Sunday, February 06, 2005

Privatized Social Security?
Peggy Noonan, former Reagan speech writer, has presented both sides of this issue very well this week in the Wall Street Journal. To read it in its entirety you have to buy online access so I will quote the best part:

"Here I raise a question about human nature that I cannot answer. Republicans tend to assume that everyone hungers for more investment accounts to handle. This is because Republicans like personal autonomy and authority, and are good at math. Others might reasonably wonder if life isn't complicated enough. The beauty of the Social Security system is its almost idiotic simplicity: They take your money from your paycheck and then 40 years later when you are old they start giving some back each month. Personal accounts are less simple. "

I tend to side with the folks who believe that most people will be better off without the responsibility of having to manage all of their own investment accounts. Nobody can tell you for sure when Social Security is going to run out of money. It is, as Bill Gross of Pimco points out this month on his web site, more a problem of demographics than of ownership. If more people contribute either through a combination of immigration, higher birthrates, and/or a higher retirement age then there is no problem. This could also be accomplished via higher taxes and reduced benefits. I favor some combination of all these options rather than privatization, and believe life is complicated enough for most people.

UPDATE: Taking liberties, I blockquoted in Paul's post. I hope it's acceptable to him. I think blockquotes help. My apologies if I overstepped.

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