Expand Social Security Now

I have thought a bit about universal basic income (UBI), and I don't have any strong views. It is a policy with pros and cons, some of which are difficult to assess (for instance, as a matter of politics, UBI appears to be an inefficient way to "spend" whatever political capital exists for redistribution—but maybe this would change if it were actually enacted and people felt its benefits). It's very hard to come to a firm conclusion.

But one observation I'd make is that the case for making Social Security (A) universal and (B) considerably more generous seems very strong. Basically this is UBI for retired people, and it seems like a great idea to me. (Part of its genius is that you don't have to call it UBI! It's already got a name, one with a lot of goodwill attached to it.)

A major failing of capitalism is that people's welfare in retirement is dependent on saving a lot and managing the money prudently, while avoiding market crashes, fraud, and other threats. It also depends on people retaining their capacity to manage their investments well into senility, which is highly unrealistic. (As a side note, I expect that in the coming years we will see massive amounts of fraud against elderly people. It's just such a rich vein to mine and the victims are so ill-equipped to protect themselves.)

Of course anyone who wants to save for retirement should be allowed to do so. But we shouldn't have a society where you have to be a savvy investor to avoid penury. Social Security has been very successful at reducing extreme poverty, but it is not generous enough for most people, and it has big coverage gaps (the amount you get is a function of how much income you earn during your working years, which means some people aren't even eligible).

By the way, Social Security has a really nice feature, which is that you can't outlive it the way you can outlive your savings. It will be there for you for your whole life no matter what. This sort of product is available from the private sector (it's called an annuity), but as you would expect the market has all kinds of bullshit products and ways to get fleeced. Social Security is rock solid by comparison, and it's absurdly cheap to administer.

Also my understanding (this is not legal advice!) is that Social Security benefits can't be encumbered and can't be garnished by creditors (except maybe the IRS?) or bankruptcy trustees. That's a really nice feature. In essence, most seniors would be entirely sheltered from financial calamity (or to put it a different way, even if financial calamity strikes, the consequences would be far less severe than they presently are).

Apart from the fiscal expense, I don't really see any downsides to expanding Social Security. (As for fiscal expense, payroll taxes currently apply to the first $100,000 or so that an individual earns. This cap could be lifted to generate a lot more revenue. I don't know if that would be sufficient, however.) I suppose the politics could be a bit tricky, especially if undocumented immigrants were covered, but this seems like a minor problem at worst. For the most part I expect the politics would be very good. There might also be knock-on effects—for instance, the less the typical voter cares about the stock market, the easier it should be to impose stricter regulation, higher capital gains taxes, and the like. (I admit that is somewhat speculative, and of course lots of middle class people would still invest.) Also I have to imagine that the infusion of money into areas where the population is shrinking/aging would help some of the worst-off areas of the country.