Abstract
The fact that social security is a rip-off is becoming more generally known as the system approaches bankruptcy.1 Like any Ponzi scheme, those who got in early stood to gain. But the system has insurmountable problems. People are living longer due to advances in medicine,2 so they take money out of the system longer. The birth rate has declined, so there are not as many people paying into the system. As the baby boomers near retirement age, more people will be drawing from the system and fewer people will be paying into it.3 Proposed solutions put forth to avoid or postpone bankruptcy have included reducing benefits, increasing taxes,4 postponing the retirement age and means testing — allowing only those who need it to be able to receive benefits.
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NOTES
The exact date when Social Security will go bankrupt is not known, of course. However, one recent estimate is 2029. The projected bankruptcy date gets closer each time an estimate is made. Outflows are expected to exceed inflows as early as 2012. See Michael Tanner, The Other Trust Fund Report. www.socialsecurity.org.
Carrie Lips, Bad News for Social Security: There May Be a Cure for Cancer, http://www.socialsecurity.org/articles/art-21.html.
In 1950 there were 16 workers for every Social Security recipient. Now there are only 3.3 and by 2030 there will be less than two. See Michael Tanner, The Other Trust Fund Report. www.socialsecurity.org.
Timothy J. Penny, Please, Not Another Payroll Tax Hike, www.socialsecurity.org.
About 86.5% of the money collected is paid out in benefits. The remaining 13.5% is lent to the Federal government to meet operating expenses. So there really is no trust fund. Michae! Tanner, Social Security Privatization and Economic Growth, www.socialsecurity.org.
Charles E. Rounds, Jr., Property Rights: The Hidden Issue of Social Security reform, SSP No. 19, Cato Institute, April 19, 2000, www.socialsecurity.org.
Michael Tanner, No Second Best: Tine Unappetizing Alternatives to Social Security Privatization, SSP No. 24, The Cato Institute, January 29, 2002. [www.socialsecurity.org].
William G. Shiprnan, Retirement Finance Reform Issues Facing the European Union, SSP. No. 28, January 2, 2003, The Cato Institute [www.socialsecurity.org].
Peter J. Ferrara, Social Security Is Still a Hopelessly Bad Deal for Today’s Workers, SSP No. 18, The Cato Institute, November 29, 1999. www.socialsecurity.org.
Andrew Biggs, Personal Accounts in a Down Market: How Recent Stock Market Declines Affect the Social Security Reform Debate, Briefing Paper No. 74, Cato Institute, September 20, 2002. [www.socialsecurity.org].
www.socialsecurity.org.
Michael Tanner, Social Security Privatization and Economic Growth, [www.socialsecurity.org.] Edward H. Crane, The Case for Privatizing America’s Social Security System, address to S.O.S. Retraite Santé, Paris, France, December 10, 1997, www.socialsecurity.org.
[www.socialsecurity.org]. For some books on the topic, see Peter J. Ferrara and Michael D. Tanner, Common Cents, Common Dreams: A Layman’s Guide to Social Security Privatization, Washington, DC: Cato Institute, 1998; Peter J. Ferrara and Michael D. Tanner, A New Deal for Social Security, Washington, DC: Cato Institute, 1998; Peter J. Ferrara, editor, Social Security: Prospects for Real Reform, Washington, DC: Cato Institute, 1985; Peter J. Ferrara, Social Security: The Inherent Contradiction, Washington, DC: Cato Institute, 1980; World Bank, Averting the Old Age Crisis,: Policies to Protect the Old and Promote Growth, New York: Oxford University Press, 1994; Henry J. Aaron, Barry P. Bosworth and Gary Burtless, Can America Afford to Grow Old? Paying for Social Security, Washington, DC: The Brookings Institution, 1989; Charles P. Blahous, III, Reforming Social Security, Westport, CT: Praeger, 2000; Dorcas R. Hardy and C. Colburn Hardy, Socia! Insecurity: The Crisis in America’s Social Security System and How to Plan Now for Your Own Financial Survival, New York: Viilard Books (Random House), J991; Martha Derthick, Agency under Stress: The Social Security Administration in American Government, Washington, DC: Brookings Institution, 1990. For some early articles on Socia! Security that have stood the test of time, see the Cato Journal 3(2) (1983), especially the articles by Buchanan; Weaver; Roberts; Robertson; Pellechio and Goodfellow; DiLorenzo; McKenzie; Ranson; Garrison; Türe; Butler and Germanis; Goodman; Wagner; Ferrara.
According to one estimate, a worker who is 25 stands to get between three and six times greater benefits under a private system than under Social Security. Michael Tanner, The Other Trust Fund Report, http://www.socialsecurity.org/articles/art-tanner4.html.
Michael Tanner, Social Security Privatization and Economic Growth, http//www.socialsecurity.org/articles/art-tannerl.html.
Jagadeesh Gokhale, The Impact of Social Security Reform on Low-Income Workers, SSP No. 23, Cato Institute, December 6, 2001. [www.socialsecurity.org]; Michael Tanner, Privatizing Social Security: A Big Boost for the Poor, SSP No. 4, The Cato Institute, July 26, 1996. www.socialsecurity.org.
Ekaterina Shirley and Peter Spiegler, The Benefits of Social Security Privatization for Women, SSP No. 12, The Cato Institute, July 20, 1998. www.socialsecurity.org.
José Piñe ra, Empowering Workers: The Privatization of Social Security in Chile, International Center for Pension Reform [www.pmsionreform.org].
L. Jacobo Rodriguez, Chile’s Private Pension System at 18: Its Current State and Future Challenges, SSP No. 17, The Cato Institute, July 30, 1999. www.socialsecurity.org.
See José Piñera, In Chile, They Went Private 16 Years Ago, http://www.socialsecurity.org/articles/art-19.html.
Peter Ferrara, Destiny of Freedom for Social Security? http://www.socialsecurity.org/articles/art-11.html.
Krzysztof M. Ostaszewski, Privatizing the Social Security Trust Fund? Don’t Let the Government Invest, SSP No. 6, The Cato Institute, January 14, 1997. www.sociatsecurity.org.
See Michael Tanner, Tom Daschle’s Very Bad Idea, http://www.socialsecurity.org/articles/art-tanner3.html.
Daniel Shapiro, The Moral Case for Social Security Privatization, SSP No. 14, The Cato Institute, October 29, 1998. www.socialsecurity.org.
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McGee, R.W. (2004). Social Security: Reform, Privatize or Abolish?. In: The Philosophy of Taxation and Public Finance. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-9140-9_17
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