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Noble Lies, Liberal Purposes, and Personal Retirement Accounts
by Will Wilkinson
Will Wilkinson is a policy analyst at the Cato Institute.
Executive Summary
Opponents of President Bush's proposal to
make individually owned personal retirement
accounts a part of the Social Security program
routinely charge that it is motivated by ideological
animosity toward the values Social Security is
supposed to embody, such as equality and social
cohesion. However, a frank look at the Social
Security status quo reveals that the program is
very poorly designed to realize liberal ideals.
Social Security has a barely progressive overall
structure, if it is progressive at all. The huge volume
of transfers inherent in the system accomplishes
very little income redistribution within
generational cohorts. Furthermore, it works to
the disadvantage of current workers, who will
receive a smaller "return" on their payroll taxes
than do current retirees. The terms of the imaginary
"compact between the generations" are
manifestly unfair.
What is worse is that the Social Security status
quo embodies a government-perpetuated
deception designed to generate its own political
support by misleading voters into believing that
their payroll taxes entitle them to later benefits.
The architects of Social Security created a
structure and accompanying rhetoric that were
specifically intended to encourage the false
belief that the system provides a kind of insurance,
similar to private insurance based in contract
and property, and therefore involves a
binding entitlement to benefits.
However, there is no justification for this
deception on contemporary liberal grounds.
The persistent intentional misrepresentation—
the "noble lie" -- embedded in the structure and
language of the Social Security system is in fact
antithetical to the ideals of transparent government,
open democratic deliberation, and equality
among citizens -- ideals at the core of contemporary
liberal thought.
A system of personal retirement accounts plus
a means-tested safety net would serve the "social
insurance" function better than the Social
Security status quo according to liberal standards.
Contrary to critics of reform, personal
retirement accounts would materially enhance
equality and social cohesion by more fully integrating
workers into the market, providing everyone
with a stake in its growth, closing the gap
between the investing and noninvesting classes,
and making more salient the mutuality of interests
in a market society.
Index of Social Security Privatization Papers
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