Tuesday, October 26, 2010
The Real Solution Is: Let All the Old Farts Die (But Shh, You Didn't Hear That)
Everybody's nervous about social security these days, and when you look at the projections, it's no wonder. With citizens panicking and politicians mud-slinging about the national debt and deficit, the last thing anyone wants to hear about is another instance of a government program's monetary obligations exceeding its revenue.
But BusinessWeek columnist Chris Farrell says that Social Security isn't broken--future productivity growth should cover most if not all of the social security deficiency. According to him, relatively small changes like raising both the retirement age and the cap on annual wages subject to the payroll tax would keep social security, well, secure. In fact, he says that, ideally, we can improve social security while we're at it, perhaps by adding a "program of voluntary additional contributions" for investment. Americans don't save enough money for their old age, and government could be the answer. These things could grant "financial independence and peace of mind for our elderly population."
Umm, no offense Mr. Farrell, but I've got a couple of bones to pick here.
The question isn't whether social security is broken, but whether that ought to even matter. Those of you who are less creative probably don't care whether or not your nuclear-powered cat-massaging car seat is broken, because you're stuck on why in the world you would need a nuclear-powered cat-massaging car seat in the first place. Now, it's easier to find a use for social security than for a nuclear-powered cat-massaging car seat, but that doesn't mean we really need it any more than we need the cancer chair. What kind of market failure is social security correcting? The negative externality from the fact that the guy down the street hasn't kicked the bucket yet? (Please note that the strange smells wafting into your yard do not in fact count as an externality.) The public good of... old-agey-ness? Perhaps there's a positive externality from the cryptic and possibly dementia-inspired wisdom that only the elderly in poorly written movies have to impart? Farrell has pointed out that Americans aren't saving enough for retirement--is that a market failure? Is inefficiency produced by citizens' "oops" moments (or lifetimes)? Do we expect the magic market to save us from our irresponsibility, or even just from plain old bad luck? Of course it sounds silly; we all know the market isn't big brother government.
Er, that came out wrong. Carrying on.
The point is that efficiency isn't the standard that social security was weighed on when it was deemed appropriate government action--no market failure should equal no government involvement. It wasn't individualism either, for sure. Listen to the suggestion Farrell made earlier: add to social security a "program of voluntary additional contributions" because "it's well-known that Americans haven't been saving enough for their old age." If an individual doesn't save for his rainy (or wrinkly) day, how is that a market problem? How is that even a social problem? It's a problem for the guy who just lost his Starbucks budget, no one else. Why should the government have to step in with a savings solution? Is there a problem with the investment market? Are Americans incapable of investing on their own without the government helping them do it? In the end, "financial independence and peace of mind" are the responsibility of those who desire it, not the government or society as a whole. The Declaration of Independence doesn't assert that people have the right to life, liberty, and unconditional satisfaction. It's the "pursuit of Happiness." Pursuit. It's not the government's job or place to guarantee a good life; it never has been.
Social security isn't fixing a market failure, it's just taking money from the dwindling younger generations to give it to the elders, now specifically the hordes of retiring Baby Boomers. Instead of trying to fix it, or arguing that it doesn't really need fixing, we probably shouldn't have it to begin with. But I understand that it's pretty much politically impossible to get rid of a program like this once you have it--how many ads have I heard this election season accusing some candidate or another of wanting to abolish or privatize social security (Heaven forbid)?
So, in the interest of coming up with feasible alternatives, I offer to you another approach that would reduce all kinds of strain the elderly put on society: Dr. Kevorkian's.
"The Social Security Squeeze Can Be Solved" by Chris Farrell. http://www.businessweek.com/investor/content/jul2010/pi20100719_245091.htm
P.S. I'm so not cynical. So totally not at all.