Posted on 03/24/2005 1:07:35 PM PST by Nasty McPhilthy
The new report by the Social Security trustees, claiming that Social Security will go broke in 2041, is bound to fuel the nationwide debate over Social Security. One side, led by President Bush, says the system is in crisis and must be saved via "partial privatization." The other side says the system is basically sound and can be saved with a little tinkering.
Both sides, however, agree on one absolute: Social Security should be saved. While it may have financial problems, they believe, some form of mandatory government-run retirement program is morally necessary.
But is it?
Social Security is commonly portrayed as benefiting most, if not all, Americans by providing them "risk-free" financial security in old age.
This is a fraud.
Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their income--approximately 12%--for the alleged purpose of securing their retirement. That money is not saved or invested, but transferred directly to the program's current beneficiaries--with the "promise" that when current taxpayers get old, the income of future taxpayers will be transferred to them. Since this scheme creates no wealth, any benefits one person receives in excess of his payments necessarily come at the expense of others.
Under Social Security, every aspect of the government's "promise" to provide financial security is at the mercy of political whim. The government can change how much of an individual's money it takes--it has increased the payroll tax 17 times since 1935. The government can spend his money on anything it wants--observe the long-time practice of spending any annual Social Security surplus on other entitlement programs. The government can change when (and therefore if) it chooses to pay him benefits and how much they consist of--witness the current proposals to raise the age cutoff or lower future benefits. Under Social Security, whether an individual gets twice as much from others as was taken from him, or half as much, or nothing at all, is entirely at the discretion of politicians. He cannot count on Social Security for anything--except a massive drain on his income.
If Social Security did not exist--if the individual were free to use that 12% of his income as he chose--his ability to better his future would be incomparably greater. He could save for his retirement with a diversified, long-term, productive investment in stocks or bonds. Or he could reasonably choose not to devote all 12% to retirement. He might choose to work far past the age of 65. He might choose to live more comfortably when he is young and more modestly in old age. He might choose to invest in his own productivity through additional education or starting a business.
How much, when, and in what form one should provide for retirement is highly individual--and is properly left to the individual's free judgment and action. Social Security deprives the young of this freedom, and thus makes them less able to plan for the future, less able to provide for their retirements, less able to buy homes, less able to enjoy their most vital years, less able to invest in themselves.
And yet Social Security's advocates continue to push it as moral. Why?
The answer lies in the program's ideal of "universal coverage"--the idea that, as a recent New York Times editorial preached, "all old people must have the dignity of financial security"--regardless of how irresponsibly they have acted. On this premise, since some would not save adequately on their own, everyone must be forced into some sort of "guaranteed" collective plan--no matter how irrational. Observe that Social Security's wholesale harm to those who would use their income responsibly is justified in the name of those who would not. The rational and responsible are shackled and throttled for the sake of the irrational and irresponsible.
Those who wish to devote their wealth to saving the irresponsible from the consequences of their own actions should be free to do so through private charity, but to loot the savings of untold millions of innocent, responsible, hard-working young people in the name of such a goal is a monstrous injustice.
Social Security in any form is morally irredeemable. We should be debating, not how to save Social Security, but how to end it--how to phase it out so as to best protect both the rights of those who have paid into it, and those who are forced to pay for it today. This will be a painful task. But it will make possible a world in which Americans enjoy far greater freedom to secure their own futures.
Alex Epstein is a writer for the Ayn Rand Institute (www.aynrand.org) in Irvine, California. The Institute promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead. Send comments to reaction@aynrand.org.
If I'm not prepared for my "Golden Years", then it's my fault and one else’s.
A report published after the Albanian pyramid/ponzi scheme collapse some years ago by a panel of economists stated that the only way to "fix" a ponzi scheme is to end it.
Agreed.
I think we need to make social security voluntary. Let young people opt out of the program if they wish.
Here here!!!!!!!
Alexander Hope couldn't have said it better.
Top sends
double ditto.
I agree completely. Gen-Xers have always been taught that SS was not for us. I have neve planned on needing or getting it when I retire. I say than can keep what I have put in but stop taxing me next year and give me back %10 of my taxes for me to invest in my retirement.
Bush's plan is a start at least!
Just think of what 12% of your income put into a mutual fund for your entire adult life would be worth when you retire.
BTTT
"all old people must have the dignity of financial security".
Thats the most idiotic notion ever. Unfortunately we are stuck with it.
But Gen X might be willing to drop it as we age. As another poster noted, none of us grew up expecting to have it.
But the Boomers will howl....
This is a winning ticket for the Republican Party.
The feds want that "slush fund" they will never end it.
Epstein writes:
" ---- The answer lies in the program's ideal of "universal coverage"--the idea that, as a recent New York Times editorial preached, "all old people must have the dignity of financial security"--regardless of how irresponsibly they have acted. On this premise, since some would not save adequately on their own, everyone must be forced into some sort of "guaranteed" collective plan--no matter how irrational.
Wow, but this sure contains a lot of unrealistic assumptions. Do you really believe that Joe Blow would really, really plan for his retirement? Not if he's like the average person I come across. At age 65 or thereabouts, they would not have saved much--if anything.
My husband just retired a few months ago, and a few weeks ago, he just got his first social security check....we have both put into social security when we were teens, and now we are in our early 60s...if only we could have taken that money and invested it, over our working lifespan, I can only imagine how much money we would have...
As it is, we planned and put into a TSP plan....and its amazing for what we put in and left in there all these years, how much return we will get back on it...if only we could have put in all that money we put into Social Security sitting in our TSP....we would have tons more money...
My mom and dad never believed social security would exist when it came time for them, but they were wrong...social security did exist for them...having heard all my life that social security was not going to exist for me, me and the hubby planned for retirement without it...again, we were wrong, we are now collecting Social security....but my son having heard that Social Security would never exist for him(he had to listen to me and his grandparents go on and on about this), has been saving for his own retirement as soon as he began working...he just turned 31 and already has a very large nest egg, for his retirement days...
Everyone needs to save for their own retirement...one way or another, Social Security will no longer exist as it is...
SS is the second worst government redistribution program ever. Worst? Handouts to corrupt governments around the world.
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