Wednesday, 12 January 2005

Social security reform

Of course, SS reform has been a big topic lately. Alex Tabarrok has a great post on the argument about the fairness of the current SS system. I likewise agree with his endosement of Tyler’s solution—make it, explicitly, a poverty program for the elderly.

The gist of Alex’s post is that, as long as we are pretending SS is a pension system, rather than a welfare program, the argument against a regressive payroll tax falls flat. However, if we admit that it’s a welfare program, we should treat it as such. This, of course, would open it to things such as means testing, eliminating the automatic increases and the like.

In the mean time, as long as we are calling it a pension (or retirement) system, arguments about the fairness of regressive taxes should be ignored.*

1 comment:

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Can you IMAGINE the shrieking if you tried to convert SS to what it was (I think) originally conceived to be now?

Hey, I don’t want old ladies eating Alpo either, but I can’t see anyone actually allowing us to actually call something by its proper name.

This might be an actual solution – my best friend works in Disability and they’re quite concerned that the Bush reforms won’t allow for continued payment of Disability payments (although means testing and ability testing for disability is a can of worms that even inveterate liberals like my friend – who is no dummy and can see that people abuse the system – haven’t cracked yet: how do you weed out the nasties without discouraging the genuinely disabled who are so proud that they will drop out if you make it too hard to collect benefits?)

But you know you’re going to run into all the usual problems inherent in welfare systems – you are creating a disincentive to responsible behavior.

It’s a chicken-and-egg question – did they fail to save because they knew SS would take care of them, or were they Victimized by Fate and it’s a darned good thing SS was there to save them from going eyeball-to-eyeball with that can of Alpo?

We’ll never know, will we? Maybe that will be the subject of my dissertation…

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