Ravenwood - 03/10/05 06:15 AM
On the subject of Social Security, anti-choice Democrats claim that investing in stocks or bonds is risky and dangerous. Mere peasants like you and me cannot afford to take the risk. But the always brilliant Walter Williams wants to know what could be more risky than trusting your money to the whim of a politician.
Here's what a 1936 government Social Security pamphlet said: "After the first 3 years -- that is to say, beginning in 1940 -- you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. ... Beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. ... And finally, beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. ... That is the most you will ever pay."The point is that you cannot trust Congress. They have lied before and they are lying now. What's more, most of the Senators and Representatives making promises today will be long gone 30 years from now.Had Congress lived up to those promises, where $3,000 was the maximum earnings subject to Social Security tax, controlling for inflation, today's $50,000-a-year wage earner would pay about $700 in Social Security taxes, as opposed to the more than $3,000 that he pays today.
The next big lie is from the same Social Security pamphlet: "Beginning November 24, 1936, the United States government will set up a Social Security account for you. ... The checks will come to you as a right." First, there's no Social Security account containing your money, but more importantly, the U.S. Supreme Court has ruled on two occasions that Americans have no legal right to Social Security payments.
Williams also wonders if Congress will stop with retirement. The slippery slope argument could easily be extended to any of the other necessities of life.
What moral principle, consistent with liberty, justifies forcing a person to set aside a certain portion of his weekly earnings for retirement and jailing him if he fails to comply? Retirement isn't the only important item for which we should budget. How about a congressional mandate that we set aside a certain portion of our weekly earnings for housing, food, entertainment or our children's education?And if social security is such a great program, how come they use the threat of lethal force to make us stay in it?
Actually it's fairly reliable, where private accounts are not, by comparison.
The core feature of social security is that it's an inflation-adjusted annuity. The company you buy it from will be there 30 years later, and not be bankrupt. It's hard to arrange that privately.
It's guaranteed by a number of things, the primary one being the vote.
The chief danger is misunderstanding the advantage and possibility of an inflation-adjusted annuity, and that it's worth preserving by raising the retirement age until it's supportable (and not by reducing the benefit once that variable age is attained!).
It means that you actually don't have to save to live to 100, but count on the death of others to support you if you're the long-living one of the bunch. You don't have to try to hedge that on your own, which would be very difficult.
Ron,
You are glossing over a few things. First of all, taxes are collected at the point of a gun. Second, benefits are not guaranteed. Sure the government will still be there 30 years from now, but the benefit may not. There is no guarantee, what-so-ever, not even by vote.
And people can be tyrannized by the majority just as easily as they can by politicians.
Posted by: Ravenwood at March 10, 2005 7:47 AMIf it's so much better than private accounts, then vote for the private accounts, because nobody will choose to use them anyway.
Posted by: Pasty at March 10, 2005 1:52 PM(c) Ravenwood and Associates, 1990 - 2014
