I wrote: >>Insurance programs are transfer programs. If I have a fire, the
fire insurance company pays me by transferring money from all the folks who pay
premia who don't have fires.<<
David Shemano wrote:> If SS is insurance against poverty in old age, how come
people who are not in poverty in old age receive SS?<
Michael Perelman writes:>If you use a means testing, SS becomes a welfare
program, an entitlment. What happens to entitlements?<
right. In addition, the SS method of payment of benefits is extremely simple,
making its administration costs extremely low, especially compared to the
private investment accounts costs that the Bushpeople push. That is, it's an
extremely efficient way for society to pool resources.
It's true that a lot of non-poor receive SS benefits. But a lot of people who
are non-poor get hit by the forces that could easily push them into poverty,
such as catastrophic illness and soaring medication costs. SS provides a
"safety net" which helps prevent these from causing a serious and permanent
descent into the vicious circle of poverty.
Further, for many of the richer folks, SS benefits are mere "pin money." But
it's simpler and more efficient to pay these benefits to them. It also
encourages majority support for the program as Michael P. and Joel B. stress.
Doug writes: >Not in the same way - insurance is about financial provision
against
quantifiable but limited risk. Everyone who hits 65...66...67 will draw SS. How
many people draw on their fire insurance.<
SS isn't insurance against being old. Rather, it's insurance against being
forced to eat dog food while old. It also represents a bolster that makes
defined-benefit pensions, IRAs, 401ks, etc. bearable.
Jim Devine [EMAIL PROTECTED] http://myweb.lmu.edu/jdevine
