Paul Krugman continues his assault on Social Security privatization by reaching out to foreign allies, but he goes off message in the process:
...Britain's 20-year experience with privatization is a cautionary tale Americans should know about.
The U.S. news media have provided readers and viewers with little information about how privatization has worked in other countries. Now my colleagues have even fewer excuses: there's an illuminating article on the British experience in The American Prospect, www.prospect.org, by Norma Cohen, a senior corporate reporter at The Financial Times who covers pension issues.
Her verdict is summed up in her title: "A Bloody Mess." Strong words, but her conclusions match those expressed more discreetly in a recent report by Britain's Pensions Commission, which warns that at least 75 percent of those with private investment accounts will not have enough savings to provide "adequate pensions."
...We must now make adjustments to public policy and/or individual behaviour which ideally should have been started in the last 20-30 years.
Evidently the crisis is upon them, even if "do-nothing" is the preferred Dem stance here across the pond.
Krugman also links to the American Prospect article above, which describes the numbingly complex privatization approach used by the Brits. Perhaps we can avoid their mistakes? Krugman rebuts this forcefully:
American privatizers extol the virtues of personal choice, and often accuse skeptics of being elitists who believe that the government makes better choices than individuals. Yet when one brings up Britain's experience, their story suddenly changes: they promise to hold costs down by tightly restricting the investments individuals can make, and by carefully regulating the money managers. So much for trusting the people.
Politics is the art of compromise, one might think. But in Krugman's construction, Republicans who won't compromise are ideologues; those who do are hypocrites. Standard are high in Krugmanworld!
Never mind; their promises aren't credible. Even if the initial legislation tightly regulated investments by private accounts, it would immediately be followed by intense lobbying to loosen the rules.
My bad - Reps who compromise are lying hypocrites. As to the possibility that larger accounts can be transitioned to a self-directed system, time will tell.
Finally, we get this:
Meanwhile, there is a growing consensus in Britain that privatization must be partly reversed. The Confederation of British Industry - the equivalent of the U.S. Chamber of Commerce - has called for an increase in guaranteed benefits to retirees, even if taxes have to be raised to pay for that increase.
Let's see - companies would rather that someone else pay the retirement benefits of their employees. Imagine my surprise.
We saw a similar dynamic in the US on the health care debate, when large employers like GM thought it would be a great idea to shift their own health care pension costs onto the government.
In a moment of fairness, however, I should note that *if* employees value "cash now" over "retirement benefits later", an individual company that tries to give employees what they "ought" to want by offering a generous retirement plan will be at a competitive disadvantage. If "we-the-people" acting through our government really do know best, then a government-mandated approach is probably necessary. This nanny-state approach has not been eradicated in either Britain or the US.