Why Force People To Save, Indeed?

In a post that leaves me scratching my head, Atrios writes,

The Case for "Privatizing" Part of Social Security

Actually, I don't think there is one. What would be the point? If you think reducing payroll taxes and/or guaranteed benefits in a way which adds up is a good idea then go ahead and advocate that policy. But, what possible good argument is there for a policy roughly like the ones which are floated by the Bushies (without details of course), which would cut payroll taxes by 2 percentage points, cut guaranteed future benefits, and then mandate that you save/invest that 2 percentage points of income. What's with the mandatory savings? If you want to cut benefits, fine. If you want to having all kinds of tax free savings instruments, which we already do, fine. But why force people to save? The only point of doing so is to ensure that people have a reasonable income base when they're of retirement age, but once you take the "insurance" part out of retirement insurance, then a mandatory saving/investment program doesn't achieve that.

I wonder if Atrios will realize that he has just made the argument for abolishing the ponzi scheme known as "Social Security" altogether.

[via The Agitator]

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Social Security isn't a

Social Security isn't a Ponzi scheme, it's a near-maximally diversified mutual fund. Future benefits will be paid for by the increased productivity of the entire economy, increased productivity that arises from consumption foregone by the retirees during their working lives. Workers and retirees are insured - or hedged, if you prefer the Wall Street term - against the risk that their particular investments would turn sour. All privatization does is create the possibility of winners and losers. Those who believe their investment acumen is above average are welcome to forego additional consumption while working and make additional, personally directed, investments, which may prove to be better than average or worse than average but which, necessarily, will in sum be average.

By the same argument, any

By the same argument, any private investment in the stock market should be similarly outlawed and taken by the government for this "near-maximally diversified mutual fund". (And I wonder, what are all the 'diverse' instruments that this "mutual fund" invests in?) Why let people take any risks whatsoever? Let's just stop all that so that there will be no "possibility of winners and losers."

How exactly does forgoing consumption inrease productivity?

Why can workers not hedge themselves by private insurance, just like in fire, auto, and flood insurance, with their money themselves? Don't they know how much and what type of risk they can take based on their own unique circumstances?

If you are going to accept

If you are going to accept SS as a given (which at this point you must), then it seems an easy sell to allow "beneficiaries" to invest the payroll deduction as they see fit. A logical and safe choice would be investment in US Treasury obligations, which the USG theoretically does now, with the caveat that they can say "maybe not" if it becomes too expensive. (To protect morons, as seems the Left's concern, the USG can limit investments to a certain level of risk.)

The added benefit of private accounts and forced savings is it teaches people extremely important lessons that schools and parents neglect: the value of a dollar, the meaning of interest, and the evil of inflation at even so "low" a rate of 3% (which results in your dollar buying half as much by the time you retire), not to mention risk/reward evaluations. Why bother learning that when you can just rely on Big Brother to take care of you.

BTW JW: foregoing consumption increases productivity IF the money is saved and that increased pool of savings is capital available to business for investment (which arguably does not occur, or inefficiently, when the government takes the "savings").

"Why force people to

"Why force people to save?"

Well gosh, Jonathan, it's just so much fun to force people to do all sorts of other things that this one just seemed like a natural fit...