Let's say that your employer pulls you into a meeting this Friday and says the following:
Starting tomorrow, you will be put into a new retirement plan that will cost you personally 8% of every paycheck you get. We will decide when you can retire and how much you will get when you do. If you die all the money you have put into the plan belongs to us. At any time we want we can increase the amount you must put in. If it doesn't work out that there is enough money when you retire and we have misused the funds--tough shit! Now get out there and work your ass off.
Throughout the nation, a fierce debate rages over Social Security. One side, led by President Bush, says the system is in crisis and must be saved via "partial privatization." The other side says the system is basically sound and can be saved with a little tinkering.
Both sides, however, agree on one absolute: Social Security should be saved. While it may have financial problems, they believe, some form of mandatory government-run retirement program is morally necessary.
But is it?
Social Security is commonly portrayed as benefiting most, if not all, Americans by providing them "risk-free" financial security in old age. This is a fraud. Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their income--approximately 12%--for the alleged purpose of securing their retirement. That money is not saved or invested, but transferred directly to the program's current beneficiaries--with the "promise" that when current taxpayers get old, the income of future taxpayers will be transferred to them. Since this scheme creates no wealth, any benefits one person receives in excess of his payments necessarily come at the expense of others.
Under Social Security, every aspect of the government's "promise" to provide financial security is at the mercy of political whim. The government can change how much of an individual's money it takes--it has increased the payroll tax 17 times since 1935. The government can spend his money on anything it wants--observe the long-time practice of spending any annual Social Security surplus on other entitlement programs. The government can change when (and therefore if) it chooses to pay him benefits and how much they consist of--witness the current proposals to raise the age cutoff or lower future benefits.
Under Social Security, whether an individual gets twice as much from others as was taken from him, or half as much, or nothing at all, is entirely at the discretion of politicians. He cannot count on Social Security for anything--except a massive drain on his income.
If Social Security did not exist--if the individual were free to use that 12% of his income as he chose--his ability to better his future would be incomparably greater. He could save for his retirement with a diversified, long-term, productive investment in stocks or bonds. Or he could reasonably choose not to devote all 12% to retirement. He might choose to work far past the age of 65. He might choose to live more comfortably when he is young and more modestly in old age. He might choose to invest in his own productivity through additional education or starting a business. How much, when, and in what form one should provide for retirement is highly individual--and is properly left to the individual's free judgment and action. Social Security deprives the young of this freedom, and thus makes them less able to plan for the future, less able to provide for their retirements, less able to buy homes, less able to enjoy their most vital years, less able to invest in themselves.
And yet Social Security's advocates continue to push it as moral. Why? The answer lies in the program's ideal of "universal coverage"--the idea that, as a recent New York Times editorial preached, "all old people must have the dignity of financial security"--regardless of how irresponsibly they have acted. On this premise, since some would not save adequately on their own, everyone must be forced into some sort of "guaranteed" collective plan--no matter how irrational. Observe that Social Security's wholesale harm to those who would use their income responsibly is justified in the name of those who would not. The rational and responsible are shackled and throttled for the sake of the irrational and irresponsible.
Those who wish to devote their wealth to saving the irresponsible from the consequences of their own actions should be free to do so through private charity, but to loot the savings of untold millions of innocent, responsible, hard-working young people in the name of such a goal is a monstrous injustice.
Social Security in any form is morally irredeemable. We should be debating, not how to save Social Security, but how to end it--how to phase it out so as to best protect both the rights of those who have paid into it, and those who are forced to pay for it today. This will be a painful task. But it will make possible a world in which Americans enjoy far greater freedom to secure their own futures.