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Social Security "duel" participants end up on same side
July 06th 09:54:19 AM
I just recently came across a Social Security "duel" on The Motley Fool. While appearing to be an interesting concept, it seems that the Fool had trouble finding columnists with strong feelings on the issue.
The format is this: A Social Security "Bear" op-ed, followed by a "Bull" op-ed. Then, each side is allowed a rebuttal.
Let's dive into the meat of their arguments.
First, the Social Security "Bear" claims that Social Security is unsustainable, citing increased life expectancy and demographics. He ends with this:
Regardless of what happens with Social Security, Fools would be best prepared to conclude that it will fail, and that they will instead need to go it alone in planning their retirement. There's still no guarantee of the outcome, but it's better to do all you can to ensure you're safer, rather than sorry. Changes will have to be made to the Social Security system to ensure that those caught without a retirement safety net won't fall too far from home.
While I certainly don't disagree completely with his conclusion, I think he understates the problems with the current system by a large degree.
He fails to mention that the current system is bad for minorities and bad for women, and a failure to address the problems could either cause the elderly poverty rate to skyrocket or necessitate crushing tax rates. He further fails to discuss the inefficiency and low rate of return of the current system, the fact that the "surplus" is being spent on other government programs, or the inherent political risks of keeping Social Security as a transfer payment program.
He could have made a better effort.
Next, the Social Security "bull" is supposed to argue the good side of the current system, but it seems as if he just can't think of many things to praise.
He talks about people being irresponsible and not saving for retirement and how the current system makes them save. However, this is not necessarily an argument in favor of the current system, just in some type of required savings program.
Furthermore, the second half of his essay falls under the heading of "The system's not perfect". His whole argument boils down to "The current system is bad, but at least it's better than nothing". Who can argue with such a noncommittal statement?
His parting quote sums it up:
We can debate the structure of the program, but it's hard to argue that the program hasn't benefited millions of Americans.
So what we gain from this "duel" seems to be...
- The "pro" side concedes that the structure of the program is less than optimal, that we face real problems in fulfilling promised benefits, but that we should be happy with a -50% return on our investment.
- The "con" side argues that the current system has demographic problems that makes it unsustainable in the long term and advises people to assume that it won't be there at all
It seems to me that our bull and bear are both on the same side: in favor of reform.
You can read the rebuttals here:
Bear Rebuttal
Bull Rebuttal
Posted by Jeremy Tunnell
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