In a recent conversation with my wife's eighty-something, recently-widowed great-aunt, I attempted to explain to her that people, in general, and seniors, in particular, would be far better off if Social Security were privatized. I told her that a seven-to-ten percent return on her money would be far preferable to the 1-2% (or even negative) amount she would "earn" from the government's program. Even beyond that, seniors would control their own accounts and have something to pass along to their descendants. Indeed, ultimately, in a free society, people would and could decide for themselves whether or not to invest and save for their retirement.
Her biggest objection to my suggestion amounted to the fact that many individuals of her generation "don't know how" to invest their money properly. Having lived through the Depression Era, they did not have the resources when starting out in their careers to set aside money for a stock-market based retirement account.
In other words, because certain people are incapable of (or at least not very skilled at) selecting the best stocks, the government should step in and insure that these unfortunates are not left to their own poor devices. Otherwise, when these folks reach the time to step down from their careers, they won't be able to. They'll be forced to work as baggers in the check-out line of the local grocery store.
A number of objections and clarifications immediately leap to mind.
First of all, the notion that the government is and/or should be the "savior" of the less-fortunate or successful (in any area of life) stands in stark contrast to the fact that it is the government itself that most frequently either created the original problem or exacerbated the situation by its clumsy attempts to "fix" the trouble. The politicians then have the temerity to push their bulk through the crowd and loudly (and cynically) proclaim that they are there to "help" their constituents; that they "care" and are "compassionate" for the poor victims of life's circumstances (for a further exploration of this falsehood, see my essay, "Compassion"); that they "feel our pain."
These con artists remind me of those bogus home repair "experts" who "inspect" your roof, punch a few holes through your shingles, then announce with great concern and "relief" that, boy, it sure is lucky they happened along before a big rain came and ruined your ceilings. Taking your hard-earned money, they then proceed to "fix" what they broke, all the time acting as though they are doing you a big favor.
Bribing people with their own money certainly reveals the immense arrogance and slyness of the politicos fleecing the voters. It says nothing about the validity of their programs.
Second and even worse than the State "magnanimously" dispensing a small portion of their stolen goods to those whom they robbed is the fact that they sweep all of us into their constricting nets on the pretense of protecting a small minority. Whether the issue is self-defense, education, welfare, Social Security, or Medicare, the government seizes upon the faults of the few to enslave the many. Never mind that many of us neither asked for nor want such "assistance" or "protection." In the tunnel-vision of the politicians, we cannot be "allowed" to follow our own path, to make our own decisions, or to enjoy or suffer the consequences of our own actions.
Third, in terms of what people earn early in their lives, well, few of us start out with six-figure incomes. Struggle is (usually) inherent in beginning one's working life. As we learn the ins-and-outs of our jobs, we progress -- more or less slowly -- towards greater and greater success. To extrapolate from the (relatively) low incomes many people earn in their twenties to what money they will have at their disposal in their forties or fifties is a non sequitur. One might as well examine the ineptitude of an infant and then conclude that this person will never be able to walk on her own two feet.
The fourth and most egregious misconception in advocating the intervention of the State in areas such as retirement funding is the belief that each and every individual should be willing and able personally to handle such potentially complex and confusing issues. The fact that someone may not "know how" to do something in no way implies that therefore the responsibility for dealing with that situation should be snatched from his hands and delivered to the tender mercies of his elected rulers.
Somewhere along the line, the fundamental idea of the "division of labor" has been lost or abandoned when considering areas of existence that have become subject to the hungry eyes of the State.
Don't know how to fix the carburetor in your car or tune the engine? A long list of competent car mechanics can be found in your phone book.
All thumbs when it comes to using a saw or pounding a nail? Most of us would not think twice about shopping around for a building contractor of good repute to remodel a kitchen, a bath, or a family room.
Ignorant of the finer points of inspecting your furnace or your air conditioner? Dozens of small business people are eagerly waiting for your call.
Faucet leaking and you have trouble telling a pipe wrench from an elbow joint? Plumbers can replace what you need or repair what is broken.
Can't string three sentences together in a pleasing fashion? Writers capable of expressing the finest nuances of the language clamor for your attention.
Whatever the good or service you require or desire (even many that are currently illegal), in a (generally) free enterprise culture, you will have a fistful of options from which to choose. Holding up the fact that each and every one of us is "rationally ignorant" in a plethora of subjects as a reason to reject our freedom and hand over the reins of our lives to the tin-Napoleons of the world makes no sense.
Every choice in life closes off certain options while simultaneously opening up others. It is impossible to know everything about everything. None of us is omniscient. Only so much time is allotted to each of us in our lifetimes. We must focus and concentrate on those facets of the world which most interest us and for which our talents are most suited. If we attempted to become expert in too many areas, we would most likely become less capable even in those realms where we might normally excel. The old saw about being a jack of all trades and a master of none is an apt characterization of this fact of nature.
Some people do have greater native potential and are more able to realize mastery in a larger number of specialities. Admiration for such Renaissance achievers is common and indicative of how uncommon it is to reach such exalted heights. For most of us mere mortals, however, we do well to earn a favorable reputation in one or two disciplines. When we run headlong into a situation we cannot solve or handle on our own, we need not panic or scurry under the "protective" wings of our elected officials.
For retirement income, any person can study various individual stocks and become conversant with P/E ratios and such. But for most workers, the better option would be just to find a reputable firm and invest their money in a mutual fund. The small fees the handlers charge adequately compensates them for their expertise without unduly hampering the earnings of their investors. With automatic payroll deductions, the latter need not even remember to send in regular checks! Simply sit back, keep a cautious eye on the activities of their "employees," and enjoy a comfortable retirement in the sun decades down the line.
If you run into people who use the excuse that, "I don't know how..." to explain their calls for more laws, more regulations, and more social programs for themselves or others, you need not grant them their point. If such individuals appeal to such ignorance, all you have to do is say, "You don't have to know."
We don't live in a society where we much each be self-sufficient. That's the beauty of capitalism and a happy result of true freedom.