I was reading a bit about Social Security and I came across this quote from a Supreme Court case (Steward Machine Company v. Davis: 1937) that affirmed the act:

“[It] is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare”.

The problem with Social Security is that it was created right out of the Depression, as a way to help people should times become that bad again in the future. Roosevelt thought he was helping the general welfare for all those in the future. In this way, it’s the same as how we fought World War II– afraid of World War I. The US without Social Security (as it is now) would be much better, because today Social Security is the main cost causing what those who created it were afraid of…a US recession 2nd to the Great Depression. During the 1930s, people didn’t realize that average life spans would get longer and that baby boomers would cause less people to pay for this program than people who need it. And it’s not as if the system is working as it was supposed to. Money isn’t being kept in a lockbox where it can be grown for those who paid the tax in the first place, it is being funneled directly into the government’s tax system. There was less foresight and more hindsight in the act’s drafting.

Social Security should have been privatized from the start. I think during the Depression, people definitely didn’t trust Wall Street or the stock market and that’s a big reason things were set up as a trust. The government was looking for a way to avoid people being ruined by another crash. I don’t think the model of a 401k or IRA system existed at that time because people didn’t want it to exist–they didn’t think it was safe. I understand that the government was trying to show an active role in ending the Depression and preventing a future one, but private Social Security not only would be more effective and less costly, but also would be more in keeping with our capitalistic ideals. I understand that poorer Americans benefit more from the public entitlement program, but they’d probably benefit more from communism as well, and it’s not like we’re going to adopt that.

Obviously that is not an option now, but I do think we should slowly try to privatize Social Security. It wouldn’t be easy, but we should start by telling high income Americans (sorry, folks!) that they are no longer eligible to receive the entitlement. Then it must be phased out. It’s not popular, but people should seriously plan for the future themselves in any case. Things that are unexpected are different, such as medical issues or temporary unemployment. If you know you’re going to age and retire though, shouldn’t you be required to prepare for that?