[Paleopsych] WP: What's Behind It: A Bit Of Social Engineering In Disguise
checker at panix.com
Thu Feb 3 18:37:37 UTC 2005
What's Behind It: A Bit Of Social Engineering In Disguise
[This is the best article I've read on Social Security. There is no CRISIS
as such. Retirement age will simply get pushed upward to make ends meet.
Robert Fogel, in _The Fourth Great Awakening_, calculated that half of the
actuarial value of Social Security has already been taken away through
increases in the retirement age.
[My understanding is that private investment generates returns of 7-8
percent per year in real terms, before taxes, over the long haul. (My
Federal pension gets 6-7% *after* taxes (my own calculations), making it
much better. Only certain state and local governments can beat this.)
Social Security returns much less, but I've never understood why, except
the all-purpose explanation of government incompetence.
[I agree with the article about the social engineering, but it's a tad bit
disingenuous: all government action has some social engineering
consequences. Likewise, a Hayekian decision to call of the bureaucrats is
itself an example of rationalistic planning. Or meta-planning.]
Sunday, January 23, 2005; Page B02
For Republicans, Social Security reform could be the kind of
donnybrook that health care reform was for Democrats in 1994. The
magnitude of the political risk is staggering. On Capitol Hill, many
Republicans wonder if they are being led off a cliff. What does
President Bush think he's doing?
Well, he says, there's a Social Security crisis. "The crisis is now,"
Bush said in December. But he must know this isn't true. Economically
speaking, stabilizing Social Security's long-term finances is a task
of only middling difficulty and importance. It requires no fundamental
change in the program and need not be tackled right away. As for
private Social Security accounts, they are -- again, economically
speaking -- a solution in search of a problem.
No, what Bush and the Republicans are focused on is not the economy,
stupid. It is conservative social engineering on the grandest possible
When people talk about Social Security reform, they usually mean
reforms, plural. They're usually linking two changes that are
conceptually and mechanically distinct. Reform No. 1 would reduce the
growth of benefits -- or raise payroll taxes -- to bring the program
into long-term fiscal balance. Reform No. 2 would structurally revamp
the program by creating private accounts: A portion of your Social
Security payroll tax would go into an investment account with your
name on it instead of going to the U.S. Treasury to finance the
benefits of current retirees, as now happens.
Congress can adopt one idea, both ideas or neither. Either, by itself,
is politically difficult; doing both -- simultaneously cutting and
restructuring the program -- is audacious. Yet that is what Bush seems
likely to propose. Why take the chance? On close examination, the
economic payoffs are unimpressive. The moral and political dividends
are potentially another matter.
Earlier this month, a White House aide named Peter H. Wehner, director
of strategic initiatives, sent selected conservatives a memo making
the case for changing Social Security. "We consider our Social
Security reform not simply an economic challenge, but a moral goal and
a moral good," he wrote. "If we succeed in reforming Social Security,
it will rank as one of the most significant conservative governing
The emphasis was revealing. The memo said little about long-term
growth and other economic effects. It stressed moving "away from
dependency on government and toward giving greater power and
responsibility to individuals." At the libertarian Cato Institute,
Michael Tanner, the director of a Project on Social Security Choice
and a long-time proponent of privatization, makes the same case.
"We're changing fundamentally the relationship of people to their
government," he says. It would be "the biggest shift since the New
Bingo. Once you cancel the zeros on both sides of the equation,
neither creating private Social Security accounts nor ratcheting down
the growth of future benefits would constitute an economic watershed.
Republicans frame Social Security reform as a dollars-and-cents issue,
but what they really hope to change is not the American economy but
the American psyche.
Conservatives used to speak derisively of liberal social engineering.
Yet the attempt to create private Social Security accounts is
essentially conservative social counter-engineering. Government should
help provide for unforeseeable contingencies: tsunamis, unemployment,
open-heart surgery. But if there is one event in all of life that is
wholly foreseeable, it is the advent of old age. Why, then, shouldn't
people save for their own vretirements, instead of relying on welfare
from the government -- which is what Social Security, as currently
constituted, really is?
Tanner argues that people who own assets see their place in society in
a new light. Private accounts, he says, would encourage a culture of
saving and personal responsibility; they would discourage political
class warfare; they may, he argues, improve work habits and even
reduce crime and other social pathologies. Create private Social
Security accounts, and millions of low-income Americans will be
stockholders and bondholders. GOP activists look at the way portfolio
investors vote and salivate at the prospect of millions more of them.
Many conservatives believe that moral values played a key role in
Bush's reelection. It may seem odd, then, that Bush's boldest
post-election priority is not abortion or gay marriage or schools but
Social Security. The key to the paradox is that Social Security reform
is not, at bottom, an economic issue with moral overtones. It is a
values issue with economic overtones.
By Jonathan Rauch, a senior writer for National Journal magazine, in
which a longer version of this article appeared.
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