I Goofed

by Don Boudreaux on January 6, 2005

in Myths and Fallacies

I goofed.

In my post yesterday on Barry Schwartz’s New York Times op-ed – the one in which he opposes Social Security privatization – I interpreted him in a way that is not only ungenerous but mistaken.

Schwartz argued that the worst reason given for privatizing Social Security is the claim that the money belongs to the people who pay it into the system. I took him to be asserting that if Congress decides to extract $X in taxes from you, then that $X is not your money – even before it’s paid in taxes, it’s not your money.

I was too quick; my knee jerked and I didn’t control it.

As several e-mail correspondents point out – especially Washington University’s John Nye, and Larry White over at Division of Labor – the full context of the paragraph that I quoted suggests that Schwartz meant to disabuse people of the (genuinely mistaken) notion that funds paid into Social Security REMAIN their funds in the same way that, say, funds paid into your 401(k) plan remain your funds.

Because no worker is vested in Social Security, Schwartz is correct that, once paid, these monies are indeed no longer the property of those who paid them.

I still disagree – strongly – with Schwartz’s conclusion about Social Security. I still think it’s a lousy deal and a lousy (and unethical) system. I still think it should be totally abandoned. But my apologies for reading him carelessly.

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