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Social Security

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September 30, 2010

Question: I am torn on the issue of Social Security. I understand Objectivist principles on collectivism and government control over personal lives. I understand, as well, that Social Security is, on the surface, a giant, bloated government program, financed by the collective contributions of taxpayers under the $90,000 annual income level, which pays for current retirees’ benefits.

However, I have a serious problem with the personal account proposal. I can't help but think that the proposals to privatize the system are a veiled attempt to loot the system. As I understand it, under the proposed personal account plan, the people who contributed comparatively more to the program (55 and older and below $90,000 annual income) are not expected to receive most of their benefits, while those people who contributed comparatively very little (50 and younger and the upper income bracket) are to reap the most benefits from such a privatization—especially those representing financial institutions on Wall Street.

My question is: Notwithstanding the immoral nature of Social Security (and ignoring the obvious error of the system as a whole), is it moral for the current government to privatize the system, as has been proposed by the Republican Party?

Answer: If I understand the Bush administration's proposal from early 2005, it was intended to transition the Social Security system to something more like a private system. It was intended to allow those long invested in the system to keep their traditional benefits, while moving younger workers over to a system which would let them reap financial returns from their Social Security contributions. This would not be a full privatization, because it would retain a forced retirement contribution system via the Social Security payroll tax.

It is absolutely moral to privatize the disgusting Ponzi scheme that is Social Security. The whole program has been designed to force the productive to provide retirement insurance to the unproductive and improvident. There is no need for such a program, nor was there ever such a need. In a capitalist society, people have many well-established forms of retirement savings options open to them and have the freedom to choose the best options for their own circumstances. These include investments, life insurance, and annuities. For those who fail to take responsibility for their lives, well, in the end there can be charity. But providing charity is not the government's proper role.

However, it would be unjust for a privatization to take place that would cheat those long-forced to contribute to the system from receiving any benefit from their contributions. So any privatization would need to provide a weaning period of transition, as the Bush plan intends to. This is not to say that I endorse the Bush plan: The administration has not been the least bit financially responsible. But something like the Bush reform would be a move in the right direction.