Noble Lies, Liberal Purposes, and Personal Retirement Accounts

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Opponents of President Bush’s proposal tomake individually owned personal retirementaccounts a part of the Social Security programroutinely charge that it is motivated by ideologicalanimosity toward the values Social Security issupposed to embody, such as equality and socialcohesion. However, a frank look at the SocialSecurity status quo reveals that the program isvery poorly designed to realize liberal ideals.Social Security has a barely progressive overallstructure, if it is progressive at all. The huge volumeof transfers inherent in the system accomplishesvery little income redistribution withingenerational cohorts. Furthermore, it works tothe disadvantage of current workers, who willreceive a smaller “return” on their payroll taxesthan do current retirees. The terms of the imaginary“compact between the generations” aremanifestly unfair.

What is worse is that the Social Security statusquo embodies a government‐​perpetuateddeception designed to generate its own politicalsupport by misleading voters into believing thattheir payroll taxes entitle them to later benefits.The architects of Social Security created astructure and accompanying rhetoric that werespecifically intended to encourage the falsebelief that the system provides a kind of insurance,similar to private insurance based in contractand property, and therefore involves abinding entitlement to benefits.

However, there is no justification for thisdeception on contemporary liberal grounds.The persistent intentional misrepresentation — the “noble lie” — embedded in the structure andlanguage of the Social Security system is in factantithetical to the ideals of transparent government,open democratic deliberation, and equalityamong citizens — ideals at the core of contemporaryliberal thought.

A system of personal retirement accounts plusa means‐​tested safety net would serve the “socialinsurance” function better than the SocialSecurity status quo according to liberal standards.Contrary to critics of reform, personalretirement accounts would materially enhanceequality and social cohesion by more fully integratingworkers into the market, providing everyonewith a stake in its growth, closing the gapbetween the investing and noninvesting classes,and making more salient the mutuality of interestsin a market society.

Download the Social Security Choice Paper

ssp34.pdf

Will Wilkinson

Will Wilkinson is a policy analyst at the Cato Institute.