The Social Security Guarantee

DEMOCRATS LIKE to characterize individual Social Security accounts as a “risky scheme.” Social Security, they assert, is guaranteed, while you could lose all your money in an account at Fidelity.

Hold on a minute, writes Jagadeesh Gokhale. What do you mean “guaranteed?”

Life holds no certainties. But to provide a relatively strong benefit "guarantee," Congress would have to pass a law requiring a super majority vote to alter the current benefit formula.
...
In reality, there is no strong Social Security guarantee and future electorates are unlikely to acquiesce to exclusively revenue-side adjustments. Potential future benefit adjustments should not be ignored, but talk of "guaranteed" benefits misleads people into believing their retirements are more secure than is really the case -- a misperception that negatively affects how much they personally save for the future.

The Social Security “guarantee” is really nothing more than the power of Social Security recipients to use the political system to extract resources from other Americans. But in an economic crisis the political system is quite likely to tell the elderly to go fly a kite. It’s happened before.

In fact it is Social Security that is the “risky scheme.” First of all, it discourages savings, which reduces the resources available to pay for pensions. And on a larger scale it also reduces fertility.

[E]conomists and social scientists have begun to suggest that the long-term fertility decline in developed economies may also be the effect of generous pension and health insurance programs. A recent study shows that a significant portion of fertility declines among developed economies during the 20th century can "be explained" by the generosity of retiree pension and health benefits.

The best system is for ordinary people to save for their own retirements and stop working when they can afford it. Once the government steps in and sets an arbitrary level retirement benefits it introduces a systemic risk that endangers everyone’s well-being.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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Ludwig von Mises, Human Action

Chappies

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Dorothy L. Sayers, Strong Poison

China and Christianity

At first, we thought [the power of the West] was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity.
David Aikman, Jesus in Beijing

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[In the] higher Christian churches… they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

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“Civil Society”—a complex welter of intermediate institutions, including businesses, voluntary associations, educational institutions, clubs, unions, media, charities, and churches—builds, in turn, on the family, the primary instrument by which people are socialized into their culture and given the skills that allow them to live in broader society and through which the values and knowledge of that society are transmitted across the generations.
Francis Fukuyama, Trust

Class War

In England there were always two sharply opposed middle classes, the academic middle class and the commercial middle class. In the nineteenth century, the academic middle class won the battle for power and status... Then came the triumph of Margaret Thatcher... The academics lost their power and prestige and... have been gloomy ever since.
Freeman Dyson, “The Scientist as Rebel”

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Danny Kruger, On Fraternity

Conservatism's Holy Grail

What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph

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James M. Ault, Jr., Spirit and Flesh

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