Thursday, February 24, 2005


Hypocrisy of Those Opposed to Partial Privatization of Social Security

I've been reading a lot about the partial privatization of Social Security. And frankly, I think that those who want to leave the system as it is just don't have a leg to stand on.

Take, for example, the AARP who is rabidly opposed to any type of privatization even though it would not apply to people fifty five and older. Naturally they think any problems in the system would be fixed by just eliminating the 90,000 yearly cap. Yup, make those EEEVIL rich people cough up their ill-begotten their members can keep getting their checks each month.

AARP runs ads saying that if people want to gamble they'll play the slot machines. Yet reports that through its AARP Services division, they make lots of money selling their members Scudder mutual funds:

But the AARP is talking out of both sides of its mouth. It says that stock and bond investing is like playing a slot machine at the same time it promotes stock and bond investing by selling 38 mutual funds to its members and taking a cut from each sale.

Among the AARP funds are far riskier choices than advocates of Social Security reform would ever offer to American workers: for example, a Latin American stock fund, a junk-bond fund, and a fund that holds shares of companies based in such highly volatile markets as Indonesia and Russia.

The hypocrisy is breathtaking. AARP's website carries solid information about how to invest wisely, but the organization's anti-Social Security ads make investing - even under the tough restrictions advocated by reformers -- look like a game for dumb suckers and out-of-control gamblers

Walter Wiliams does an excellent job of debunking the conception that Social Security is a form of insurance, and that people have a right to their benefits:

In Helvering v. Davis (1937), the court held that Social Security was not an insurance program, saying, "The proceeds of both (employee and employer) taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way."

In a later decision, Flemming v. Nestor (1960), the court said, "To engraft upon Social Security system a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands ... " That flexibility and boldness mean Congress can constitutionally cut benefits, raise retirement age, raise Social Security taxes and do anything it wishes, including eliminating payments.

Yet the main argument liberals have these days is altruism. "What about all the poor people" they cry. Well what about them? The premise of liberals, in asking this question is that the "needs" of some people should trump the abilities and desires of productive, intelligent, law abiding, tax paying citizens to do with their money as they see fit. In the liberal view, the ambition, foresight and creativity of productive citizens should be throttled because someone else "needs" that money.

Actually, there's another commentary on called "Moron-Proofing Social Security" which sums it up quite comically:

In a free society, risk = the potential for wealth. If you seriously believe that some people are too stupid to be trusted with any risk, then you've effectively excluded those people from any significant form of wealth accrual. And while some people might indeed be that foolish, why should the remaining 99% of us be held hostage to their incompetence? If the idiots of America can't be trusted to memorize and recite the words "I want an index fund," how can we trust them with somewhat more complex chores, like buying a car? Or getting a mortgage? Or, for that matter, taking a spouse? A free citizenry that can't be trusted with even modestly difficult tasks is a citizenry that won't stay free for long.


<< Home

This page is powered by Blogger. Isn't yours?