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August 17, 2005
Social insurance
Kip asks:
For the life of me, I cannot understand why these people are so utterly terrified of voluntary partial privatization -- is it the "voluntary" or the "privatization" or both? - A Stitch in Haste Eminent Domain = Social Security?As one of “those people”, I’ll answer: both.
See, the bigger your pool, the better an insurance plan works. The odds of all of us needing it at once goes down the more of us there are. Making social security voluntary means people can pull out, thus diluting the strength of the system. Same thing with “private”-- even if we all had to have some insurance, private plans would split the pool into several smaller pools. Risk sharing doesn’t take place, and we all pay more. Voluntary private accounts would kill the system...
Posted by Andrew at August 17, 2005 09:23 PM
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