Against the Privatization of Social Security
Privatizing Social Security could have adverse effects upon those who depend on this program. This is because the private sector may not provide adequate funds to meet the financial needs of those who depend on Social Security. Because of this, Social Security should not be privatized.
If Social Security was privatized, people would have more income since they would be paying fewer taxes. However, as I noted in an earlier essay[1], there are two groups of people who will be negatively affected if Social Security was privatized. The two groups are the disabled and those whose incomes are too low to allow them to save for retirement. Of course there will be organizations set up to direct funds to these two groups, and there will be altruists who will donate to these organizations. The question is will there be enough funds donated by altruists to provide an adequate standard of living to those two groups? I do not think there will be for one reason.
Let us say that everyone consumes, saves, and/or donates to charities (charities that do not provide aid to the two groups discussed) the exact same amount prior and after the privatization of Social Security. Do you think that everyone will donate their additional income from the abolition of the Social Security tax to charities that deal with the two groups discussed? Chances are this will not occur. (Even if this did occur, there would not be enough income to maintain the same standard of living for the two groups because charities expend part of the received donations to cover their incurred expenses.) This is because the poor and low middle class will spend the additional income to cover their costs. At the same time, the upper middle class and upper class may want to use their additional incomes to consume, save, or donate to other charities.
An objection to my previous point is that people, especially the upper class and wealthy, will allocate their pre-privatization of Social Security income to aid the two groups discussed. However, these altruists may not find doing this utility maximizing. They may rather donate the majority of their income to other charities, to consume their income, or to save their income. All the while, they are donating an amount of their income to charities that aid the two groups so that the aggregate amount that goes to these charities does not provide an adequate amount of funds to pa decent living. Even if they chose to donate an adequate amount of income to provide a decent living to the two groups, they have less income to consume, to save, or to donate to other charities. This in effect has its negative consequences, in which I will not embark.
Social Security should not be privatized. This is because there is a chance that the private sector will not provide an amount of income that guarantees an adequate standard of living to those who depend upon Social Security.
[1] see http://myoponions.blogspot.com/2005/08/repairing-social-security.html
If Social Security was privatized, people would have more income since they would be paying fewer taxes. However, as I noted in an earlier essay[1], there are two groups of people who will be negatively affected if Social Security was privatized. The two groups are the disabled and those whose incomes are too low to allow them to save for retirement. Of course there will be organizations set up to direct funds to these two groups, and there will be altruists who will donate to these organizations. The question is will there be enough funds donated by altruists to provide an adequate standard of living to those two groups? I do not think there will be for one reason.
Let us say that everyone consumes, saves, and/or donates to charities (charities that do not provide aid to the two groups discussed) the exact same amount prior and after the privatization of Social Security. Do you think that everyone will donate their additional income from the abolition of the Social Security tax to charities that deal with the two groups discussed? Chances are this will not occur. (Even if this did occur, there would not be enough income to maintain the same standard of living for the two groups because charities expend part of the received donations to cover their incurred expenses.) This is because the poor and low middle class will spend the additional income to cover their costs. At the same time, the upper middle class and upper class may want to use their additional incomes to consume, save, or donate to other charities.
An objection to my previous point is that people, especially the upper class and wealthy, will allocate their pre-privatization of Social Security income to aid the two groups discussed. However, these altruists may not find doing this utility maximizing. They may rather donate the majority of their income to other charities, to consume their income, or to save their income. All the while, they are donating an amount of their income to charities that aid the two groups so that the aggregate amount that goes to these charities does not provide an adequate amount of funds to pa decent living. Even if they chose to donate an adequate amount of income to provide a decent living to the two groups, they have less income to consume, to save, or to donate to other charities. This in effect has its negative consequences, in which I will not embark.
Social Security should not be privatized. This is because there is a chance that the private sector will not provide an amount of income that guarantees an adequate standard of living to those who depend upon Social Security.
[1] see http://myoponions.blogspot.com/2005/08/repairing-social-security.html
posted by Rich at 1:01 AM
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