March 31, 2005

Depressing Democrats and Social "Insurance"

Life must be really dark, cold, harsh, nasty, brutish and short to Democrats. After all, they believe old people are at quadrennial risk of being forced to eat dog food (funnily enough, this belief comes around every four years only a months before an election and a few weeks after a losing one), they think that the stock market is just waiting to crash, the economy will tank at any moment and plunge us all into another depression if not monitored by hyper-ethical, super-intelligent bureaucrats, and that without social security there are no other welfare options for low-income old people.

They must be really depressed to forget about all their other programs they've passed for the poor and the old. After all, with both Medicare (for the elderly) and Medicaid (for the poor) old people without Social Security still have two back-up supports for themselves – and that’s excluding the extensive system of private charity in the US. This horribly depressing worldview prevents them from seeing the possibility and the opportunity to stop fighting poverty and instead embrace wealth.

Democrats are so tied up trying to protect old people from the ravages of everything that they don't realize the opportunities to make leaps and strides away from poverty. Private account systems could make sure that old people of the future no longer fear poverty; instead, they could have big, fat retirement accounts literally making the average retiree a millionaire. If somehow people floundered under this system, Medicare, Medicaid and general welfare would all still be available. Why do Democrats think old people are so weak and the economy so fragile that we need multiple, redundant hand-out programs?

We don't need Social Security, even if you love welfare. We have a welfare program already and it can cover the poor. We already give old people Medicare and now they have a big, fat prescription drug entitlement to go along with it. If they're poor, they can draw on other welfare programs to supplement their incomes.

Rather than wasting billions on a redundant layer of welfare, we can turn coupon-cutting retirees into millionaires. It sounds like a pie-in-the-sky promise, but it's actually very reasonable. See Kudlow here for a conservative estimate of the benefits of private accounts. I’ll spoil it for you: the cautious estimate is that you could get $101k from Social Security or $939k from even the worst-performing stock market.

But even better - if you die at 30 or 90 or anywhere in between, you personal account is YOURS. It goes to your wife and kids, it goes to your parents or friends or cousins. It's your money and you get to control it.

What's amazing is how Democrats view the economy as an unwieldy, unpredictable force that could cause upheaval at any moment. Somehow, though, Social Security is supposed to weather massive unemployment and funds scarcity better than the premier engine of wealth creation in the world. If there's a major depression then we still have all sorts of welfare programs to help the poor. But any reasonable person knows that another great depression is just plain unlikely; given that knowledge, it's a lot better management of an a negligible risk to bring the average person into the stock market.

Shouldn't Democrats be pushing to get the average person involved in the stock market? After all, that would let the average person tap into a major wealth-creator and become an investor-capitalist in his own right.

Unfortunately, yet again, the Democrats want to bet against the economy, against human nature, and against private wealth. Why? Because to them, the world is a zero-sum game. There's no way the poor can get better unless the rich get worse, and there's no need to use the stock market when they can just tax the bejeezus out of rich people to achieve the redistributive effect desired.

If they had an ounce of optimism in the world maybe they could see the possibilities and opportunities that the stock market offers even the poorest investor - just imagine! You could have a plumber and a thoracic surgeon going to the same investor. It's like allowing every worker, from richest to poorest, their very own investment house to work with. This OUGHT to be the best thing ever for Democrats and advocates of the poor. Unfortunately, they can't see past outmoded 19th-century views of the economy.

We have two very different views here. We have the advocates of personal accounts - those who want a prosperous and free future where any worker can take advantage of premium investment advice to become successful and independently wealthy. Then we have the opponents of personal accounts - those who refuse to see anything better in the economy than a twisted view of the early 20th century where every worker only avoids grim, torturous death through their crusading efforts and are willing to screw over millions of workers to reinforce this social role for themselves.

Let me say it plain and simple: you can risk paying higher taxes for fewer benefits under the current system or you can embrace a sensible reform and see at least 9 or 10 times the return on your money. Fiscal leftists right now are laughing or cursing and spitting on their screens. Fiscal libertarians are pulling up real estate and automobile websites to decide how to spend their money.

But this will always be the division between the economic left and economic right. The left can’t stop thinking that the world could always get worse and the right won’t stop thinking that the world could always be better. Put me down for the sensible idealism of the economic right.

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