge that it is motivated by ideological animosity toward the values Social Security is supposed to embody, such as equality and social cohesion. However, a frank look at the Social Security status quo reveals that the program is very poorly designed to realize liberal ideals. Social Security has a barely progressive overall structure, if it is progressive at all. The huge volume of transfers inherent in the system accomplishes very little income redistribution within generational cohorts. Furthermore, it works to the disadvantage of current workers, who will receive a smaller "return" on their payroll taxes than do current retirees. The terms of the imaginary "compact between the generations" are manifestly unfair.
What is worse is that the Social Security status quo embodies a government-perpetuated deception designed to generate its own political support by misleading voters into believing that their payroll taxes entitle them to later benefits. The architects of Social Security created a structure and accompanying rhetoric that were specifically intended to encourage the false belief that the system provides a kind of insurance, similar to private insurance based in contract and property, and therefore involves a binding entitlement to benefits.
However, there is no justification for this deception on contemporary liberal grounds. The persistent intentional misrepresentation— the "noble lie" -- embedded in the structure and language of the Social Security system is in fact antithetical to the ideals of transparent government, open democratic deliberation, and equality among citizens -- ideals at the core of contemporary liberal thought.
A system of personal retirement accounts plus a means-tested safety net would serve the "social insurance" function better than the Social Security status quo according to liberal standards. Contrary to critics of reform, personal retirement accounts would materially enhance equality and social cohesion by more fully integrating workers into the market, providing everyone with a stake in its growth, closing the gap between the investing and noninvesting classes, and making more salient the mutuality of interests in a market society.
1. July 1: Justice Sandra Day O'COnnor, the first women on the
Supreme COurt (appointed by Reagen BYW), is retiring at age 75. This
gives Bush 2 likely appointments to the court this year. Entertainment
sure to follow.
2. June 30: The Senate passed CAFTA, a Central American version of
NAFTA. The House is likely to be a more fractious debate. No doubt this
will be laid on the feet of Bush as his disregard for US jobs, but will
anyone recall what year NAFTA passed?
3. June 30: Eminent Domain Supreme Court