Tuesday, March 08, 2005

I've Decided

In my paper copy of Reason, there's a feature debate between Tyler Cowen and James Glassman on Social Security reform, with Glassman more or less backing the president's privitization plan, and Cowen arguing that it isn't all it's cracked up to be. Those of you who have been reading this blog (ok, nevermind...) know that I've been back and forth on this issue. Some call it inconsistency, I prefer to call it being "nuanced".

But reading Cowen's argument has me convinced. Some choice quotes:

It runs counter to both liberty and responsibility to set up a new system of "private" accounts with regulated contributions, investments, and withdrawls. We would end up adding to government involvement in the market economy, not diminishing it.


And what will happen to the efficiency of capital markets? Glassman already has admitted that investment choices will be "restricted". By whom? According to what standards? Will the government use these regulations to punish unpopular companies? How about companies that (supposedly) break the law? How about companies that supported the other political party? This proposal invites the politicization of investment decisions.


Our government would raise taxes (or borrow) to finance further private investment in equity markets. Furthermore those investments are to be regulated by the government.


I'll vote no on this idea and hope that something better comes along.

I'm sure reason will put the full text up on their site soon. When they do I will link it. But you really oughtta subscribe anyways.

As for the accounts, I find Cowen's arguments persuasive. The idea of the government regulating where significant dollar values are placed in a capital market has a significant potential to distort price signals, and the use of these decisions for political gain is all too likely a scenario for my tastes.

It appears to me that the long term default position is going to be an endless progression of benefit cuts. That is, if nothing is done now, the benefits will be tied to inflation rather than wages, collection age will be pushed upwards, and other new and creative ways to decrease expenditures will be explored.

My ideal solution would be that I be given the option to opt out entirely. I'm 30 years old, and don't count on a single penny of the benefit to be there for me. The FICA line on my paycheck is money taken from me and given to another, in just the same manner that a welfare payment is taken, or property taxes go to city schools though I have no children. I've never seen it as mine or as an investment, and don't expect it ever to come back to me as such. I would welcome the opportunity to stop the hemorraging and denounce any claim to payments made since I started working at 14. I look at it as my payoff money to the gimme generation. Here, have it. Leave me alone.

Failing that, however, let the cuts come as they inevitably will. I'd prefer the program be allowed to wither on the vine, a drag on our economy caused by enormous expeditures, but yet allow the markets which are the only vehicle for potentially surviving this demographic bottleneck to operate free of the political meddling that the privitization plan is undeniably going to create.


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