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December 20, 2004



I think you overlook the framing component of the debate; privatisation is no pancea but it does draw peoples attention to the fact that social security is an indivdual responibility not a right. And once people realise that it is a responsibility they can start to rationally address the problems it creates - whether collectively - i.e. through a social contract - or indivdually through some sort of libertarian ideal.


interesting blog. well written articles. however, I'll have to take issue with your "damn both houses" take on social security. I see you wrote this awhile ago, which means that less of the details of the president's proposal (which still hasn't really been released, only floated) were out, and the latest forecast moving SS's bankrupt date was pushed even further back in to the future (for at least the 7th or 8th straight year).
First point: you say, "Story lines from the left depict destitute old people living on the streets and eating from dumpsters because they have gambled away their Social Security on risky investments. This is wrong on so many levels, it almost not worth discussing."
In the current plan, people who are disabled are still entitled to benefits. In the president's plan, they would really be eating out of dumpsters, b/c they won't be covered.
That would only be a small oversight, but what about people who retire during a bear market? They'd most likely not be doing nearly as well as people on the current system. As you know, many old people live solely on their social security checks. A sizeable decrease in payments really would push a fair number of elderly toward or below the poverty line.
Yet, the 800-pound gorilla you didn't tackle was how to pay for privatization. If you cut off a third of social securities revenues while paying the same benefits, the whole system will go deeply into the red pretty fast. This is what Republicans want, and even the president has said he'd like to move completely from a guaranteed benefit plan to a guaranteed contribution plan. Of course, no Republican wants to commit political suicide by cutting benefits that are now guaranteed, so what will happen is that they'll add a few more trillion to the national debt. Once Social Security is deeply in the red, it will become politically feasible to cut benefits, which is the real goal.

Also, one could defend Krugman in a variety of ways from your charge that he's hypocrital b/c he usually backs government intervention but not now b/c lobbyists will hijack it. First, this isn't Krugmans only reason for opposition (since you've posted he's done a series on privatization). Secondly, this administration has a proven track record of bowing to lobbyists and corporations, and they haven't proven to be very adept at carrying out the details of their own policies (see iraq). I'd trust Al Gore much more to write a Social Security privatization scheme, but then the details would look very different. One can't equate this administration's competence with the competence of government's everywhere.

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