Friday, March 20, 2009

Social Security

Eariler yesterday, Andrew Sullivan (who still displays his conservative tendencies from time to time) highlighted a study that showed that fullly 50% of workers would opt out of Social Security if given the chance.

Later in the evening he published one of his "dissent of the day" pieces (letters from readers who disagree) in which the foolishness of respondents to the study was highlighted:

But the survey also found that 33% of adults over 60 would give up their benefit to be able to opt out now.

To save 6.2% on their taxes for the next few years, they are willing to give up 10+ years of future benefits worth about $12,700 per year (average benefit is currently $1056/month).


This survey suggests that 1/3 of our soon-to-retire population has questionable financial judgement. If that isn't an argument FOR mandatory social security, I don't know what is.

And this is precisely "the rub" as it were. I realize that conservatives like Sullivan recoil at what opponents like to call the "nanny state," that is, a government that functions paternalistically, making decisions for citizens it doesn't trust to make the "right" decision. But who can doubt that if 50% of the populace were allowed to forego SS payemnts that it wouldn't wind up costing the government more in the long run.

Consider that in the past decade or so, Americans have been spending more than they've been taking in as income, ralying on now collapsed home values to prop up their debt to assets ratio. Are we really to suppose that this 50% would actually take their SS payments and put them in private retirement plans when they've already shown a marked inability to save as things stand? Or would they instead use this money to bump up the trim level on their next SUV purchase?

More likely whe'd simply end up, after a few decades, with a large pool of elderly paupers who would wind up costing the government more in poverty programs of some sort than if we'd merely kep them on Social Security to begin with, in much the same way that uninsured patients who use hospital emergency rooms as doctors of last resort end up costing the medical system a whole lot more than if they'd merely been supplied with some sort of basic medical insurance to begin with.

Americans as a people aren't willing to let helmetless motorcycle accident victims die on the sidewalk, unattended as a result of their foolishness. We rush them to hospitals and treat them for their injuries in much the same way, but at much greater cost than those who showed good judgment in taking safety precautions. We're not willing to let the uninsured die at the door of hispitals for lack of insurance coverage. And for the very same reasons we wouldn't be willing to let elderly paupers be evicted from their apartments and die of starvation and cold in the streets. Therefore, the only thing to do is to recognize that a government mandated retirement savings plan / safety net is the cheapest way of avoiding these costs.

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