Krugman live

In a lecture last night in DC, NYT columnist and Princeton econ professor Paul Krugman discussed the future of Social Security. As he walked onto the stage, my friend and I managed not to squeal like teenage boy-band groupies. Then, across a sea of orange ties (the event was sponsored by the Princeton Club of Washington) we watched PK slam the White House's privatization plan with poise and humor. My full notes from the lecture are posted here.

Krugman emphasized a couple of points I've been hammering on (see related post, SOCIALIST Security you mean, 2/16/05). First, the disagreement over whether to privatize Social Security is a philosophical one. As Krugman puts it, the pro-privatization side simply believes that "the government should not be in the business of providing social insurance." When one side believes the program must be preserved, and the other believes it is fundamentally illegitimate, there can be no compromise.

Second, Social Security is not a pension plan. It's social insurance. It exists, to quote PK again, to "[protect] your mother or grandmother from living on dog food." That's why it sometimes runs a surplus, which should be left alone to take care of later deficits. That's also why it doesn't make sense to privately invest these contributions, even though it is true that higher rates of return might be available. "It's also true," noted PK, "that my wife and I would have more money if we took my mother-in-law's savings and let her starve."