Tuesday, January 11, 2005

Libertarianism and old people

Bush pitches his plan to replace Social Security as an "Ownership Society" initiative. On Bush's plan, your investment account will be your property. If you die with money still lying around in your account, you get to pass it on to your kids. This is the kind of thing that libertarians like. While the government is making you save a certain percentage of your income, this is intuitively less coercive than the transfer payments in the current Social Security system. Your retirement is provided for by your property, and property rights are an institution that libertarians like. Utilitarians, on the other hand, aren't that bugged by coercion per se, especially when it operates in the noninvasive form of payroll taxes. (The regressive structure of the payroll tax is a topic for another day.)

But if you fail to die before your retirement account runs out, as a large percentage of the population will, you'll be a very old person with no money. This is the kind of thing that makes utilitarians really unhappy. Libertarian theories don't give any reason to care about an old person's poverty -- since nobody's been coerced, all is well.


Mary said...

Just for argument's sake, trying to take a libertarian point of view--could this not have positive unintended consequences, such as a shift back to extended families taking responsibility for their elderly members? There would be coercion in the form of social pressure, rether than government mandate, which might be more palatable to many. Also, as someone on the top of the hill, if not yet over it, I fear that there is going to be growing resentment by younger people of the much larger generation that came before them that they will eventually have to support. The Bush plan is a bad idea, but I don't think it's a bad idea to think about, well, alternative forms of coercion.

Blue said...

Both those responses sound pretty vague. Hoping to create social coercion because that will be better contains a great many assumptions. And whether the younger generation will be disgruntled at funding the elderly, might be a bit more convincing if there was any reason to believe any time during the next generation SS would run out of money.

The main argument for it is that allies of those with a monopoly on power stand to earn a great deal of money from it (investment fees as minor at 1%, which is rather conservative to say the least, on a multi trillion dollar fund), and the hope that money invested in the stock market provides more boost the economy than that invested in government bonds. This might convince me, but everything else just seems rhetoric.

Dana Watson said...

I think you're missing an important point, though. The other half of Bush's plan is obviously to run the health care system into such ruin that none of us will live longer than our retirement because we'll all die of poor health long before that. Problem solved. Maybe the fast food industry is in on it, too. Fiendishly clever, that man. Here's to an early death.

Neil Sinhababu said...

Well, there is a disanalogy between Social Security and the Iraq War. The latter gave the administration thousands of executive decisions to make, and they proceeded to screw up an enormous number of them. Once SS privatization gets passed, there probably won't be quite as many executive decisions to make. The badness of the thing, I imagine, will be right there in front of you in the legislation.

Yeah, we better get some serious mileage out of this one.

Blue said...

Maxwell: There's no studies or any research to suggest that SS will go bust any time in the next 40 years, and even that's with very conservative estimates about population growth, immigration, GDP growth (all of which make supporting SS easier if we aren't so conservative). All there is is a vague paranoia that "of course it will fuck up" and claiming anyone who says it's fine a pollyanna (in the public discourse at least).

As for equating personal-responsiblity for government-responsibility, well, not to say I believe in personal-responsiblity is so important it needs to be coerced, but if it does exist, then who should be doing it besides the government? And what happens when non-coerced responsibility fails to live up? Screw them over, and their lower class kids too?