David R. Henderson  

Social Security and Kids

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In the comments on my post on retirement last week, Chris Koresko asks a good question, writing:

Would it make sense to link the size of a retiree's Social Security payment to the number of kids he has in the workforce paying Social Security taxes?
After all, if not for SS it is likely that working people would be spending more of their income taking care of their parents; therefore, such a rule would help reduce the redistribution from large families to small ones.

I think it would make sense, for the reason he says. His proposal, if implemented, would reduce the distribution from large to small families. But then, if one's goal is to reduce distribution [I don't call it "redistribution" because the term "redistribution" presupposes that someone distributed in the first place] why not take the next logical step: make Social Security non-distributive. How would you do that? End it. Indeed, when you look at many government programs and you start thinking about reforming them to make them less inefficient or less distributive, you can usually reason your way to ending them in toto. I have no difficulty with that. But it does raise an issue: maybe the purpose of many of the supporters of the program is to do what many of the opponents don't want it to do.


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CATEGORIES: Social Security



COMMENTS (6 to date)
Shawn Smith writes:

I agree...SS will eventually be "fixed" by doing some number of items, such as tying it to whatever (inflation/wages/family size), raising age requirements, means-testing, etc. But, then 10-20 years down the line, you're going to do the same thing...try to make the program work by "fixing" it.

SS should be ended in a phased fashion. Then, people can use the additional funds as they see fit...if there are some who don't have enough funds in their old age, then there are private charities. And, with additional funds in private hands, then charities would be funded better to handle the additional recipients. And, all of this would be done with less bureaucratic overhead, more local involvement, and less coercion.

geckonomist writes:

Dear Mr. Henderson, start with yourself and send back each and every SS payment you'll receive.

Bill writes:

I think the gecko is on to something. Send me back all my contributions to date - not even asking for interest - stop the withholding, and I will agree never to take a payment and never complain about SS again.

Alvin writes:

Can I have a larger social security check since I support open borders?

Bill2 writes:

I for one would rather have Social Security taxes taken out of my paycheck than not have Social Security. The U.S.'s demographics allow the program to be workable with relatively modest changes to the retirement age and a small decrease in benefits. It is politically difficult but will not be impossible. They are upping the age and lowering the benefits in France and Greece right now, and Americans will accept it as well.

The alternative is to make investments (take on risk) and bet that in the many years leading up to and through retirement, that those investments will not turn out to be worthless or worth far less, such that retirement is ruined and one dies in relative poverty. By the way, the DOW has been flat or negative for 10 years, which is the length of a short retirement. I am happy to count as an asset in retirement the mechanism of social security, which attaches the current ability of Americans to be engaged in productive pursuits to retirement income. This is in many ways a more secure investment than the risk that investments made over 40 years in industries that could disappear overnight will not in fact disappear or become severly devalued. Look at ss taxes as another way of diversifying, and it will not be as painful.

Nathaniel writes:

But if the point is to use incentives to make the system "sustainable" then a larger pension should go to those that produce more children and keep the worker to retiree ration more tenable.

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