Private Accounts: A Bad Idea
Dan has taken up the call for private accounts as a way to try to fix social security. Read his take take down of anti-private accounts “economist” Paul Krugman here. Dan also published a very good question from Nate about how this new program could affect our economy.
With all this rhetoric being thrown around, I’d like someone to address one nagging question I have about the privatisation plan. Has anyone done an economic analysis (and I mean in-depth economic analysis, not ideological beliefs, from either side) on the effects such a large infusion of capital would do to the stock market, the related financial markets, and ultimately the economy overall? I’m honestly not sure yet whether the effects would be good or bad, but I’m fairly sure they would be deep and long-lasting.
I have read a few discussions about Nate’s question and it is something to worry about. How will that huge amount of money effect the economy and who will decide how it effects the economy? Who decides where it is invested? Who decides how that investment should be protected? Will there be guarantees from the government that the investment won’t be lost? I’m against privatization because there is little doubt in my mind that after all the arguing is done and legislators start to make the compromises needed to get the program passed into law the government is going to assume a greater degree of control over our economy than it has ever had in this country.
This new forced savings program will need lots of regulation and oversight and that means more power for the bureaucrats and nannies in DC who will insist they have to protect us from our own recklessness and stupidity. I can think of any number of ways the whole thing will turn out if personal accounts happen. Because our paternalistic government nearly always tends to err on the side of regulation and control rather than individual responsibility the vast majority of likely outcomes I can imagine aren’t good from the standpoint of individual liberty. The Republicans are wrong to champion this program. The whole idea that the government should force people to save their money is inherently un-conservative.
That said the Democrats certainly don’t have anything better to offer. If we do nothing to deal with future costs only huge European style tax schemes can keep social security alive over the long run. The only rational conservative/libertarian position on social security is to advocate for phasing the program out in favor of a need based welfare program for the elderly. The government should never have been in the business of providing all Americans with a pension. The only way of solving this issue is to get the government out of that business all together. This isn’t a very popular view but it will be as time goes by and people see the potential this issue has to destroy our economy no matter who wins the current private accounts debate.
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Same worries I’ve had.
No generation is willing to take a hit to save their children. The baby boomers are unwilling to tighten the belt to save us from their debt.
Let them save themselves! They cry. But in reality, it would be the next generation, or the next who would have to save for a lifetime….for their children. $74k per family = national debt.
How many of us are planning for self sufficiency in retirement?
How many retirees are willing to exercise 45 minutes 3-4 times a week to help reduce healthcare costs?
How many are willing to give up the ghost before 5 cancer treatments and 4 new organs? Or their 60foot RV in Lake Havasu or condo near Miami?
How is corporate america helping out? Slashing pensions? Offering 401k accounts as alternatives? What? Judging by the small amount of fuss my co-workers put up when their pensions were diffused, I don’t think anybody my age cares enough. Luckily, I’ve moved on to a job with a pension again. I don’t know how many plan to survive, or even if they do.
I see 2 problems here. Greed, and no future planning.
I know Bush is scared to dump taxes on flustered americans right now, but the belt has to be tightened in a major way somewhere. Either enrage retirees, madden the current workforce, or just leave it for our children like everybody else has in decades past. The dems can claim to have a better plan, but their track record runs against them.
I yearn for gov’t spending as it was in some earlier years, where we were responsible, and didn’t spend what we didn’t have. There’s answer #1.
Comment by cody — February 9, 2005 @ 8:11 am