Choice Shtick

This article is reprinted from The American Prospect.

Once upon a time, there were weapons of mass destruction in Iraq, and we were invading in order to destroy them. Then they turned out not to exist. Fortunately enough, it turned out that George W. Bush was only pretending to think the weapons of mass destruction were the reason to invade. Really it was all about the freedom from the beginning. You just didn't notice. Similarly, as the president's case that Social Security is in crisis continues to crumble, conservatives are busy ginning up new reasons to phase the program out and replace it with a system of mandatory investments in private stock funds.

As George Will put it on Jan. 20 in The Washington Post, the really important reasons for destroying the most successful program in American history are "philosophic." It's all about choice. All about freedom. Similar arguments have issued forth recently from the pens of Andrew Sullivan, Jonathan Rauch and David Brooks. My friend Will Wilkinson, recently a graduate student in philosophy and now a policy analyst at the Cato Institute, ground zero for privatization, recently recommended Daniel Shapiro's old Cato paper "The Moral Case for Social Security Privatization," which argues that privitizing social security is all about "maximizing individual choice and liberty." As Will put it in a recent Newsweek column, think of today's kids who own "iPods, in which they can store as many as 10,000 songs of their choosing, which they can hear whenever they choose. Then try to explain to them why they should not be allowed to put a portion of their Social Security taxes in tax-personal [sic] retirement accounts."

Well, I've only got an iPod Mini, which only stores about 1,000 songs, according to Apple's estimates. In fact, though, I've got a considerable number of very short songs by bands like NOFX and the Ramones, which take up less disc space, letting me put more than 1,000 on. And this, of course, is part of the beauty of choice. Me, I love "Judy is a Punk," so there it is on my iPod. My dad, not so much. He likes a lot of Rolling Stones songs I consider overwrought. And thanks to the magic of choice, he gets to put the songs he likes on his iPod, while I listen to the songs I like. Choice, you see, is a good thing.

The important thing to keep in mind, however, is that Social Security privatization isn't like that at all. Cato's privatization maestro, Michael Tanner, has his problems, but he isn't given to rhetorical flights of fancy. His plan, as described on the Cato web site, would eliminate half of Social Security's revenue stream, requiring massive cuts in guaranteed benefits. In exchange, you would be forced to save 6.2 percent of your wages for your retirement in an individual account. "Allowable investment options for the individual accounts," Tanner writes, "will be based on a 3-tier system: a centralized, pooled collection and holding point; a limited series of investment options with a lifecycle fund as a default mechanism; and a wider range of investment options for individuals who accumulate a minimum level in their accounts."

Not really as much fun as an iPod. Meanwhile, "At retirement, individuals will be given an option of purchasing a family annuity or taking a programmed withdrawal."

Under the current system, 6.2 percent of my paycheck vanishes each pay cycle and goes to the government; when I retire, I'll get a fixed sum of money every month from the government. Under Tanner's plan, 6.2 percent of my paycheck vanishes each pay cycle and will go to a private investment manager; when I retire, I'll get a fixed sum of money every month, either from the investment manager or from the insurance company I buy my annuity from. The difference – Will's grand triumph for the cause of human freedom – is that I get to pick which private investment managers handles the money during the interim.