Thursday, April 26, 2007

Social Security or Liberty Liability

Social security has been a dark cloud hovering over the US for numerous years. The many problems with social security have left American wondering if they are ever going to see their money that was invested. Reform has been attempted, but the myriad of problems has been a tomato seed under the fingers key politicians. No publicly appealing short term solutions have been seriously considered. One of the largest and most difficult problems to address comes from our age structure. In the early 50s the worker-to-beneficiary ratio around 16.5 to 1, this allowed for minimal contribution by the workers. Because our reproductive cycle has slowed to 3.3 to 1 it takes more contribution per worker to give the same benefits, within 40 years the ratio is expected to drop to 2 to 1. The second major problem is the investment vehicle the government chosen. They have invested in themselves almost exclusively in US government securities! The only way for the government to pay off the debt they have issued is to issue more, cut spending or tax our shirts off. Some government assistance is necessary, but when citizens become dependent on transfer payments their personal retirement planning is effected.

How can the government get out of this major problem they have created? The obvious solution is to increase public savings and slowly reduce the benefits of social security until it no longer exists. Unfortunately, a politician running on that campaign could not get elected for dog catcher in Grand Junction.

The idea that we are paying for something we may never see is a very serious infringement on our liberty, and by many, could be construed as stealing. Why do we allow them to forcefully steal our money with almost no hope of repayment? Because their coercive force is greater than the individual, we do not have a choice. Only in large aggregates can change be made. It will just take time for Americans to realize the shear size of the problem, and create political demand for a solution.

1 comment:

Larry Eubanks said...

". . .if they are ever going to see their money that was invested."

This does not accurately characterize our social security system. The money is raised by the power to tax, and the money which is taken in by this tax in any given year is spent. It is not invested. The national government in our system of political economy is not able to invest. It taxes and it spends. There are no capital accounts with our national government.

Our system of social security is more accurately characterized as a redistribution of income from current workers to those who are retired.