Savings & Pensions

CATO Institute - Nobel Lies, Liberal Purposes, and Personal Retirement Accounts

Opponents of President Bush’s proposal to make individually owned personal retirement accounts a part of the Social Security program routinely charge that it is motivated by ideological animosity toward the values Social Security is supposed to embody, such as equality and social cohesion. However, a frank look at the Social Security status quo reveals that the program is very poorly designed to realize liberal ideals. Social Security has a barely progressive overall structure, if it is progressive at all. The huge volume of transfers inherent in the system accomplishes very little income redistribution within generational cohorts. Furthermore, it works to the disadvantage of current workers, who will receive a smaller “return” on their payroll taxes than do current retirees. The terms of the imaginary “compact between the generations” are manifestly unfair.