Soft privatization

[John K. Taber]

Max Sawicky wrote:
> 
> > . . .
> > Social Security as it is structured now is a pooling of resources
> > to meet a risk, the risk being that you won't be able to earn a living
> > because of disability or age or death (this last case affecting
> > the family of the deceased). The second part is that it is
> > pay-as-you-go. I rather like this idea, and hope it is kept.
> 
> The vulnerable part of the program is not insurance against
> disability, which is generally not addressed in privatization
> plans, but the retirement piece.
> 
> Since everyone looks forward to retirement, the question
> becomes why have insurance rather than saving for persons
> who live long enough to retire?  One rationale is
> paternalism; people won't save enough or wisely and
> bug the rest of us when they are old and destitute.
> Another is 'poverty insurance.'  The benefit
> formula favors those with relatively low earnings
> over their lifetime.  Without these rationales,
> there isn't much reason to favor social insurance
> over private saving for retirement per se.

I hope we look more carefully at "everyone looks forward to
retirement." It's true, but it's a surface truth, due I think
to our unwillingness to accept age as it is. Also, the joys of
retirement are suggested and reinforced by all sorts of ads. 
As most of us actually reach retirement, we undergo a wrenching
change in life when our age makes it harder to deal with.

Retirement is a modern event, the result of capitalism I have
read.

Still, it's not an event that I have much choice about. While the
retirement age is being raised, many of us are being downsized
into retirement in our 50s. 

I read SSA's Trends in Retirement and Savings Report with a lot
of interest.


> >
> > Because demographics would mean that pay-as-you-go would be
> > burdensome, it is partially pre-funded since 1983. The pre-funding
> > is a sort of cushion to tide us over the baby-boom hump. .  .  .
> 
> The pre-funding is only for a year, nowhere near enough
> to meet anything but short-term contingencies.  This was
> deliberate, since the program is designed as pay as you go.
> The Greenspan commission's mandate was to fund the program
> as presently structured, by maintaining 75-year balance,
> not to transition to paygo.

Thanks. Your correction of my misimpression is cheerfully
accepted. 

Question on the -.58 imbalance. First, did I read the Greenspan
report right, and Social Security *was* left with an imbalance?
Second, was that within the mandate of plus or minus 5 percent
of actuarial balance?