Thursday, January 20, 2005

Social Security



Doing my public duty to spread the word, and to spread the spreading of the word on Social Security to any bloggers around, I'm linking this piece from the American Prospect headed Attention, Bloggers

American Prospect Online - ViewWeb

In Buying Into Failure Paul Krugman notes that in attempting to privatize Social Security the US is following the lead of the UK and Chile. I don't know much about Chile but my mother-in-law is an old age pensioner in the UK and it doesn't look like the system is working. She even made it into the local paper in an article on the difficulties old age pensioners in the area are facing with rising costs and inadequate benefits.
It's ironic that the Cato Institute to which Krugman alludes has eliminated talk about Social Security "privatization" in favor or talk about Social Security "choice" because as her savings get eaten up she doesn't have many choices.

I'd like to have some choices when I get old. The notion that security is a trade-off for choice is flat-out wrong: security is a pre-requisite for choice, for effective freedom and willingness to undertake risk. Here for example is an article citing the "cushion hypothesis" to explain why Chinese, contrary to popular stereotypes, are more likely to take risks than Americans. The author notes:

"people in a collectivist society may be more likely to receive help if they are in need. As a result, the adverse outcome of a risky option may not seem as severe to them. They appear to be less risk averse. People in a collectivist culture feel that they are 'cushioned' in case they fall, which is why we call it the cushion hypothesis."

In some countries, individuals are cushioned by government safety nets; in others by extended families and community networks. In the US, we have very little cushioning of either sort. We fantasize a world of close-knit families, neighborly neighbors and communities that take care of their own, but it just isn't so and unraveling government safety nets isn't going to make it so. To have that fantasy world, even if it were a good thing, we'd need to have a higher marriage rate and larger families, we'd have to get women out of the labor force to care for the elderly, and we'd have to stay put geographically to keep extended families and communities together.

Even if that were feasible, I don't find it a very attractive picture: I would not want to be dependent on filial piety, neighborliness or community spirit. Pettit in a defense of Sen suggests, plausibly, that "capability" or effective freedom requires that the satisfaction of our preferences not be "context dependent," that it not depend upon the preferences of others. In any case, I'm a nasty cuss and think I would make out much better getting social security checks direct deposited into my bank account than I would relying on the good will of family, neighbors or community.

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