Purposeful Ramblings Through My Mind

I was linked in another forum to a roundtable discussion on God and Government. For American viewers, go here. For non-Americans, here it is. You'll need to watch one piece at a time. I watched only the roundtable discussion, so my comments are only for that.
( My response )

Fallacy: "If the government hadn't taken all those Canada Pension Plan payments over the last forty years (read: Social Security) and instead had left the money in the hands of the people who earned it, those people could have gotten three times the return on it over the course of their lifetimes, compared to what CPP will pay out to them. Ergo, the government does a poor job of investing and should get out of the business of retirement funding, because obviously, individuals could do it better."

Logic problem #1: Most people don't save as much as they should. The majority of people, faced with a tax break of some kind (or a tax that was never implemented to begin with) will not invest the money thus kept in their pockets. They'll spend it. What's more, most of them will not even realize they've spent it. If that payroll tax was 6%, it's estimated that 60% of people wouldn't increase their savings at all, 20-30% would increase their savings by a fraction of that amount, and perhaps ten percent would increase their saving by the same proportion as the tax break they were given. End result: 90% of the population would be less prepared for retirement than they needed to be.

Logic problem #2: If fifteen million working Canadians suddenly invested 6% more of their income in RRSPs, the rate of return would not be the same as it is now; it would likely be substantially lower. (I don't really understand how this works, but my brother-in-law with an economics degree says it's true. If anyone can elaborate on it, I'd be interested to figure it out.) Judging prospective earnings of the past forty years based on the earnings of the people who actually DID invest is a "what-if" exercise at best. My history profs always slammed me for writing "what-ifs" into my essays. I can only assume the same would be true of economics profs.

Logic problem #3: Just because some people abuse the system (for example, moving back to their country of origin for retirement, where they live rich off their CPP) doesn't mean it's a bad system. It means there are loopholes that perhaps could use some closing.

Sociology problem #1: Just because some, or perhaps even many, people are capable of doing for themselves something that the government is offering to help them do, doesn't mean the government is wasting its effort or its money by helping. It is reasonable, in our nearly-post-scarcity society, to ensure a minimal level of prosperity for all citizens. That's a fancy way of saying there is no excuse for allowing people to starve or live in squalor when the rest of us are (comparatively) rich. The Canada Pension Plan is not like pension plans through companies or private RRSPs. It's not an investment in your own future as much as it is a method of paying it forward through taxes. It's a fundamental element of the social safety net, and I am unwilling to risk finding out what our society would be like without it.

http://www.thornwalker.com/ditch/spartacus.htm

For those too lazy to click/read: basically, this guy wants people to opt out of receiving social security benefits, to refuse to take the payments that will/are being made to them by the government. He says it's a way of refusing to make the working pay for those who aren't working.

On the one hand, I can see the value in this. If people who don't need the money, don't take it, the system ends up having more resources for those who do need it, or more tax money for other things. I know many elderly people who could afford to do this. One of the things I dislike about socialism is that determining need is so hard. While I would like to help those who need it, and only those who need it, it's often really tough, not to mention expensive in bureaucratic terms, to figure out who needs it and who is lying to get it. (I believe there are a lot more of the former than the latter, mind you, and given a choice, I'd rather pay for a few cheaters than NOT pay for one person with a genuine need.) If people who didn't need it were to choose to opt out, it would make life simpler for those who believe that it's not unreasonable to ask the working to ensure that those not working can afford to eat and keep roofs over their heads.

On the other hand, I can see how such a movement would go in the long run. You get enough people opting out of any social system, and sooner or later there are enough people who can say, "We're all paying into this, but only X small number of people are using it. Let's stop paying for it." The mechanisms for that could be radical - cancel the program altogether - or more benign - give tax breaks to those who opt out, or rebate cheques on the amount they've paid in, or some other mechanism where the taxes that goes towards Social Security (or whatever it's called in your country) is partially or completely refunded to those not participating. Governments could get away with reducing the benefits, setting eligibility requirements, or other things to reduce the amount they're paying out. End result: the system stands the chance of being undercut far enough to force its collapse.

That's unacceptable to me.