Deinonychus antirrhopus

A confusing example, for a nearly content-free assertion.

Yes, work conditions that are different may make for differing assessments of a worker's 'welfare' broadly defined, even if the monetary factors are equivalent.

What, however, does this appeal to unspecified non-monetary 'welfare' assessment components have to do with a fairly straight-forward comparison of the (strictly) monetary comparison of some continuation of the status quo system (augmented by additional taxes now or in a phased-in increase over time), vs. some version of a changed system which includes, presumably, privatized accounts to some degree?

It sounds like hand-waving, of an entirely content-free sort. You say MAYBE some other ancillary factors, aside from expected monetary returns (discounted to net present values), make a form of partial-privatization score higher on (overall) measures of 'welfare'? Well, um.... ok, so far as that goes.

But what are those factors, and more, what is the argument that they will be so more enhanced via the privatization agenda that it would be better in an assessment of overall welfare? Could you possibly be more vague?

Actually, the one other factor I can see at work, beyond the issue of the comparative present value of taxation net benefits receipt, is the relative certainty of the expectation. Often, and particularly in the case of persons close to retirement age, preservation of capital becomes more important than aggressively seeking better possible returns with more risk.

And this is where you've misstated the effect of shoring up SS's longer term finances but in its present form and baseline track of benefits increase. It does NOT simply yield the status quo ante, and therefore, represent no net increase in overall societal welfare. To the contrary, it would assure the population of the fact, now widely disbelieved, that the system would be there for younger workers who are now decades away from eligibility for retirement benefits.

Are you pretending to be ignorant deliberately or are you genuinely confused Sofla. A person's welfare depends on income, but is not defined by income. The more income I have the better I can live, and thus the higher my own level of welfare, everything else held constant. Hence ensuring a stream on income that wont recieve for years is constant, but at the same time lowers my current income makes me worse off.

Think of it this way. There are two time periods: period 1 and period 2. In period 1 I work, in 2 I'm retired. Right now, not changing any policies my income is W1,1 (first period income) and W1,2 (second period income). My welfare is

U(W1,1) + bU(W1,2)

Where b is less than 1 and greater than 0. Now, if we raise current taxes to ensure W1,2 then my discounted stream of utility is

U(W2,1) + bU(W1,2),

where W2,1 = (1 - t)*W1,1. Clearly in this case my overall welfare has decined.

Q.E.D.

Or in other words, while the money is important it isn't just the meny I'm going to get in 30 years or so, but the entire stream of income that I'm going to recieve. If the income stream in decreased in the early years to provide a fixed income stream in later years, then clearly I've suffered a loss in welfare.

To the contrary, it would assure the population of the fact, now widely disbelieved, that the system would be there for younger workers who are now decades away from eligibility for retirement benefits.

Bwahahahaha. Talk about hand-waving. Leave the economics to those who understand it Sofla.

The thing I don't like about raising taxes and otherwise leaving it alone is that we still end up with a pyramid scheme. Ie, we don't fix the underlying problem that each succeeding generation gets less out of Social Security than the generation before.

Sofla,

What do you mean by the system will "be there" for younger workers? Benefit reductions are in the cards - likely through inflation or other devious means. I can't so casually dismiss the fact that the new generation of workers would probably be better off not paying Social Security taxes! When you have such a vast conflict between what's good for a group of people and what's actually being done, there's going to come a day of reckoning.

Steve -- I think what you are trying to say can be most simply illustrated by a "rate of return" approach. Lowering benefits or raising taxes may make the system solvent, but clearly does not help people who suffer through those regimes. Lowering benefits gives me more income today, but less income tomorrow. And the relationship between today and tomorrow is "actuarially fair".

Raising taxes likewise doesn't help me, since I'll pay taxes today for the already-promised benefits tomorrow.

There are at least four separate issues with social security that, IMO, need to be addressed. 1) Solvency, 2) rate-of-return issues like this, 3) cash-flow problems, 4) effect on aggregate saving.

The Left, to the extent that they allow for any problems, seems fixated on issue #1, which is the easiest one to solve and, in reality, the least of our problems. Dang, I should be blogging instead of putting everything in your comments thread. ;)

No kidding, once you blog it, send me an e-mail so I can link!