How Minarchist Libertarians Would Reform Social Security

Minarchist libertarians represent a segment of the political spectrum that advocates for minimal government intervention in personal and economic decisions. When it comes to reforming social security, their approach typically involves reducing or even eliminating government-funded welfare programs and turning them into individual, voluntary arrangements. However, the specifics can vary significantly based on the individual or group's interpretation of minarchism.

Removal of Income Caps and Digital Accessibility

One proposed reform is the elimination of the cap on income to be taxed for social security purposes. This would ensure that all earned income is taxed according to the rules set by the program. Additionally, empowering citizens to access their social security accounts online without the need to register with a private company would enhance transparency and ease of access.

A Minarchist Approach to Social Security

From a minarchist perspective, the primary goal is to move away from government-funded social welfare programs and replace them with individual, market-driven solutions. One potential approach proposed by minarchist libertarians would involve a comprehensive overhaul of the current system.

Under this plan, the Social Security Administration would calculate the present value of future Social Security (SS) benefits, assuming a generous life expectancy of age 90. For example, a person who has just turned 65 with a monthly SS benefit of $1,500 and 2.5 COLAs would have their future benefits valued at $475,159, as demonstrated in the calculation below.

Calculation Example

Monthly Benefit: $1,500

COLA (2.5% annually): 2.5%

Assumed Life Expectancy: 90 years

Present Value: $475,159

This amount would be paid to each participant in the form of negotiable zero-coupon government bonds. Each bond is due on the participant's 90th birthday and can be freely traded in the marketplace. Individuals would then have the choice to:

Manage the funds themselves Use the funds to purchase annuities that replace the foregone income Sell the bonds to an investment or insurance firm Pay bills with the bonds Even buy beer with it

In doing so, the market would determine the value of these bonds. Should all bondholders start selling immediately, the bonds would likely trade below par, transferring risk from taxpayers to bondholders. Meanwhile, the Social Security system would exist primarily to provide pensions to individuals over the age of 90, making the administration of the system significantly more manageable for the government.

Conclusion: Learning from History

The ultimate goal of minarchist libertarians is to prevent the government from becoming the obligor on any future Ponzi schemes. By transferring control and risk to individuals through privatized solutions, they hope to create a more sustainable and transparent social security system.

In summary, minarchist libertarians would approach social security reform through a combination of personal financial responsibility and decentralized decision-making, aiming to minimize government interference and maximize individual freedom.