This is silly. You can't say the numbers are bad and not run the actual numbers. The market came back in about from it's low in 2009, to over take it's 2007 high by 2013. 4 years. So why a ballout? By the time a ballout would have been negotiated it would have been tiny. As market was only down 25% by August of of 09. Maybe a ballout of a very few people about to start retirement. But really with gaurdrails like you can't be more than 50% in stocks after your 60 it would have been fine. The issue here is that some people can retire early others need to work an extra year or two based on how the market is doing. Also let people lock-in thier gains by investing in some kind of SS like annuity in a good year after 50.
I can't find any record of Australia bailing out its privatized social security system (individual "superannuation" accounts that can be invested in stocks, cash, or other instruments) during the GFC, but maybe it would have been different in the US.
100% agree with Caplan. No matter what you call it, the taxpayers and bond investors are on the hook for providing Universal Basic Income for older people. So make this program as efficient as possible, while enabling individuals to have maximum opportunity to invest in other opportunities.
The Libertarian argument for privatizing everything is nice in theory but fails reality. There will be a social safety net. There will be laws and regulations. Placing everything in the "free market" bucket invariably results in the government becoming the market and applying its heavy hand to secure politically desirable outcomes.
The reason people push constructive reforms is because austerity is unpopular. Bush's SS privatization plan had a chance of passing. Austerity is DOA out of the gate.
Why can’t we do both? Austerity plus giving folks the option to go private (eg stay with SS or have SS taxes diverted to qualified retirement accounts)?
SS privatization (partial or full) strikes me as the Economic Right's version of benefit increases. The argument proponents make is that if only you could invest your payroll taxes in accounts you owned and controlled, you'd get a much better ROI. People should be able to save however much they want in accounts they own and control and they don't need the government for this. A more consistent free market case is to argue for benefit reductions and payroll tax cuts. Let people keep more of their own money coupled with personal responsibility. You could concede a government backstop minimum benefit to address undesirable poverty in old age. Such a backstop would be far less expensive than the trillion-plus Social Security expenditure we incur today.
I don't think this will work. In Europe austerity is a derogatory term and every proposal that doesn't increase the budget will be considered austere. At least in Spain now there is not a single party proposing budget restrain, even less budget cuts.
At least deregulation (for some things) is defended by some parts of the right, but austerity ois not defended by anyone (sadly).
"government will never implement a transparent free-market reform. Even an idea as simple as “give people the freedom to invest their own payroll taxes in a private account” will quickly morph into a kilo-page Congressional boondoggle. This further increases the chance that something will go wrong. And when it does, the market will take all the heat."
It's a self perpetuating racket. Can't get there from here. Even without the inevitable, at best occasional, sabotage buried in that kilo-page boondoggle.
Interesting framing. I like it a lot. It avoids perpetuating the myth that "the government creates markets". The government sucks at everything, especially at creating markets.
However, perhaps I'm too much of a tax-abolitionist to get overly excited about spending cuts. I'm not sure I actually care how much other people (whether governments, corporations, or individuals) spend. I care much more about how much they collect, and what they do if you decline to pay.
> Congress is also less likely to use austerity as an excuse for new kilo-page legislation.
This is not at all obvious to me. How did you arrive at this conclusion? Don't many people just think "more spending fixes all known problems?" The only thing that seems to limit this is how much they actually have or can borrow. I.e. taxing power.
Why not just invest the SS taxes into some sort of full market ETF? The yield (say, 8%) would surely save the system as the current yield is a fraction of that…
This opinion is what Reagan said, starve the beast.
This is silly. You can't say the numbers are bad and not run the actual numbers. The market came back in about from it's low in 2009, to over take it's 2007 high by 2013. 4 years. So why a ballout? By the time a ballout would have been negotiated it would have been tiny. As market was only down 25% by August of of 09. Maybe a ballout of a very few people about to start retirement. But really with gaurdrails like you can't be more than 50% in stocks after your 60 it would have been fine. The issue here is that some people can retire early others need to work an extra year or two based on how the market is doing. Also let people lock-in thier gains by investing in some kind of SS like annuity in a good year after 50.
I can't find any record of Australia bailing out its privatized social security system (individual "superannuation" accounts that can be invested in stocks, cash, or other instruments) during the GFC, but maybe it would have been different in the US.
Good point. I'm also not aware of any bailouts of IRA and THRIFT participants in the US.
100% agree with Caplan. No matter what you call it, the taxpayers and bond investors are on the hook for providing Universal Basic Income for older people. So make this program as efficient as possible, while enabling individuals to have maximum opportunity to invest in other opportunities.
The Libertarian argument for privatizing everything is nice in theory but fails reality. There will be a social safety net. There will be laws and regulations. Placing everything in the "free market" bucket invariably results in the government becoming the market and applying its heavy hand to secure politically desirable outcomes.
The reason people push constructive reforms is because austerity is unpopular. Bush's SS privatization plan had a chance of passing. Austerity is DOA out of the gate.
Why can’t we do both? Austerity plus giving folks the option to go private (eg stay with SS or have SS taxes diverted to qualified retirement accounts)?
SS privatization (partial or full) strikes me as the Economic Right's version of benefit increases. The argument proponents make is that if only you could invest your payroll taxes in accounts you owned and controlled, you'd get a much better ROI. People should be able to save however much they want in accounts they own and control and they don't need the government for this. A more consistent free market case is to argue for benefit reductions and payroll tax cuts. Let people keep more of their own money coupled with personal responsibility. You could concede a government backstop minimum benefit to address undesirable poverty in old age. Such a backstop would be far less expensive than the trillion-plus Social Security expenditure we incur today.
I don't think this will work. In Europe austerity is a derogatory term and every proposal that doesn't increase the budget will be considered austere. At least in Spain now there is not a single party proposing budget restrain, even less budget cuts.
At least deregulation (for some things) is defended by some parts of the right, but austerity ois not defended by anyone (sadly).
With due respect Mr. Caplan: what if you promote privatizatization and freedom of association instead of open borders?
I don't know men this can easily backfires with "when the government was doing something It was better"
Austerity Accelerationism?
Count me out. It is a waste of my time to "push for" this or that political reform. (But I do enjoy reading Bryan Caplan.)
"government will never implement a transparent free-market reform. Even an idea as simple as “give people the freedom to invest their own payroll taxes in a private account” will quickly morph into a kilo-page Congressional boondoggle. This further increases the chance that something will go wrong. And when it does, the market will take all the heat."
It's a self perpetuating racket. Can't get there from here. Even without the inevitable, at best occasional, sabotage buried in that kilo-page boondoggle.
Likewise, free market healthcare seems impossible.
Interesting framing. I like it a lot. It avoids perpetuating the myth that "the government creates markets". The government sucks at everything, especially at creating markets.
However, perhaps I'm too much of a tax-abolitionist to get overly excited about spending cuts. I'm not sure I actually care how much other people (whether governments, corporations, or individuals) spend. I care much more about how much they collect, and what they do if you decline to pay.
> Congress is also less likely to use austerity as an excuse for new kilo-page legislation.
This is not at all obvious to me. How did you arrive at this conclusion? Don't many people just think "more spending fixes all known problems?" The only thing that seems to limit this is how much they actually have or can borrow. I.e. taxing power.
Why not just invest the SS taxes into some sort of full market ETF? The yield (say, 8%) would surely save the system as the current yield is a fraction of that…