Towards A Good Samaritan World

Friday, February 18, 2005

GO GREENSPAN

The guru of the 1990s boom advocates both immigration and private Social Security accounts.

Some have noted one link between Social Security and immigration, namely that immigration helps keep Social Security viable by increasing payroll tax revenues.

I would add that a link goes the other way too: private accounts change the political equation for immigration.

The major economic reason for US-born individuals to oppose immigration is that it alters the returns to the factors of production in favor of capital and to the detriment of labor. The more you turn workers into capitalists, the more it's in their interest to support open borders.

Private accounts also offer one possible way to implement my proposal to tax immigration instead of restricting it. The proceeds of the tax could be channeled into private accounts as "dividends."

1 Comments:

  • Yes, I was pleased to see Greenspan's comments. Not, of course, that they are being taken as a whole by most commenters.

    Over the next couple of weeks I'll try and run some numbers. If you do a slow implementation of private accounts plus a progressive indexing scheme (lowering the benefits the top tier of SS people get) plus a substantial boost in high-quality immigration I think the numbers don't look that bad. Obviously we need to move towards a savings oriented system vs our current exercise in self-delusion.

    The key to making this happen is to protect the lower-income earners. To do that you can't raise their payroll tax rates, but allowing private accounts combined with progressive indexing might really help. I think another very strong point of Greenspan's is important - once you start having people have private accounts, there is a natural tendency to start saving more. Human factors should never be ignored.

    The more I think of it the better I like your proposal on immigration. I see absolutely no reason why it should not work, and with pooling benefits I can see how it could probably be used for lower income type immigrants as well.

    By Blogger MaxedOutMama, at 5:26 PM  

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