When we consider a program like Social Security, we would ask how to carry through its purpose – ensuring workers a core retirement income— at the least possible cost. Any serious analysis would almost certainly show that some public Social Security type program fits the bill.The scare mongers of the Right -- the "Dragons" -- get all puffed up with claims of "getting government out of your life" and "freedom" but in reality this is a cover for wanting to "privatize" government functions into big money opportunities for their rich buddies. There's nothing in it for the ordinary person.
The administrative costs of the Social Security program are approximately 0.6 percent of what is paid out in benefits each year. By contrast, the administrative costs of privatized systems like the ones in Chile and the U.K. are on the order of 15-20 percent of the benefits paid out annually.
Furthermore, these privatized systems do not allow individuals to do what they want with their money. They threaten them with jail if they don’t turn over a fraction of their earnings to the financial industry each year. So the commitment to a privatized Social Security system seems more like a commitment to force people to give money to Merrill Lynch than a commitment to individual freedom.
The same applies to privatizing Medicare. We can hand people vouchers and tell them to buy the health care they want. However, this would require a massive array of laws and bureaucracy to ensure that the providers accepting these vouchers were not gaming the system and ripping off beneficiaries and the government. This approach can increase profits for insurers and providers but there is no evidence whatsoever to suggest that it would make it possible to provide the elderly with health care at a lower cost.
We can take steps to lower costs and reduce the role of government that will send David Brooks’ small government types fleeing in horror. Suppose that we got rid of government patent monopolies and allowed all prescription drugs to be sold at generic prices in a competitive market. Free market types should love this one. Instead of drugs selling for hundreds, or even thousands, of dollars per prescription, they could be bought at chain drug stores for five or ten bucks.
The research could be supported by government research grants awarded through competitive contracts. The government already spends $30 billion a year on biomedical research through the National Institutes of Health. If this sum was doubled, then it would probably be sufficient to replace the industry’s funding; especially if a requirement of getting grants was that all research findings would be posted on the Internet where they would be freely available to other researchers.
We could also try a variation of the Paul Ryan approach to Medicare vouchers. Instead of creating an incredibly burdensome task of policing a privatized system in the United States, we can allow beneficiaries the option to buy into the much more efficient systems in Europe, Canada and elsewhere. Free market types should love this win-win situation where giving beneficiaries a choice will allow taxpayers to save money on Medicare and put large sums of money (more than $10,000 a year in many cases) into the pockets of our retired workers. But, this voucher system means less money for the insurers, the drug companies and other providers, so Paul Ryan would not support it.
There are many other cases where smaller government can be used to accomplish the progressive goals of providing basic needs and limiting inequality[CSN]. But Paul Ryan and his friends are not likely to be interested in these policies. This might suggest that, in spite of what David Brooks tells us, Mr. Ryan’s concern is not reducing the size of government, but rather redistributing income upward.
If you want to keep on top of the hypocrisy on the Right and the sleazy job the media does, follow Dean Baker's blog: Beat The Press.