W. Copley of Butlerville, IN, asks:
There is one more option. Eliminating Social Security. Japan does not
have Social Security, as well as others. Russia went broke because it
provided everything to its citizens. We lived quite well from 1776 to
1930's without Social Security.
The nation as a whole may have lived quite well, but the
elderly did not. Before the 20th century, retirement was rare. You worked
until you dropped and if you could not work but did not drop, you were
treated very badly. As a group, the elderly were very poor compared
to the rest of the population.
The problem was mitigated by contributions from children to their parents,
by charity from fraternal institutions, some union pensions, and welfare
from local governments. In the late 19th century, pensions for Civil
War veterans were almost as universal as today's Social Security. In
the early 20th century, we saw the beginnings of corporate pensions.
Few retired on their own personal savings.
The Civil War pensions disappeared over time and other support mechanisms
were ruptured by the Great Depression. The invention of Social Security
was a response to this economic crisis, but even if the Great Depression
had never occurred, it is doubtful that the traditional system could
have endured the very rapid growth in life expectancy. As the elderly
population grew, they became harder and harder to support through traditional
mechanisms, even at low living standards.
Incidently, Japan does have a Social Security system that in some ways
is more generous than ours.
Tanner and Darcy Olsen respond:
Ideally we would certainly favor allowing full freedom -- that is, allowing
individuals to save and invest for retirement without a government mandate.
Unfortunately this is not politically viable. Personal accounts are
at least a movement in the direction toward increased liberty. As Nobel
laureate Milton Friedman has argued, the current Social Security system
restricts freedom in three ways: (1) by requiring that individuals make
some provision for their old age; (2) by requiring that this provision
be made by buying one single type of insurance -- Social Security; and
(3) by requiring that this one type of insurance be purchased from one
monopoly "seller" -- the federal government. A system of mandatory individually
owned, privately invested accounts would not do anything about the first
element, but it would eliminate the second and third, thus increasing
individual liberty to a significant degree.
Actually Japan has a very substantial public pension program. Prior
to the creation of Social Security in the thirties approximately half
of the elderly lived in poverty. Currently just over 10.0 percent of
the elderly live in poverty, just about the same as the rest of the
adult population. It has provided hundreds of millions of retired workers
with a decent retirement over the last sixty years, with a minimum of
fraud and abuse. If the politicians leave just leave Social Security
alone, it can continue to guarantee workers a secure retirement for
another sixty years.