What Can Replace Social Security?

Manchester, New Hampshire—Last night, some of Ron Paul’s younger supporters—and Ron Paul supporters are disproportionately young—held a pub crawl through the bars of downtown Manchester. During the first two hours (after which time I crawled away), about 50 largely male Paulists, behaving far too decorously for serious pub crawlers, drank and munched and yacked.

Paul himself had arrived in the state just that afternoon—electing, for some mysterious reason, to spend Wednesday, Thursday and Friday morning back in Texas.  At a welcome rally at Nashua’s small-plane airport, he spoke in his usual generalities about libertarian values, interspersing occasional anecdotes about unnamed congressional colleagues who had voted to fund one damned project after another.  He was hailed, of course, as a conquering hero—Paul’s supporters are the only true zealots among the Republicans this year.

One such zealot who turned up at the pub crawl was Nick, who’d driven all the way from Boston. Like many if not most Paul supporters, Nick was drawn to Paul chiefly because of his opposition to foreign wars—he’d had some friends who were wounded in the wars.  Recently laid off by a medical products firm because, he said, of Medicare’s and Massachusetts’ regulations, he now works as a handyman at some rental properties.

Nick’s views of our military interventions could come straight from the lexicon of the left. “It’s a self-fulfilling prophecy,” he said of our relations with Iraqis and Afghanis. “They hate us because we’re over there, and we’re over there because they hate us.” On foreign policy, he noted, he could make at least partial common cause with the Occupy The Primary demonstrators (including Vermin Supreme, see previous post) who’d shown up in a park a few blocks away. But on economic issues, they parted company: Nick sees the growth in economic inequality as the result of the federal government’s crony capitalism.

To his grandparents, Nick is an anomaly. Two are mainstream Democrats, who don’t like his economics; two are mainstream Republicans, who don’t like his views on foreign policy. Or maybe it’s his views on social security, which he opposes. As Nick sees it, if the payroll tax that funds social security were abolished, people could set aside their own money for their retirement. “They could make investments in stocks or bonds or hedge funds,” he said. “They could collect stamps.”

 

Comments

«As Nick sees it, if the payroll tax that funds social security were abolished, people could set aside their own money for their retirement. “They could make investments in stocks or bonds or hedge funds,” he said. “They could collect stamps.”»

But OASDI as the acronym says is not about saving for retirement, that is the usual right wing propaganda. It is not at all meant to replace individual saving for retirement, because its payouts are at poverty level.

It is as the acronym says insurance against the risk that the individual savings don't work out (for example because of AIG style bankruptcies), and provides a poverty level of retirement insurance payouts. Self-insurance cannot work for individuals, so OASDI is irreplaceable.

A less mean retirement requires saving 25-30% of income during working lifetime, so workers should put around 15% of their income into pension investments (life assurance, index funds, treasury bond funds) on top of the around 12% insurance premiums they pay for OASDI.

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