Friday, April 01, 2005
To have and to hold
My one and only poster has asked me to comment on "ownership," and the administrations take on it. In the interest of rewarding posters, I will first try to relate the White House' opinion, then try to explain why I think ownership is an idea whose time has not yet come.
The meaning of ownership
At the following URL, you can find a 13-page acrobat file which lays the Bush position with more details than I would have guessed (shame on me).
Page 5 of the document addresses ownership. I think the following quote summarize this ownership pretty well:
"Personal retirement accounts offer younger workers the opportunity to build a "nest egg" [sic] for retirement that the government cannot take away… The money in these accounts would be available for retirement expenses. Any unused portion could be passed on to loved ones."
So ownership, from the administrations' perspective, involves  freedom from seizure and  inheritability. That seems pretty reasonable. One hears lots of rumors in the media that sound a lot less like ownership, but if one takes the White House at its word here, that sure sounds like ownership.
Why don't I support ownership right now?
On page of the White House report, there is the claim that "Establishing personal retirement accounts does not add to the total costs that Social Security faces."
With all due respect, I disagree. The best way to demonstrate this is with a common claim by those who support I.R.A.s which runs something like this: "And what happens, under the current system, if you die before receiving your Social Security benefits? They're gone." Well, where exactly did they go? The answer is: to other SS recipients. Those who live less long subsidize those who live longer. If we are to allow I.R.A.s to be inherited, that would end this subsidization, so we would need to find money from some other source (other than those who pass away early) to pay for the longer lived.
I don't have a specific problem with I.R.A.s, it's just that, given the current funding gap, I think that we need to first propose solutions which don't increase the costs of Social Security. Bush recognizes this to an extant, planning to roll in I.R.A.s somewhat slowly. If they could be rolled in slowly enough, I probably wouldn't have a problem with them, but they probably also wouldn't have any political value if rolled in that slowly.
One last thought.
Above, I quoted the White House as saying "Personal retirement accounts offer younger workers the opportunity to build a "nest egg" for retirement that the government cannot take away." I'm no lawyer, but I'm not sure why I.R.A.s are any safer from the government. Right now, Congress has the ability to legislate benefits away. If we were to change the system such that I.R.A.s were created, I'm not sure what would prevent Congress from voting to increase the retirement age, decrease credited investment income or just wholesale refuse to distribute benefits. I imagine that an outraged electorate could sue, protest or vote the bums out of office, but we already have those options. So long as the government
* collects tax revenue
* manages the funds
* and creates the laws by which funds are disbursed
I can't understand why they are any safer from the government. I'm not worried about the government stealing my nest egg, mind you, I just can't understand this particular claim.
As always, thanks for reading.