Musings on Politics & Policy

An attempt to take an open minded view of current topics,
strip away excess detail and arguments,
and get at underlying issues —

Tuesday, January 18, 2005

Social Security

The push to privatize Social Security, or part of it, is about the distribution of risk and opportunity. It's not presented that way; but, strip away economic, bureaucratic and legal details, and that is what is left. Take a system where the risk and opportunity are balanced by sharing them collectively, and change it to a system where the risk and opportunity are faced individually by everyone without collective support. The current Social Security system is backed up by a government guarantee. The proposed system would leave the individual facing their chances on their own.

Since we already have individualized retirement accounts, 401Ks, company retirement funds, individual investments and savings, insurance, and more, why would we want to remove the one government guaranteed safety net? What advantage could there be?

The arguments for making the change tout the higher potential investment returns and pander to individual egos ("those who oppose this plan are trying to tell you that you can't manage your own money [smirk]" ). In fact, while some would experience higher investment returns, others would experience significant losses and find themselves without the resources for retirement. How much money was lost when the long running bubble burst? How many lost their retirements when Enron imploded? And what about the massive losses in professionally managed retirement funds that got sucked into hedge fund investments? There will be losses, both among private investors and among professional investors who are handling money for others. And, where there is big money being handled on the free market, there will also be fraud. There is always fraud.

People who experience losses and/or fraud on the free market have had the government guarantee behind Social Security as a safety net. Take that away, and what is left? This is the real question. Is it right that people who have put a life into working should have some base level of retirement to fall back on? Or, if the fates are unkind, should they simply be left to fall into poverty and pan handling? There can be many reasons why a person might be unable to take up work again after a presumptive retirement or even be unable to work to their expected retirement age.

It leaves one wondering what the real reason is behind this push to privatize Social Security. Could it be just to make all that money available to the money managers and "robber barons" so that they can sequester more wealth, gain more power, and make more contributions to those in politics who have favored them? That's a pretty cynical supposition, but what else are we to suppose?



Anonymous Anonymous said...

Not even NPR can muster a productive discussion of this issue. The so-called political analysts on the right just shut down any constructive critiques. And the left leaning analysts are so busy playing catch up, trying to play by the right's rules, that they take cheap shots instead of hammering away at the real issues. Just this morning on NPR this kind of interaction resulted in the lefties accusing Bush of claiming to have more "political capitol" to spend in his second term than he really does. And they went on to say it would be harder for him to gain the political support needed to pass social security reform. To that I say, let's cut the bull and get to the point. Your post gets to the point. Thanks.

January 20, 2005 at 9:57 AM  

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