Prometheus 6

The roundtable discussion on ThisWeek is one of my favorite chunks of Sunday morning agitprop.

After George Will (who, if he ever retires from punditry, has a great second career as a sit-down comic open to him) explains quite concisely how airlines will see bankruptcy as a competitive tactic and how that will spread through the economy like ebola:

CR: This is a fundamental contract that's been breached. And these are people who have taken reduction after reduction to try to save the airline, and they've negotiated for pensions versus pay,and now they're finding out they're not getting their pensions. I think the anger is obviously well justified, and you're going to see that across the corporate spectrum as well.

GW: I dissent. (colleagues chuckle) I believe this strengthens the case for the President's plan for Social Security reform. (colleagues chuckle)

GS: You're going to have to explain that, George.

GW: I should be glad to do so. It strengthens it because this shows that risk is a factor of life no matter what system you have, and the question is which would be riskier. This was supposed to be the most secure thing in the world, a great corporation's pension plan. It's not secured.

We've already decided Social Security will be changed, we've decided the solvency is the standard by which we will judge suggested solutions. This still leaves a lot of options. Using a corporation as an example, it is possible to keep your books balanced while selling off the place piece at a time...it is, in fact, the entire investment strategy of a number of institutional investors.

Let's assume it is not the intention to actually eliminate the social safety net. If not, additional sane requirements are needed...openly stating the nature of the system we want to construct will eliminate some methods of achieving solvency as abhorrent to our intent. I think minimizing risk to the ability to provide benefits is a better requirement than maximizing the possible return to individuals because it's more in keeping with the goal of providing a social (not individual) safety (not wealth generation) net.

Another method of minimizing risk to the citizenry would be to allow the Social Security fund itself to invest in the equities market. Long term the equities market has excellent returns, but such projections "smooth out" the bumps and dips that can happen at when any individual retires. The collective entity "Social Security Trust Fund" has a much greater ability to ride out those shifts as well as to absorb expenses...the medical insurance industry shows how profitable aggregating risk can be.

But yeah, this discussion was inevitable. All the words and rules and laws are based on a snapshot of a rather fluid reality. Sooner or later the reality just...moves away from the area beneath the network of rules and expectations we live in.