Brad DeLong endorses privatized social Security, if what you average by that is forced savings.
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Too plenty of households room myopic: they do not conserve enough. Family members resist increases in Social protection taxes–they watch no link in between the taxes and also their future benefits. However if Social protection were privatized for this reason that families saw your Social defense contributions as their own, later there would be much much less objection to upping the contribution rate–and so producing a genuine and much more effective forced saving regime to raise the national savings rate.
…privatization is a necessary an initial step to produce the possibility of doing the moral thing–making the boomers develop up the assets needed so the they deserve to shoulder a higher share of the load of gaue won their very own retirement.
We must raise our national savings rate. However if we just raise Social security taxes, Congress will treat this taxes as general revenue and spend them.
He also agrees with my ultimate Lockbox argument. Brad writes,
At present, her Social defense benefits space yours just by elegant of Congress: Congress can cut them if that wished. But if her privatized Social defense account were *yours*, climate it would be yours not by grace of Congress but by appropriate of property: courts would stand prepared to protect it versus any casual effort to reduced or confiscate it.
Reflexively, Tyler Cowen disagrees.
I wish to privatize numerous things, but forced save is not one of them.
Most the all, i am worried about the fiscal ramifications of this privatization. Existing plans require not, in the lengthy run, price us any kind of money, as Arnold Kling reminds us. However they execute require a huge tax increase in the brief to medium run.
No castle don’t. The government could borrow the money, and shift the burden into the future, just as that does now. I’m not saying that’s the best thing come do. I’m simply saying the it deserve to be done, if girlfriend don’t desire a large short-term taxes increase.
Tyler goes on:
So let’s press for means-tested benefits, and also hope that social defense slowly but surely shrinks and evolves to a welfare system for the needy elderly. It have to not be a stranglehold end every tendency employment relationship.
I would certainly argue because that the compelled savings. First, let me allude out that from a completely libertarian point of view, us are saying over second-best kinds of solutions. As Robert Barro once pointed out, second-best has tendency to be a rationale because that “anything goes.”
I believe that the need for saving has actually grown exponentially over the previous century, primarily since the lifespan has lengthened and much more medical care for the yonsei is easily accessible and desired. Ns don’t think the as people or together public plan advocates us have come to terms with this increased need because that savings.
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Also, we have very different propensities come save. Given the vast need for savings, what this could lead to is a human being where the savers subsidize the spendthrifts. I don’t think it’s fair that if ns consume temperately and also save carefully for future contingencies the I have to then be viewed as a “soft target” for soak-the-rich taxes policies. I want to force other civilization to save, so that they carry out not come whining to me (or come the government) when they don’t have money to salary their wellness bills once they obtain older.
For Discussion. Which existing government policies execute the most to discourage thrift?