Tuesday, November 04, 2008

Not being on your own

Robert Solow is one of the most entertaining - and perceptive - economics writers I know. He also has a zany sense of humour but that is another story. This book review by Solow of Peter Gosselin, High Wire: The Precarious Financial Lives of American Families, provides an excellent critique of the perils of privatising social security. The general message - pay a little tax to protect the sick, the old, the unemployed, and the victims of natural disaster. This is a good social deal and typically best organised by the public sector.


Blissex said...

«pay a little tax to protect the sick, the old, the unemployed, and the victims of natural disaster. This is a good social deal and typically best organised by the public sector.»

There should be an argument here in support of this far-from-obvious bare assertions.

What about the argument that since the sick, old, unemployed and victims are losers who are consuming without producing, they are worthless parasites, and should thus pay higher taxes to fund incentive-raising tax credits for those who produce high incomes?

Why should the government steal money from winners, reducing the incentive to be a producer, to give it to losers, increasing the incentive to be a parasite?

How is is equitable for people who contribute to the wealth of the nation to suffer exploitation from those who destroy it?

Consider for example Australian immigration policy: it is designed to exclude the old, sick, unemployed, victims, and to accept highly producing winners instead. Why is that not a good idea for domestic policy too?

I think that there are very good answers to all these questions, but just to state as a self-evident truth that winners should be punished for being more productive to reward less productive losers does not work for me.

derrida derider said...

blissex, there remains the efficiency arguments for social insurance (broadly defined) which I think are actually much stronger than most people (including Solow) think, and which were also historically very important in the foundation of welfare states.

There's a reason we don't all have 8 children these days in the hope that 2 or 3 will live long enough to support us in our old age.