Social Security is too important to trust to politicians

by Harry Browne

Several points are being overlooked in the discussions about Social Security.

  1. The claim that some people can't invest properly for their own retirement is typical of politicians' justifying their interference by citing a problem they caused themselves. If they didn't tax interest payments, and if their monetary policies didn't create inflation, anyone could provide very well for his retirement simply by putting 5% of his earnings in a bank savings account.

  2. Another claim is that some people are too irresponsible to look ahead and provide for their retirement. Of course, some people wouldn't provide for their own retirement just as some of them won't brush their teeth. But it is wrong to hold the rest of us hostage to force us into a fraudulent Social Security scheme, or force us to display our teeth for government hygiene inspectors simply because some people won't take responsibility for their own lives.

  3. The idea that Social Security can be "fixed" by another tax increase overlooks where that course of action leads. That's the way the problem traditionally has been handled by countries that have had Social Security longer than we. As a result, the payroll tax in Austria is now 23%, in Italy and Spain 28%, and in Holland 32% (combined employer and employee contributions). Increasing the payroll tax is just a stepping-stone to further tax increases.

  4. Social Security brings a new dimension to such concepts as annuities, insurance, and retirement. No long, complicated contracts. No actuarial tables to pore over. Social Security operates on a very simple principle: the politicians take your money from you and squander it. Allowing the politicians to invest Social Security reserves in the stock market to boost the return would just give the politicians more money to squander and they'd still be back soon enough, asking you for a tax increase.

  5. "Privatizing" Social Security gradually over many years won't work. The first time the stock market dives, the politicians (both Democratic and Republican) will use that as a reason to take over your retirement once again.

Social Security is inherently unsound because it's a political program run by politicians for political purposes. It will never work. Only a completely Libertarian solution makes sense: shut Social Security down totally and for good.

And what happens to those who are currently dependent on it? Have the government make a one-time purchase of private annuities for them, providing the same income Social Security has promised.

How will that be paid for? Sell off assets the federal government shouldn't own anyway power companies, pipelines, unused military bases, western lands, oil rights, mineral rights, and most of the hundreds of thousands of federal buildings that serve no Constitutional purpose.

This approach doesn't appeal to politicians, because it takes tax money and power away from them. But the only alternative is to resign yourself to having more and more of your income taken from you and poured down the drain.