Here Richard Posner argues against a free market and for mandatory savings and hence for Bush’s privatization program: “[I]t is plausible to model the individual as a succession of selves with different preferences. A young person may dislike the idea of growing old and may be inclined therefore to refuse to make provision for his old self. The old self—-the self that will not emerge and ‘take over’ the individual for many years-—has no control over the decisions of the young self. Compulsory retirement saving gives the old self a ‘voice’ in the decisions of the young self.”
Well, he is certainly right that getting the government involved in reconciling and harmonizing the inner contradictions of individual’s multiple personalities and moods over the course of a lifetime does seem contradict the idea of liberty.
Second–and this idea he says is consistent with libertarian thinking–he argues that mandatory savings prevents old people from free riding on their children. Both points need a response, but it strikes me as a good step to see the fog lifting debate shifted to where it really belongs: it is a good idea for the Bush administration to impose a new program of forced saving. This is Westley‘s take on it.
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Is Posner really suggesting that young people sacrifice fiscal freedom to a person who doesn’t even exist??
Philosophically, this plan is a nightmare: how on earth could one weigh the values of someone who exists and someone who doesn’t (and who therefore has no values, and who therefore has no proper stake in the younger version’s fiscal decisions)?
It’s bad enough when the government purports to be protecting us from our current selves (e.g., by banning drugs) — i.e., the selves that, necessarily, always make their preferences known through the very act of acting. But Posner’s theory crosses the line between bad idea and just plain silly.
Posner’s argument is ridiculous. He is arguing that when “selfs” are earning money as private citizens they are too imprudent to save for the future. But when “selfs” are elected to government, they will be prudent enough to force people to save for the future, rather than being selfish and merely advancing policies which will ensure their own re-election.
This is the heart of all socialist arguments, is it not? That private individuals and organizations are too stupid and greedy for their own good, but individuals acting collectively inside of a magic entity called “government” are somehow not just intelligent enough to ensure their own good, but to take care of everyone else as well.
The lack of savings has nothing to do with lack of individual prudence or intelligence, and everything to do with government destroying savings through inflation, then promising to make it up to them with welfare.
Posner forgets, conveniently it seems, that people are taxed a big chunk out of their incomes, leaving precious little to save in the first place. He advocates to part with even MORE money because people are not saving enough. Is he for real?
Will the US government tax the interest these forced investment funds receive? Because my government (Mexican) does this joyfully, even though I already payed income taxes for the same money from which they substract for my forced investment/retirement plan.
It seems to me that any assortment of people who profer a system to follow to ensure fewer or no regrets is pretty much religious. It is when such assortments become so convinced in their formula for regretlessness that they use force on others to adhere that value is destroyed.
Socialism IS a religion as it offers a heaven/hell scenario, a hell made up of regrets (and it’s relative heaven of fewer or no regrets), and assumes to place a universal system of value which will not change (i.e. the values one holds won’t change over time, and will be univerally held by all).
But any rational person sees that this is impossible and that values change constantly, seperate individuals merely live a rolling present. While we venture through, our values are constantly subject to change as new information is processed. But then again there are too many people who deem to think that they have managed to process more information than average, into Truth, and can force others to abide by their conclusions.
Associations should be maximally voluntary precisely because values change. What brought one to abide and conform to an association will likely change over time, and the association will certainly change. But those with a Universal Value System can’t seem to appreciate this reality. In fact severality of value is their biggest fear.
Food for thought on forced savings:
“Libertarian Paternalism” by Richard Thaler, a behavioral economist.
http://www.aei-brookings.org/admin/authorpdfs/page.php?id=260
Excerpt of article:
Consider two studies of savings behavior:
1. Hoping to increase savings by workers, several employers have adopted a
simple strategy. Instead of asking workers to elect to participate in a 401(k)
plan, workers will be assumed to want to participate in such a plan, and hence
they will be automatically enrolled unless they specifically choose otherwise.
This simple change in the default rule––from nonenrollment to enrollment––
has produced dramatic increases in enrollment.
2. Rather than changing the default rule, some employers have provided their
employees with a novel option: Allocate a portion of their future wage
increases to savings. Employees who choose this plan are free to opt out at
any time. A large number of employees have agreed to try the plan, and only a
few have opted out. The result has been to produce significant increases in
savings rates.
Libertarians embrace freedom of choice, and so they deplore paternalism.
Paternalists are thought to be deeply skeptical of freedom of choice and to deplore
libertarianism.
According to the conventional wisdom, libertarians cannot possibly
embrace paternalism. The idea of libertarian paternalism seems to be a contradiction in
terms.
Generalizing from the two studies just described, we intend to unsettle the
conventional wisdom here. We elaborate a form of paternalism, libertarian in spirit, that
should be acceptable to those who are firmly committed to freedom…
Obi, as long as the employee has the choice to opt out, then yes, it’s difficult to argue that it contradicts libertarianism. But it certainly changes the probabilities. Reminds of these credit card offers, “you get this offer for 60 days free, but then you can still cancel it and not owe anything.” In this case, it’s more of an opportunity cost factor–how difficult is it to cancel something once it’s started compared to how difficult it is to start it if it hadn’t been started in the first place? A phone call is easier than putting it in writing and mailing it in. So the probabilities can be tinkered with, making it either easier or more difficult.
Still, I’d be surprised if the government ever gives you the choice to “opt out”, even after the fact.
It is plausible to support Posner’s model of different selves. I have at least two: “Night Guy” has a lot of ideas about getting up early and working out, whereas “Morning Guy” is adamantly opposed and would prefer to control weight by foregoing supper, an event that falls within “Night Guy’s” bailiwick. “Night Guy” then punishes “Morning Guy” by staying up late. If only the state would step in and moderate the conflict between them.
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