Private accounts and retirement

Taragi, Kumamoto

It was a pleasure to read Sarah Moreno’s April 19 letter “‘Sink or swim’ ethic in America.” She is 100 percent correct that the federal government abuses Social Security funds and that Americans are skeptical of government-run social welfare programs.

Now the points of disagreement: Americans are very charitable, donating great sums of money to institutions that help the elderly and the disabled. Only a minority of Americans believe in a “sink or swim” ethic. Skepticism of government welfare is rooted in experience; government does things poorly, and there is very little the average person can do to change that. Private charities do more good because they must compete for donations by proving to donors the value and efficiency of their programs.

Additionally, since people have less disposable income after paying high taxes — some of which are used to fund government welfare programs — they feel that they have already “paid their share” and that there is no need to give to a private charity.

Regarding Social Security in particular, the choices are not between a government-run Ponzi scheme and social Darwinism. Many countries are moving from a pay-as-you-go system into private retirement accounts. Instead of payroll taxes funding payments for current beneficiaries, privatization puts those funds into a private account that the worker owns. This makes it impossible for the government to use the funds for anything else.

The problem, however, is that funds cannot go into private accounts and pay current benefits at the same time. So, no politician is willing to force one generation to be that bottom layer.

The opinions expressed in this letter to the editor are the writer’s own and do not necessarily reflect the policies of The Japan Times.

joseph jaworski