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Taking it with you when you go

No, this isn’t a metaphysical essay about laying up treasures on Earth vs. in heaven. What I want to discuss is very much a contemporary issue.

Many immigrants come to the United States, work here, pay taxes and Social Security and generally behave like all other native-borns. Then, when it comes time to retire, they return to their countries of birth, drawing their Social Security benefits in the Old Country, usually to extreme benefit because of the power of the US $ relative to the razzbuknik or whatever their local currency is called. Here’s an example, close to home.

Our cleaning lady (let’s call her Olga) is just such an example. She and her husband managed to emigrate here from Romania in the mid-1980s, while Romania was still very much a Communist vassal state. She’s lived here since (fifteen-odd years), and just recently became a U.S. citizen. She still owns a house in Bucharest, lived in and maintained by her brother. When she reaches retirement age, in another fifteen years’ time, she plans to move back to Romania, back to her house, and draw her SocSec money from Uncle Sam over there. This will give her a high standard of living, higher probably than what she’d get with a Romanian State pension (for which she will also qualify, by the way).

Now, there are two schools of thought on this, and quite honestly, I can’t really decide which one I favor. Let’s call them, respectively, the Free Market position, and the Unspoken Compact position.

  1. The Free Market Position. This is quite simple. The capital represented by Olga’s SocSec payments (demanded by FICA) is hers, to use as she wishes. If she wants to spend it, she may spend it anywhere she chooses. She has worked hard and honestly, and will have paid into the system for thirty-odd years, indeed a long period of time as working lifetimes go—and certainly longer and more productive than that of the average welfare recipient. If she chooses to spend it outside the United States, she should be able to do so, just as any U.S.-born retiree would be able to spend their Social Security dollars while on a cheap package tour to Greece.
  2. The Unspoken Compact Position. Social Security money is not composed only of the ex salaris payments of the recipient—the State also augments the amount, making up the difference in the amount paid in versus the amount necessary to sustain payments until death. You don’t only get what you put in—you get enough to live in security, more or less, until the day you die. That’s the agreement—but the Unspoken Compact is that the money received by the retiree stays part of the U.S. economy, for the later use of future generations. When Olga takes her SocSec money out of the country, it will, in the end, represent a net outflow of capital from the United States to Romania.

People who agree with the latter position, by the way, usually wish to stipulate a condition of ex patria SocSec payments, that only the actual amount paid in by the retiree should be allowed to be collected outside the United States—and when that is finished, all future monthly payments of SocSec money should be collected, in person, in the United States.

Now I know that Social Security doesn’t really work that way—it’s not an insurance policy, but a means whereby current taxpayers subsidize pensioners (there is no "lockbox", Virginia). Nevertheless, the retiree has contributed to the welfare of others in the past, and should be allowed to receive same in turn—that is the system, whether we agree with its principle or not (I don’t, by the way).

Whenever someone in politics starts talking about "fairness", it is generally a good thing to hold onto one’s wallet. Nevertheless, even as an unabashed capitalist and free marketeer, I also see some merit in the Unspoken Compact position.

Perhaps one of my esteemed abalawinfo dwellers can bring perspective to my confusion…. and no, I’m not going to collect my SocSec payments in South Africa, unless it’s to pay an outfitter who will help me nail a Cape buffalo.

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