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Nobel Laureate Favors Social Security Reform.

Gary Becker, Nobel laureate in economics, University of Chicago professor, senior fellow at Stanford's Hoover Institution, makes "A Political Case for Social Security Reform," explaining that personal accounts "would protect retirees from the government interference."

"Republicans and Democrats are arguing passionately about the future of Social Security, and the argument, at its core, is about privatization. It is true, as some critics observe, that there is no magical gain in privatizing Social Security, since all systems have to provide incomes for retired persons. By that token, however, there's no gain in privatizing a government steel plant either, since steel still has to be produced, too. Yet there are very good reasons--with roots in political economy--to privatize steel. And as with steel (and the like), there are excellent reasons for a privatized individual-account Social Security system."

Becker, arguing that "privatization helps to separate saving for retirement from interest-group politics, from taxation, and from government spending," believes the philosophical/political case for reform is far more persuasive than the pragmatic/economic case:

"So the really strong arguments for privatization are that they reduce the role of government in determining retirement ages and incomes, and improve government accounting of revenues and spending obligations. All the other issues are really diversions, because neither advocates nor opponents of privatizing Social Security generally answer the most meaningful question: Is there as strong a political economy case for eliminating government management of the retirement industry as there is for eliminating its management of most other industries?

My answer is 'yes.'"

Posted by Will Franklin · 21 February 2005 01:17 PM

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