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Tabarrok on Social Security Reform

Still in the midst of NaNoWriMo, but more on that later (so far, so good). Blogging will continue to be light to nonexistent in November, although I do have some thoughts on the election I’d like to share in the next week or so. In the meantime, Alex Tabarrok at Marginal Revolution says a few things about Social Security that I’ve long held. Namely that it’s a pretty sweet deal for past and current retirees. However…

…It’s today’s workers and children for whom social security is a raw deal. Even if the system does not go bankrupt, current workers will receive a very poor return on their “investment.”

In refusing to cut benefits to current and soon-to-be retirees the costs of any reform are forced onto those people for whom the system is already a poor return. It would be fairer to spread the costs to all recipients especially to those who have benefited from social security the most.

Emphasis mine. Perhaps stating the obvious, but it needs to be said. Reforming the system will inevitably involve pain, and we should strive to spread that pain around as broadly as possible instead of just sticking it to the younger generation.

In a similar vein, his co-blogger, Tyler Cowen (who, despite my vote did not win the election and thus I can no longer refer to him as our next president, <sniff>), is also guest-blogging at WSJ.com in a discussion with John Irons of Argmax.com, and they also discuss Social Security. Cowen is actually not fond of privatization and would prefer to make Social Security less like a pension system and more like “a system of welfare for the elderly.”

I’d be perfectly fine completely phasing it out of existence and letting welfare take care of welfare, but that’s a post for another time. Although personally, I myself never liked the term “privatization” for this situation, preferring “individualization” instead. But that probably has a lesser chance of catching on than “tax shift.”

Update 11/15/04

Updated to use a permalink to the WSJ debate. Also, Tyler Cowen elaborates on his opposition to forced savings.