{ "href": "/post/2009/05/15/dont-romaniticize-social-security-overhaul-it/", "relId": "2009/05/15/dont-romaniticize-social-security-overhaul-it", "title": "Don't Romaniticize Social Security; Overhaul It", "author": "pmjones", "markup": "html", "tags": [ { "href": "/tag/economics/", "relId": "economics", "title": "Economics", "author": null, "created": null, "updated": [], "markup": "markdown" }, { "href": "/tag/government/", "relId": "government", "title": "Government", "author": null, "created": null, "updated": [], "markup": "markdown" } ], "created": "2009-05-15 15:00:59 UTC", "updated": [ "2009-05-15 15:00:59 UTC" ], "html": "
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It is tempting to romanticise the creation of Social Security, but it was not the result of a kind nation coming together and sacrificing to help the poor aged. The Depression-era government set up a Ponzi scheme that would not unravel until all nearly all their voters died. A 58-year-old in 1938 would only have to contribute for seven years before collecting benefits. He could expect more than a 30% internal rate of return on his tax dollars, compared to someone today who will get less than 2% (assuming benefits are not cut).

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It is time to overhaul the system entirely. Social Security was meant as a national saving scheme that would prevent old-age poverty and ensure the middle class a reasonable retirement income. It would better achieve those objectives by addressing them separately. Ideally we would have a two-pronged system: one to provide explicit welfare, the other a transparent saving vehicle.

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via Free exchange: our economics blog | The Economist.

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I must say it's nice seeing someone at The (kind of left-leaning) Economist saying this.

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