Independent Women Throw Their Hands Up
October 17th 04:20:57 PM
The Independent Women's Forum has a great article from Carrie Lukas about the reasons that women should support Social Security reform. "Every day without Social Security reform is a missed opportunity for real savings," Lukas writes. The article then goes on to discuss how policymakers can fix Social Security.
One excellent point in the article is that the initial investment in personal accounts is worth making. Critics call this the "transition cost," but this is misleading. If we don't make a transition to personal accounts, the cost of the status quo is much greater. The huge costs that would result from doing nothing are why Social Security reform is, as Lukas writes, "one of the most pressing problems facing our country."
Posted by Ryan Lynch
Comments
This is absolutely right, and is a point that deserves to be better recognized. All Americans are adversely affected by the failure to fix Social Security, but proportionally, women suffer even greater adverse impact because they are more reliant on the program due to their longer lives and lower non-Social-Security retirement income.
One particularly problematic aspect of Soc Security is the terrible returns that it offers on work by women. This mostly reflects its 1935 design when it was assumed that men would work outside the home and women would not be in paid employment. As a result, the system pays lower returns to single women and to two-earner couples than to high-income couples with a non-working spouse (see http://www.ssa.gov/OACT/NOTES/ran5/index.html, and go to Table 3.) In other words, the system that is often thought of as progressive is actually regressive in many places, taking money away from women who work.
One basic problem is that no government-designed, one-size-fits-all benefit formula can anticipate every change in American workforce and household structure. This is one reason why personal accounts are important; they don't care what kind of household you are in, or whether you meet a particular eligibility requirement. Such an account belongs to you no matter what your household circumstance.
Sebastian Mallaby recently wrote in the Washington Post that anyone who really cares about women and minorities should be "clamoring to fix Social Security." http://www.washingtonpost.com/wp-dyn/content/article/2006/10/01/AR2006100100872.html
Posted by Feverishb on October 20th 08:03:54 AM
The problem with personal accounts is their is too much dependency on the stock market. Private accounts.
For the market to go up, there has to be higher prices, layoffs or more customers. Many people have been priced out of buying because of the cost of necessities like gas, health care and housing.
For the market to go up enough to support everyone who will retire prices would be so high that no one could afford to buy. So what if you make a million in the market if prices go up two million?
If globalization really works, market prices will go down, not up.
The market cannot go up forever, now can it?
Social Security works.
Posted by Jo on October 26th 08:41:52 PM
Excuse me. Their should be there. Knew better.
Posted by Anonymous on October 26th 08:43:35 PM
Jo, I think you are missing part of the underlying concepts of the stock market.
You are correct that the market goes up in response to higher profits, more customers (which is really another way of saying higher profits), or layoffs (which is yet another way to say more profits).
However, higher profits can also be accomplished through greater efficiency and productivity. When one person can make 10% more than they did last year, due to technology or something else, then company profits should go up because that employee can do more.
Putting more money into the market would just make more money available for investment, which increases productivity...which makes more money available for investment, which increases productivity...and so on.
See Mankiw's intro to Econ book for more info on this idea.
Posted by Jeremy on October 27th 05:18:17 PM
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