A pay as you go welfare social safety net program, which is what SS really is, does not pose a moral hazard. A private account, which if it fails, and leaves the investor too poor, will cause the government to just give the investor his old benefits under the old system, is a tails the investor wins, heads the government (taxpayer) loses, proposition. That becomes the moral hazard.
"which if it fails, and leaves the investor too poor,"
As apposed to......putting into the current system where you get none of the money other then in benefits? If your lucky. How can that investor get "too poor"? He or she now does not have any of that money to begin with.
P.S. You do know the laws of compounding interest right? And you do know the proposed portion of money to be taken from each individuals SS tax for the private account is a whopping 3% of 12.4 %.
How about mandatory purchase of government bonds? The payment in can be used to pay for present beneficiarries, and the private holder of bonds has something to pass on to his heirs if he outlives the purchase. It's not a private account in the sense that its success depends on any company's business success, but it is a private account in that the value of the government bonds accrues to an identifiable individual buyer.
ugh . . . i hate when people throw out jargon as shorthand for superior enlightenment, retreat behind it and then refuse to examine their position
again, how is this tired 'moral hazard' canard any worse than what we've got?
"pay as you go" is not "pay what you can"--there is a level of expectation, among those who need benefits to make ends meet, that can't be ignored when we hit negative cash flow
since a lockbox is not an option where politicians are involved, the only difference is that under the current system the coin's already been tossed--whereas what's proposed gives us another toss in the private sector