Pensions

The social security tax First, I have to mention that the social security tax is the most regressive tax in the U.S.A. today. `But', you say, `people are contributing to their own pensions that they'll eventually take out later.' This is, of course, a myth, supported by annual mailings from the Social Security administration. Every dollar the government takes in goes into one big pot, and every dollar taken out for this year's budget, whether for pensions or bombs, is taken out of the same big pot.

The populace has been duped into thinking that social security is a more moral and just tax, because it is somehow a separate fiscal entity which supports itself and nothing else. In your accountant's dreams it does. It's a tax just like the income tax, only it starts taxing at the first dollar you earn, taxes only labor, gives you no deductions, and the wealthy are 100% exempt.

[Here is a cute paper by Ed McCaffery about cognitive errors applied to tax policy. You can question his lab methods, but I have no doubt that this would generalize with no problem to the population at large.]

Eliminating the Social Security tax and raising the income (or any other) tax accordingly would undoubtedly make the U.S.A. a less polarized place and provide a much easier life for the struggling among us. Too bad it'll never happen.

Immigration and pensions Now that I've talked about how horrific pension taxes are, let me tell you about the latest buzz: portable pensions.

There are two simultaneous issues which wealthy nations (the U.S.A., the EU) face relative to the poorer nations (Mexico, the Ukraine): the wealthier nations aren't having kids at a replacement rate, and they attract lots of immigrants.

So we want some sort of incentive to get people to flow back to the poorer nations, which is where portable pensions come in. The idea is that if you choose to move to Mexico, your imaginary social security account goes with you. This is a good thing for circular migrants, and for the large number of illegal immigrants to the U.S.A. who pay social security taxes and never get anything back. Conversely, if people choose not to use the portability, they can stay in the country they've migrated to and not think about it.

At the same time, this is a strong incentive for old people to get out of the country. A dollar in Mexico buys about eight times what it does in the U.S.A.---and it's sunny. A regular retirement paradise.

There are people who support this idea because they think the alternative is that the dark skinned people will take over the country and never leave. Dubya's platform supports them. But just because *uckheads agree with an idea doesn't make it automatically wrong.

I take a more multicultural approach to assessing the value of the proposal: circular migration is a good thing. As more people commute across a border, the border eventually becomes irrelevant. If somebody comes to the U.S.A., gets a great education, and then chooses to go home to disseminate knowledge, then that's frigging optimal. Of course, if the person is forced out coercively, then this is significantly less than optimal, and is even sort of evil. Portable pensions, conversely, are actually a lessening of government restrictions---nothing but creating more options for people to decide among.

So the portable pension idea is a nice way to induce more circular migration, which would bring more capital (=the pensions) to the net-out-migration countries, and either augment their human capital or at least alleviate any brain drain. Plus our old folks will have more options for living on a limited income.

Finally, getting back to the fuc*heads, this is a way to convince them that their country is not being invaded. That means that with portable pensions come more porous borders, which is also a good thing.

Anyway, so that's my thinking. I haven't spent enough time pontificating to see the evil dark side of portable pensions. On the analytic side, I've retrofitted my immigration model for (name of international development group) to test whether portable pensions will do what we want them to. (Name of international development group) has me so supremely outclassed, by the way: I provide the model and they provide the data to run it with, and they came up with the most beautiful data set you have ever seen, ever. My model isn't worthy. So I'll be working, trance-like, for the next several dozen hours to make my model classier. Will try to remember to eat, sleep, and inhale at regular intervals.