Rasmusen Weblog

Reason (b) is, at most, a reason to make sure that everybody who can save does save for their old age. I would say, myself, that if someone could have saved for their old age and didn't, then we simply should not put them on public charity.

But suppose we don't want to make people pay the penalty for their improvidence. Even then, reason (b) doesn't apply to most people, because most people *do* save, even in addition the forced saving of Social Security, and they would save even more if Social Security. Most people save, if only in the form of owning a house (which they could sell in their old age) or by means of an employee pension plan. At a minimum, Social Security should exempt all of those people from paying tax or getting benefits. We do not need to force Bill Gates to provide for his old age. Going a step further, another common way to provide for old age is to have children. Someone with eight children should not have to worry about starving in their old age. If we do not already, we should require that children maintain their old parents, just as we require parents to maintain their young children. And we should exempt someone with children from being in the Social Security system. They have invested for their old age in raising children. And in their old age, their own children should pay taxes for their pensions, not other people's children.

Going two steps further, for the few eligible people left, why require them to do their forced savings via a low-yield government program? All that is necessary is to force them to contribute to a pension plan, much as in the private-account plans. Going three steps further: how many of the improvident who would not save for their old age actually would reach old age? If someone is reckless enough not to save, maybe he will die early in one of numerous ways (shootings, accidents, drink, drugs, AIDS) that affect reckless people. In fact, if you plan to burn yourself out by age 40 it is irrational to invest in a pension plan.

Little mentioned is the corrupting moral effect of Social Security. For one thing, it encourages improvidence, because a person can count on a government pension even if he saves nothing himself. For another, it encourages filial impiety. Instead of caring for my parents myself, I can shrug them off as the government's responsibility.