Private Social Statism?
Rick Henderson's article "Retirement Plans" (March) perpetuates myths about Social Security reform. According to rhetoric, several plans now exist on the Hill and among libertarian think tanks which would "privatize" Social Security. This is false. Even the plans promoted by the Cato Institute call for replacing the current Social Insecurity scam with another statist plan under which savings levels would be mandated by the government and savings programs would be regulated by the government.
We're stuck with the commitments the government has made to the elderly and those nearing retirement. What we can do now is stop the cycle of wealth transfer from working people to retired people, and return to a system in which people prepare for retirement by investing in industry. But we ought to allow working people to invest or consume their wealth as they believe best, not as government wishes.
There seems to be a tacit belief that transforming the Social Security system into a mandatory savings system would somehow mystically alleviate the financial burdens of paying off current and upcoming Social Security beneficiaries. But if we are to end Social Insecurity, somebody's got to eat the current burden. It is a separate issue how workers will save after Social Security.
Rick Henderson replies: I state in the article: "None of the reform plans under consideration would make Social Security voluntary and let individuals withdraw from the system by renouncing any benefits they might receive. Instead the proposals are all variations on forced savings plans." Granted, I used the term privatization to describe these coercive schemes, but my task wasn't to concoct my ideal retirement system. It was to report on the changing political scene and examine what Congress might enact in the next few years. I would hope Mr. Armstrong would acknowledge that adopting the British- or Chilean-style proposals, while coercive, would establish a property right in "Social Security" and could prevent the huge tax increases the current system must impose to keep up with demographic demands. These alternatives may not be perfect, but they're a big improvement over what's there now.