The Real Truth About Social Security

"…poor judgment…poor policy…ill-founded policy…Poor policies…bad policy". Thus opines Edward C. Prescott on the character and lineage of Social Security. Of the conservative arguments for the privatization of Social Security, Paul Krugman recently wrote:

Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it.

As if in a direct rebuke of this attack, Mister (oh how WSJ loves that word) Prescott assures us all that he hasn't a politically motivated bone in his body:

Why a politician from any party would want to intentionally destroy a retirement program meant to benefit the elderly is beyond me. Such political claptrap makes me glad I'm an economist.

Did you catch the stink-eye? Paul Krugman, you see, is an economist too! -- Meeow! But to the point. Ed Prescott says that the Social Security in its current form is just plain dreadful and needs to be "rebuilt", primarily so that people can express their "rationality" by being liberated from – you guessed it - taxes!

Would […] changes in tax rates and changes in government promises affect labor supply? Theory says "yes," the statistical evidence agrees, and common sense concurs.

Perhaps insofar as everything "affect[s] labor supply". Yes, Virginia, things other than tax cuts can create jobs (a quick Google search turned up Physics, Renewable Energy, Less pollution, Outsourcing, Wal-Mart, Hire-'N-Fire, Gravity Research, Medical Privacy, Tourism, Civil Justice Reform, Immigration, and a disabled shoe repairman in South Africa). As for the theory he proposes, well…10 minutes before I read Mister Prescott's article, I came across this passage in a little unrelated reading:

…while the social sciences are truly science, when pursued descriptively and analytically, social theory is not yet true theory. The social sciences [which included economics] possess the same general traits as the natural sciences in the early, natural-history or mostly descriptive period of their historical development. From a rich data base they have ordered and classified social phenomena. They have discovered patterns of communal behavior and successfully traced interactions in history and cultural evolution. But they have not crafted a web of causal explanation that successfully cuts down through the levels of organization form society to mind and brain. Failing to probe this far, they lack what can be called a true scientific theory. Consequently, even though they often speak of "theory" and, moreover, address the same species and the same level of organization, they remain disunited.

I thought that was interesting. As for common sense, well…Albert Einstein said it best: "Common sense is the collection of prejudices acquired by age eighteen."

Why does everyone with an ideology always insist that they're not ideological?