Perhaps
the best political line of the last half-century is the one that goes something
like, “I think you can spend your money better than the government can.” It’s brilliant
for two reasons, the first being that there’s no possible answer because no
politician who wants to get elected is going to argue the point.
The
second reason is that it’s not true.
After
decades of behavioral research, it has been pretty well established that the
average person is terrible at managing money. People consistently underestimate
what they need to salt away for retirement and tend to indulge themselves now,
rather than planning for the future.
When
you add to that all the income shocks that can occur in a lifetime (serious
illness; lingering endgame for a parent; kid with a drug problem; divorce;
period of unemployment), even people who are reasonably prudent and frugal are
likely to come up short at the end of their working lives. So you would think
that a social policy based on people managing money shrewdly over the long haul
would be a non-starter.
If
you doubt that, consider how many people, faced with the choices for investing
their retirement money, chose the most conservative path they could imagine:
investing in their own company, which they felt they knew. When that company
was Enron or PG&E, they lost everything; in other companies, the loss may
not have been total but was still devastating.
I’ve
always believed that it’s silly to have a system that expects people to be
other than what they are. It’s why I can’t imagine a Marxist society ever
working. It’s also why I can’t imagine there being any good ending to Congressman
Ryan’s proposals to convert Social Security and Medicare to individual
accounts. Ryan, an acolyte of Ayn Rand, believes his ideas would encourage
individual responsibility.
I’m all for responsibility, but if
a policy based strictly on that virtue would result (as I believe it would) in
90 percent of the people being worse off than they are under the present
system, what’s the sense in it? What’s the morality? Letting old people die of
starvation because they invested badly or from lack of medical care because
they bought the wrong health-insurance policy is no different, morally, from
killing them in re-education camps because they were unwilling to embrace
communism.
The beauty of Social Security and
Medicare is their simplicity and their guarantee. Social Security says you will
get a check from the day you retire until the day you die. Medicare says you
will get basic medical coverage from age 65 to the grave. The sharp decline in
poverty among the elderly over the past four or five decades is proof that
these programs work.
No one disputes that they are in need
of an overhaul, but the overhaul has to be built around maintaining the
fundamental concepts. Letting people go their own way, however appealing that
might sound to the libertarian mind, amounts to setting up many, probably most
people to fail.
Ryan’s old-age plan changes
wouldn’t affect my generation (a shrewd political calculation on his part) and
I wouldn’t live long enough to see the outcome. But I can write the scenario.
Go down the path of individual retirement plans and individual senior health
plans, and forty years from now you wouldn’t be able to drive across town
without encountering dozens of geezers holding cardboard signs offering to work
for food or asking for help with their medical bills. John Galt’s pension plan
would be on public display at every street corner.
