Thursday, February 03, 2005
Getting Desperate?
Opponents of Social Security reform are already sounding desperate. Senator Reid was on the radio saying that President Bush's proposal will mean a 40 percent reduction in benefits. In reality benefits will only be reduced on a voluntary basis. Those who partially opt out will have to invest their retirement money in the private sector. Traditionally this provides a much better return than Social Security.
Harold Meyerson may be misrepresenting Milton Friedman's position:
When Milton Friedman was calling for privatization a half-century ago, it wasn't because he feared the system would run out of money when the boomers retired. (The boomers were at that point just midway through being born.) It was because he was a committed advocate of laissez-faire capitalism.
I don't know what Friedman wrote half a century ago, but I still have a copy of Free To Choose from a quarter-century ago. The following paragraph appears on pages 95-95:
Workers paying taxes today can derive no assurance from trust funds that they will receive benefits when they retire. Any assistance derives solely from the willingness of future taxpayers to impose taxes on themselves to pay for benefits that present taxpayers are promising themselves. This one-sided "compact between the generations," foisted on generations that cannot give their consent, is a very different thing than a "trust fund." It is more like a chain letter.
Pages 96 and 97:
The long-run financial problems of Social Security stem from one simple fact: the number of people receiving payments from the system has increased and continued to increase faster than the number of workers on whose wages can be levied to finance those payments.
Friedman doesn't want to reform Social Security solely out of dedication to laissez faire principles. He has long recognized that Social Security is financially unsound. What's new is that it's gradually dawning on people that Friedman is right. The opponents of reform need to say what their solution is.
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Opponents of Social Security reform are already sounding desperate. Senator Reid was on the radio saying that President Bush's proposal will mean a 40 percent reduction in benefits. In reality benefits will only be reduced on a voluntary basis. Those who partially opt out will have to invest their retirement money in the private sector. Traditionally this provides a much better return than Social Security.
Harold Meyerson may be misrepresenting Milton Friedman's position:
When Milton Friedman was calling for privatization a half-century ago, it wasn't because he feared the system would run out of money when the boomers retired. (The boomers were at that point just midway through being born.) It was because he was a committed advocate of laissez-faire capitalism.
I don't know what Friedman wrote half a century ago, but I still have a copy of Free To Choose from a quarter-century ago. The following paragraph appears on pages 95-95:
Workers paying taxes today can derive no assurance from trust funds that they will receive benefits when they retire. Any assistance derives solely from the willingness of future taxpayers to impose taxes on themselves to pay for benefits that present taxpayers are promising themselves. This one-sided "compact between the generations," foisted on generations that cannot give their consent, is a very different thing than a "trust fund." It is more like a chain letter.
Pages 96 and 97:
The long-run financial problems of Social Security stem from one simple fact: the number of people receiving payments from the system has increased and continued to increase faster than the number of workers on whose wages can be levied to finance those payments.
Friedman doesn't want to reform Social Security solely out of dedication to laissez faire principles. He has long recognized that Social Security is financially unsound. What's new is that it's gradually dawning on people that Friedman is right. The opponents of reform need to say what their solution is.
