Where Government Excels
As Republican presidential hopefuls trot out their policy agendas — which always involve cutting taxes on the rich while slashing benefits for the poor and middle class — some real new thinking is happening on the other side of the aisle. Suddenly, it seems, many Democrats have decided to break with Beltway orthodoxy, which always calls for cuts in “entitlements.” Instead, they’re proposing that Social Security benefits actually be expanded.
This is a welcome development in two ways. First, the specific case for expanding Social Security is quite good. Second, and more fundamentally, Democrats finally seem to be standing up to antigovernment propaganda and recognizing the reality that there are some things the government does better than the private sector.
He goes for an early laugh with this:
Like all advanced nations, America mainly relies on private markets and private initiatives to provide its citizens with the things they want and need, and hardly anyone in our political discourse would propose changing that. The days when it sounded like a good idea to have the government directly run large parts of the economy are long past.
Huh? The ongoing cries for single-payer health coverage (which Krugman supports) don't represent a Big Government footprint on a huge part of the economy? And on that topic, when did we solve the Veterans Administration problem? Krugman, in an earlier paean to Big Government, had described the VA as follows:
Some still think of the V.A. as a decrepit institution, which it was in the Reagan and Bush I years. But thanks to reforms begun under Bill Clinton, it’s now providing remarkably high-quality health care at remarkably low cost.
But on to the red meat for progressives:
And there’s another major example of government superiority: providing retirement security.
He explains that people don't save enough and they pay too much for their financial advice (Paul Krugman, closet Boglehead!). The answer... oh, there is no need for a spoiler alert - it's time to expand Social Security!
And in the real world of retirement, Social Security is a shining example of a system that works. It’s simple and clean, with low operating costs and minimal bureaucracy. It provides older Americans who worked hard all their lives with a chance of living decently in retirement, without requiring that they show an inhuman ability to think decades ahead and be investment whizzes as well. The only problem is that the decline of private pensions, and their replacement with inadequate 401(k)-type plans, has left a gap that Social Security isn’t currently big enough to fill. So why not make it bigger?
I am confident that Democratic plans to expand Social Security have nothing to do with an increase in forced savings by the working class to fund their own retirement and everything to do with higher taxes on "the rich" (i.e., earners over the Social Security cap of $117,000) to pay enhanced benefits to the more numerous non-rich. There are votes to be bought and Democrats to buy them!
Also in the real world are the many state and local pension plans that are run by, well, governments, and are dramatically (one might even say critically) underfunded.
Since Times readers often enjoy two papers in one, lets cut to a Times guest piece from Aug 4, 2013:
A Plan to Avert the Pension Crisis
By RICHARD J. RIORDAN and TIM RUTTEN
LOS ANGELES — IT isn’t politically feasible for Washington to bail out Detroit, but President Obama and Congress must step in to avert the worst fiscal collapse in urban American history.
They must intervene, because symptoms of the municipal illness that made Detroit, with an estimated $18 billion in liabilities, the largest city in American history to declare bankruptcy are showing up in other cities.
And its not just Detroit by any means:
This is news to roughly no one other than Paul Krugman. And don't even ask about the generous (but unsustainable) public pension plans in Europe.
Government excels at making popular promises for benefits tomorrow that won't be funded until the day after tomorrow, at the earliest.
I COULD NEVER PICK A FAVORITE BECAUSE I LOVE THEM ALL, BUT... Krugman's tribute to France as an engine of job creation has got to be high on any list of Krugman Classics.