Et tu, Barro?
A serious analysis with asking why we have Social Security. If we were not so used to it, we would find it odd for the government to collect money from young workers and give it to the old (mostly workers’ parents). One rationale is that the government should help people who lack discipline to save for old age. I have never embraced this paternalistic view.
What Barro is arguing is that we should get rid of Social Security as we now know it, rather than replacing part of it with private accounts. He would like to trim back Social Security by making it a program that offers only a minimum benefit that is the same for all, in order to prevent extreme poverty among the elderly; indexing the minimum benefit to prices rather than wages; and raising the retirement age. Thus, he supports all of the major methods of shrinking future benefits.
The Washington Post was excited to report this as a split among conservatives on the Social Security issue. In fact, I believe that conservatives are quite united in their belief that it is a fiendishly bad program (fiendishly bad because the pay-as-you-go structure is so difficult to unwind). There are tactical differences over how best to go about taming the monster.
For Discussion. What are the pros and cons of Barro’s (and Tyler Cowen’s) idea of trimming Social Security benefits to a fixed minimum benefit?