“A safety net of a guaranteed minimum retirement income would also be available, funded by general tax revenues.”

An argument was never so gracefully conceded: that (a duaranteed minimum retirement income) is what Social Security is for! Period! The “social cohesion” gobbledygook is just bureaucratic flourish.

WIll (or, “Scholars at Cato” ) wants to retain the entitlement at the heart of Social Security, while just taking away the special name for the tax that pays for it. Maybe he doesn't want to, but that's what he's proposing! Joe: you're still going to be paying social security taxes, dude, they'll just be quieter!

This proposal is flat-out unremarkable — it doesn't change the basic functioning of Social Security. I'm for (fairly generous) means testing in Soc. Sec. (anyone serious about S.S. is). I'm for retirement accounts — I mean Jesus, they already exist!

What Will proposes is basically just that we stop paying Soacial Security to people who don't need it and help people save during their working years. That is NOT what Joe the Plumber had in mind.

That's it. Certainly not an uncommon sentiment. But he has the “right idea”? What idea is that? He doesn't say what he wants to do, only that he wants to keep his money. Well, here's a shock: so would everyone else if we were in a utopia. Unfortunately, there are poor old people. We as a society decided to help them out 75 years ago, and to do that we've taken money out of every breathing worker's paycheck since then. To make that work politically, we decided to give the benefit to people who don't need it as well, and sort of suggested there was some type of account you were paying into for yourself your whole life. That was dumb. Fundamentally were helping out poor old people here — we should have no illusions about it. If Joe or Will are against that, they should stand up and say it: “I want to invest my own money — screw the old poor people.” Because personal retirement accounts or forced savings are not going to make the old poor people go away. They'll still be around, they'll still have very little income from which to save, and anyway, what does a personal retirement account do for you if it's empty, and you're poor and old already? Perhaps if Roosevelt had gone the forced savings route, there would be no old poor people today. I kind of doubt that. But maybe. Thing is, he didn't, and there ARE old poor people today. They're rather used to getting their checks. I'm all for any kind of government-sponsored retirement accounts for young folks today to help them be better off when they're old so they (we) aren't so dependent on their Social Security checks. And if that's all Will's article calls for — a phase-out of some kind to privatization, then it's probably a very fine article and it comes down to what your preference is for how things should work. But it bothers me that Will credits The Plumber with such nuance. It's not there. Joe wants to take care of his parents only, and keep his Social Security payments. And he means, like, now. So Joe either doesn't get that his payments are not for him in the future, but for current old poor people without their own Joes the Plumber (or whose Joes are not in a position to buy their 250-280K business — oh, wait….), doesn't know that such old poor people currently exist, doesn't really care what happens to old poor people without their own kin to look after them, or thinks they'll get looked after some way or other.

I'll have to read the article, but I don't think Will believes any of therese things. I assume his proposals are very sensible, as I said. So I wish Will would not sink to cheaply promoting his (I trust) very sensible ideas by attaching them to the latest campaign sensation, when HIS ideas are so reflexive and uninformed.

The idea that everyone is going to have 100% of their assets in a mutual fund at age 64 is absurd. Anyone who does that deserves to take a huge hit if the market happens to tank at retirement time–they would have reaped huge gains during the boom times, remember. But if we're really worried about rubes losing their shirt in the market, have the government recommend some default asset allocations for certain age groups (the older you get, the less stocks you should hold and vice versa). Make it clear that this is only a recommendation, not a guarantee. Maybe we even hire some finance experts/professors to print up a brochure that explains risk/reward and other investing concepts to novices. Anyway, when you are playing with your own money, you have a lot of incentive to learn some elementary finance. Finally, there is always the option to purchase an annuity if risk is that scary for you.

Given the return on most people's money that SS currently gives (essentially zero), almost any private investment plan, held for some 30 or 40 years, would leave people better off, even if their investments tanked right when they retired (which again, would be unlikely if one invested rationally and had most of their assets in low-risk investments at retirement time).

Social Security exists to assist those who are too feckless to plan their own retirement effectively. We don't really care about the retirement of people who can manage money, they'll be fine. We have Social Security to keep our lottery-ticket-buying, slightly-senile, Ponzi-scheme-credulous gampers from having to eat cat food as a result of their poor, age-addled decision-making.

Now, if we can find a better way to do that, sign me up, but I don't see how assuring Granny that everything will be fine as long as she remembers basic portfolio theory is going to work.

I tentatively predict that you would see a much larger number of businesses fall into the “too big to fail” category. Riding to the rescue of voters' bubble-generated wealth will be politically irresistible.

If we decide to restrict private account investment to low-risk instruments, how do we decide what's low-risk? Once upon a time, some tranches of CDOs were considered low-risk. Are there regulatory-capture issues related to deciding what instruments will gain access to the new market?

Do private accounts imply that we should expand FDIC coverage?

The way Social Security works, the payroll taxes of today's workers fund the pension of yesterday's workers (mumble about the Trust Fund here). If you're going to move to a system of compulsory savings along the lines of the Australian system, you have to explain how you're going to fund the retirements of people more than half way through their working lives, so you need to explain where else you're going to raise taxes to tide you over until today's workers reach retirement and can claim their reward.

If you are prepared to support a plan that a) introduces compulsory savings while b) reducing payroll taxes at some (slow) rate that's a function of demography, then I think you're gonna find a lot of support among the reality based community. But saying you will go with a) and get rid of the payroll tax completely and immediately while holding benefits the way they are makes no sense at all.