Exposing a Bait and Switch

Ellen Nagler is confused. She knows David Brooks is evil, but here he is in the New York Times proposing something that sounds perfectly sensible: creating tax-free individual investment accounts for children when they are born, so that when they turn 18 they will have a nice little nest egg. Similar ideas have been floated by more liberal types like Tony Blair and the New Century Foundation. Is this a place where the left and right can agree? Or has Brooks finally seen the light and is ready to pull a Brock?

Of course not. Don't be silly.

This is one of those ideas that sounds great until you really start thinking about it. Upon closer examination, you realize it undermines the social compact. The reason Social Security and the like are so valuable (and successful), what makes them so quintessentially liberal, is that they point to a social obligation to our fellow citizens. Given the rampant individualism of today's society, bordering on sociopathy, it would be a mistake to embrace a proposal that leaves people to believe that they really are "going it alone." It would merely advance the right wing theme that every person should take care of themselves.

This is where the bait and swich comes in. The right can propose this sort of thing as the thin edge of the wedge. Once it place, it creates further opportunities for dismantling the social safety net. You can imagine conservatives arguing the following: "Hey, this guy had $50,000 to invest and he blew it! Let him suffer!" Nice. Brooks betrays his broader "opportunity society" design later in the column when he suggests that this proposal would pave the way for eliminating taxes on savings and investments. Right. Which is why we should oppose it, given that something like 90% of all stocks are in the hands of the top 10%.

I suspect that if enacted it would become a vehicle for undermining the few protections we still have. For example, the money has to come from somewhere. If it were to come from the inheritance tax, that would be one thing. But what do you want to bet the money comes out of the hide of other social programs? People would starve now so they might feast later.

The political problem with establishing private accounts is that it enhances the influence of the market on politics. Thomas Frank pointed out this feature a few months ago in the context of social security privatization: if everyone's retirement is reliant on stocks, it gives Wall Street a veto on any government action. All Wall Street has to do to block anything it doesn't like is say that it would depress the value of their stocks, and their conservative allies could accuse Democrats of trying to ruin grandma's nest egg. I would rather not stick my head in a sack, thank you.

If Brooks' proposal were an add-on to the existing pension system, as its left-wing advocates have suggested, I would certainly be more open to the idea. But I suspect that it would displace rather than supplement existing arrangements, and serve as a backdoor method of eliminating what remains of our retirement protections. Frankly I don't trust anything, no matter how good it sounds, in the hands of Bush & Co. They will always find a way to bungle and pervert it.