It has been a while since I just rambled. The tyranny of the immediate...
So I was reading a thing in the Harvard Magazine (no snide comments, please. It just shows up!) about Social Security. The liberals have pretty much acknowledged that the President has set the agenda to talk about SS, though occasionally they try to point out that Medicare/Medicaid are going to break the bank also...interesting way of trying to change the topic, since I really think in this case they better hope they don't get what they are asking for. Anyway, the consensus is that we have to do something since the whole SS thing is on the table, and I have even heard a few honest liberals admit that the most important part of the program is the wealth redistribution aspect. So they argue about the best way to let change happen with as little 'damage' to the Social Security system as possible. Any the article (getting back on track) talked about the need to 'maintain replacement rates', or make sure that benefits continue to be indexed to wages, instead of cost of living.
But that got me thinking, a dangerous thing on a Saturday morning. From Econ, I remember that you can basically do three things with your wages: save them, spend them, or get them taken from you (taxes). Lets say that you save 10% and are taxed at 30%, that means that you are spending 60%. Your standard of living is based on your consumption, because you are getting no benefit from your savings or taxes, only from your consumption. So if, in retirement, I want to have the same standard of living from my savings (and taxes, if you believe in Algore's Lockbox), I need to plan on consuming savings at the same rate as I consumed my wages, that is, less savings and taxes. But if I am consuming savings (retired, right?) I don't need to be adding to them, so you can discount that, and if the gummit is paying me some of the money they took while I was working, it makes no sense for them to turn around and take some of that back again. Double taxation, anyone? So if SS returns are indexed to wages, people are getting a much better 'real returns' than they should. Instead, a 'fair' rate of increase would be based on wages less savings and taxes. But then people would save less, since more consumption now would mean more SS later. However, if people know that they are not going to be able to maintain the same standard of living (or consume the same amount) in retirement, maybe they will then have some incentive to save on their own. Thus, the benefit of indexing SS payouts to cost of living.
However, this ignores the whole wealth redistribution aspect of the program, which gets to the fundamental nature of belief in the system. Conservatives look at it in one of two ways. The first is as a minimal safety net that provides a very basic income for grasshoppers (those too dumb to plan for themselves) and the severely unfortunate (who tried, saved and had a tornado wipe out everything the day after they retired, and have no remaining family). These people believe that government is the fourth and final choice for the safety net: first is personal responsibility, second is family, then community (or church), and finally government. The other group of conservatives, leaning toward libertarianism, would argue that there should be no fourth option, and that SS was a bad idea from the get-go. Liberals, of course, have a similar division, and generally the order of precedence is reversed, with personal responsibility coming in last, and sometimes even meriting punishment (confiscatory taxes--soak the rich!). The first reason for SS for them is a redistribution program, and a way for the government to make sure that things are pretty much even in the end.
I guess it comes down to your belief in Equality of Opportunity, vs. Equality of Outcome, and how you answer that defines the way you look not only at Social Security, Welfare, Medicaid/Medicare, but also school, hiring practices, markets, science, government, and promotions in the military.
In other ramblings, JB and Zephyr have completely torn up the back yard, thanks to the melting snow, so I put up an ugly green fence to keep them off it for a few weeks while I reseed with the hardiest grass I can find at Home Depot. Gloria is in her jump-up having a big old time, and Tamsey is getting ready to see if that thump we just heard was JB announcing his waking from a nap, or ice melting off the roof.