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The Red Herring That Wasn't: Social Security.

Donald Luskin has this humorous, predictable example of elite media malfunction, on his blog (also posted at Social Security Choice):

New York Times front page headline this morning:

Down Market Casts a Pall on Social Security Plan

And from the Times' web site in the afternoon:

Stocks Rally on Fed Survey, Earnings

NEW YORK (Reuters) - U.S. stocks surged on Thursday, with the Dow gaining more than 200 points...

DOH!

The Cato Institute, back in September 2002, offered a more serious rebuttal to the "stocks are a risky scheme and therefore we should not reform Social Security" line:

The evidence shows that long-term market investment for Social Security, while hardly risk free, bears little resemblance to the "meltdown" scenarios painted by many account opponents. Opponents of personal accounts implicitly assume that workers with accounts would be short-term investors without any nonstock diversification. In the real world, the combination of asset diversification between stocks and bonds and time diversification over long time horizons reduces the risks that a short-term market drop could substantially affect workers' retirement incomes. Even in today's bear market, workers with personal accounts would retire with higher total retirement incomes than the current pay-as-you-go program is able to pay.

The short-term ups and downs of "Enron" and other stocks are a red herring, totally irrelevant to good-faith discussion of reform. Looking at the big picture, there is little doubt that personal investment accounts are safe, secure, and a much better deal for everyone.

Posted by Will Franklin · 21 April 2005 06:00 PM

Comments

Posted by: trippy at April 22, 2005 01:25 PM

Posted by: trippy at April 22, 2005 01:43 PM