Tuesday, January 18, 2005

Why Social Security Privatization Is a Bad Idea

In Washington D.C. and around the states the debate is over GWB's idea of privatizing social security so that people could possibly get higher returns. This is a horrible idea. Here are a few reasons why I feel that way:

1). Social security came out of the Great Depression and was created by President Franklin D. Roosevelt to ensure people had some money to retire with. Many, many people lost their life savings playing the stock market. Now GWB wants people to risk playing the stock market again by investing their government security money?! That is how people lost their retirement money in the first place!-playing the stock market!!

2). People complain that social security benefits only pay out 1-2% while the stock market could possibly pay our more. The problem here is that there is also a possibility that investing your money in the stock market could give you 0% return. At least with the government you are guaranteed a return.

The stock market is a risky venture. It is basically gambling and I think it is irresponsible of the President to encourage people to take unnecessary risks with their government pention. People can still augment their retirement package with IRA's, 401k's and individual investments in stocks, bonds, etc.

Sure, Social Security will need to be adjusted for the younger generation to gain it's benefits but the GWB plan is not the way to go. It is (like so many of his other ideas/plans) unwise, risky and not well thought out.


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6 comments:

Zen Unbound said...

Yeah, it's a terrible for idea for the reasons you've given. And also for these reasons:

1. Govt's responsibility here is to help old or disabled people have enough to survive. Social Security is not a pension or an investment. If you want a pension, get it from your job. If you want to invest, do it with money you can afford to lose.

2. Bush's scheme would be incredibly expensive. Little considered so far is What happens to people who lose all or a lot of their Social Security in the stock market? Why, they go on welfare; i.e. the government pays. What happens to people who become disabled before amassing a large social security fund under Bush's scheme? Why, they go on welfare.

3. When, under Bush's scheme a ton of money is added to the national debt and a ton of money goes into the stock market, what happens? Massive inflation and with so much money chasing so little stock, stocks are overpriced. We immediately have a bubble, like in the 90s. What happens to bubbles? Reality sets in; bubbles burst. The dollar is weakened on international exchanges. Basically, the international economy gets shakey; nobody trusts markets or the future; fear takes hold and jobs are lost and we have a worldwide recession or depression.

4. Social Security, the way it is, can be fixed. Retirement age can be raised. Increases in soc sec checks can be pegged to price increases instead of inflation. High income folks can pay more. The Fed gov't can, itself, add to the fund. Doing a little of everything will make Social Security actuarially sound for all time.

james said...

Zen, well said.

more anonymity said...

on a related-ish note: Your country's political economics depress me! In the UK we get a welfare state, national health service, and most people believe the government exists to help people, not simply to get out of the way while the rich trample on the heads of poorer people.

The opposition to the UK government announced yesterday that it's fighting the next election on a tax-cutting ticket, and they won't win! The UK electorate would rather have the benefits described above, and would NOT countenance equities based social security.

Of course to balance this story, I should talk about our foreign policy which is protozoan in its invertebracy. But that depresses me as well, so I won't.

Rant over, sorry.

james said...

No worries on the rant Richard. The biggest thing that I think America needs on that list is national health care. Although and improved welfare state is up there as well. I agree that paying more taxes for greater social benefit and return is the way to go. The rich are getting richer and the poor and getting crushed.

As for the middle class, There is none. It is slowly dying a cruel and painful death.

Kitten said...

James, my sweet passionate soul...can you please post about something NON political...i want to comment! Im having withdrawals!!

xo

more anonymity said...

James - Glad you agree, but with Dubbya's inauguration party tomorrow, it seems your countrymen and women dissagree!