Sunday, September 11, 2005

Selling Snakeoil, Part 4

Hyman continues to barely recast his criticisms of Social Security into paeans to the “positive benefits” (as opposed to “negative benefits,” I suppose) of privatizing Social Security (or, as Hyman euphemistically refers to it, “properly restructuring” Social Security).


Benefit #7 - Personal retirement accounts earmarked for each retiree could be
inherited. A retiree who neither needs nor desires the retirement benefits or
who dies early in their retirement years can pass the balance of their account
to a relative such as a grandchild to pay for college or to a son or daughter to
buy a home.

Fact 7: We’ve already dealt with this at some length in a related response to Hyman’s criticisms of Social Security, but the current system already allows workers to pass on the benefits they earned to a spouse or to minor children. On the other hand, there is no guarantee that a private account would ensure enough money for the retiree to live on to begin with, let alone enough to pass on anything meaningful to children. Moreover, if a retiree’s portfolio is in the red, their family inherits that debt (to say nothing of the colossal collective debt we will pass on to future generations from the costs of privatization).

Benefit #8 - A revamped Social Security system with accumulated wealth would
allow all workers to have access to the money they've paid in. Millions of
today's workers including those who are employed for less than 10 years and
spouses who are married less than a decade never see a single dime they have
paid in. Workers who die before they could begin collecting benefits -- this is
especially true of minorities -- are also denied the money they have spent a
lifetime paying into the system. A personal retirement account would allow them
to collect on their own investments and/or pass them on to an heir.

Fact 8: Actually, workers would not have access to the money they’ve paid in. The president’s plan, while touting individual ownership, provides the risks of investment without the flexibility. Worker’s would have their money locked away from them, and would have to
purchase an annuity at retirement to provide income. As we’ve also noted, Social Security (unlike privatized accounts) is an insurance policy that pays benefits to disabled workers and to the families of those workers who die early (these recipients collectively make up about a third of Social Security beneficiaries). You might remember that we also exposed the supposed benefit to minorities as a canard: Hyman’s arithmetic is based on data that mistakenly suggests that minorities who reach retirement age die significantly sooner than their white counterparts. In fact, life expectancy for retirees is roughly the same; it is the higher morbidity rates of minorities in middle age that skews the numbers, and such workers already are able to have their benefits passed on to their spouse or minor children.

And those are the Counterpoints.

Hyman Index: 2.19


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At 10:50 PM, Blogger Ted Remington said...

Speaking of selling snakeoil . . .



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