Private Social Security Accounts?
So I am considering changing my mind about whether we should support some form of private accounts for social security. My objections have been that the stock market is too uncertain, especially for the likes of me, too risky, and could leave those privately invested destitute when they retire.
What has me rethinking that objection?
A conversation with a stock broker and an article I read about Chile having privatized their social security system.
The broker pointed out that the stock market has, over the past 200 years, delivered an average 7% return, net of inflation, a number far exceeding what the government run social security pays out to retirees. That includes the terrible years of the Great Depression, far worse years than the tough investing years we have experienced since the dot com collapse. And he also pointed out that if the country and its economy falls into a ditch so deep and from which it is unable to emerge, so the private accounts fail, then it is more than likely that the government would not be able to meet its committments through the social security system. So, if there is to be any viable system, the markets hold the greatest promise.
The article on Chile said that workers were offered a wide variety of choices for investing, from volatile and risky to CD type investments. And that, in the event that at the time of retirement a person's income from her account fell below the agreed upon poverty level, the government would pay a subsidy.
President Bush has yet to propose a system, so we don't know if his system would be like Chile's. But if it is, perhaps we liberals ought to take another loo.
What has me rethinking that objection?
A conversation with a stock broker and an article I read about Chile having privatized their social security system.
The broker pointed out that the stock market has, over the past 200 years, delivered an average 7% return, net of inflation, a number far exceeding what the government run social security pays out to retirees. That includes the terrible years of the Great Depression, far worse years than the tough investing years we have experienced since the dot com collapse. And he also pointed out that if the country and its economy falls into a ditch so deep and from which it is unable to emerge, so the private accounts fail, then it is more than likely that the government would not be able to meet its committments through the social security system. So, if there is to be any viable system, the markets hold the greatest promise.
The article on Chile said that workers were offered a wide variety of choices for investing, from volatile and risky to CD type investments. And that, in the event that at the time of retirement a person's income from her account fell below the agreed upon poverty level, the government would pay a subsidy.
President Bush has yet to propose a system, so we don't know if his system would be like Chile's. But if it is, perhaps we liberals ought to take another loo.
posted by Blayney at 1:37 PM
2 Comments:
No rethinking on this one for me! Remember, this debate is not about privatizing, it's about eliminating the Social Security System, something the more conservative Republicans have been wanting to do since it was founded.
I understand your reluctance, particularly since President Bush, who has consistently given us cause for concern about his disregard for anyone who isn't rich, has so far provided no details of his plan. But perhaps we ought not to shoot ourselves in our own foot by opposing what could be good for poor and rich alike. The Chile plan seems to be working that way if we can believe reports. And could we influence Bush to do something like it rather than another scheme to make rich people richer?
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