When the agenda is obvious, skepticism needs priority

Allen Sloan provides an example in Privatizing Social Security: Still a dumb idea. He knows it’s a dumb idea and is writing a column to confirm his view.

The holiday season is upon us, making this a perfect time to go searching for turkeys — the financial variety, of course. But this year, rather than looking backward at inept deals or government programs, let’s try to find future turkeys.

And the biggest one is … privatizing Social Security.

Where’s the skepticism needed? The first item is about the security of a retirement investment.

Why is privatizing Social Security such a turkey? Because retirees shouldn’t have to depend on the market’s vagaries for survival money.

Which assertion is supported by taking a short term look at a stock fund value based on a very short timeframe selected for maximum effect supporting the idea of “vagaries” that would destroy retirement planning. The skeptic would note that the whole idea about retirement is a twenty year or longer (and out to forty or more in modern reality) investment program and on that time scale, the ‘vagaries’ tend to diminish in impact.

Then there is the dumb people argument.

Most people have no idea how to invest well — study after study shows that mutual fund buyers tend to buy high and sell low. But even if you manage to invest well, you run into the second risk, largely unrecognized, that interest rates will be low when you retire.

Then there’s the canard, especially in light of his own idea that “For 20% of 65-and-up couples and 41% of singles, Social Security is 90% or more of their income.”

But Social Security isn’t supposed to be a gambling program, or a wealth-building program. It’s an intergenerational social insurance program, in which we make sure our parents don’t have to depend on food banks and homeless shelters when they get old, and we hope our kids do the same for us.

In order for a proper debate about privatizing social security, there has to be a bit better intellectual integrity than this illustration illustrates. A core issue is about who knows more about what to do with your money: you or the government? How much should the government get involved in trying to get you to secure your future? What sort of insurance should government provide for poverty and unexpected health contingencies, especially for the aged? Is the government actually the most secure financial resource or is the vagaries of legislative opinion perhaps more significant than those of the private sector? What should the government do to promote and protect property ownership so that it can be depended upon as a valuable asset for individuals?

But it is so much easier to set aside the difficult questions and just impugn those things that seem strange or weird or, well, just different. The debate really needs better than that.

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