Well, *we* are talking about it. The right managed to hijack healthcare reform and create the insurance-industry boondoggle known as managed care. I think it would be great if the left could swipe the right's pet notion of social security reform and use it as means to introduce socialized control of the economy. The key is to raise public consciousness about what is at stake. That's obviously a daunting task, but if it's a hopeless one, there seems to be little point for forums such as this list.
-----Original Message----- From: joshua william mason [mailto:jwm7 at midway.uchicago.edu] Sent: Friday, December 11, 1998 9:35 AM To: lbo-talk at lists.panix.com Subject: Re: "Clinton Leads Toward a Plan to Invest Some Soc. Sec. Taxes in Market"
Nathan Newman writes:
> From: Carl Remick <cremick at rlmnet.com>
> -Twenty years ago, Peter Drucker wrote a hysterical (in every sense of
> -the word) book called _The Unseen Revolution : How Pension Fund
> -Socialism Came to America_. Maybe the equitization of Social
> -could make that revolution *really* happen. I know it's a long shot
> -seems worth considering.
> Carl makes a good point. Any privatization plan in the end will
> specify that all proceeds go to a specific list of mutual funds (even
> there is some provision for opt-out). The reason there has to be a
> set of funds is that administering individual accounts for most
> class SS savers would be an administrative nightmare
But isn't exactly that "administrative nightmare" the motivation for privatization in the first place?
I should add that according to some recent Peter Hart polls, it's the security of an account with their name on it, rather than higher returns, that gets people interested in privatization. So private accounts might actually go down more easily than the kind of "partial privatization" schemes you're talking about.
> One other kicker to this debate that few mention is that Social
> invested funds, unlike normal investments, should not follow
> fiduciary rules of looking for the highest return. Given the choice
> between capital-heavy, low-wage industries and labor-heavy, high-wage
> industries, Social Security funds should be invested in the later for
> simple fact that promoting the later itself increases the FICA taxes
> back into the system.
Interesting idea, but are you aware of *anyone* who's actually advocating this? The AFL-CIO sure isn't, nor are any of the big affiliates, and they'd be the logical candidates.
Interest in pension fund socialism comes and goes. Around the same time the Drucker wrote the book referenced above, Randy Barber and Jeremy Rifkin (always a good barometer for the fancies of foundation intellectuals) wrote The North Will Rise Again making the same arguments (though they liked the idea of pension fund socialism). Go back to the late 50s, and you can find reports from the Fund for the Republic and the Twentieth Century Fund talking about how the rise of pensions creates the possibility of a "people's capitalism." Paul Harbrecht, author of the Twentieth Century paper, went so far as to ask if the spread of pension funds meant that workers were becoming owners of the means of production.
But in fact, unions have *never* been able to use their pension funds in the ways you suggest. In the early 60s the UMW tried to use investments in utilities as a way to get leverage over the coal companies, and were slapped down by the courts. Today, under ERISA, accepting concessionary returns to achieve some other goal is simply illegal, even in cases where your argument about a better overall performance because of higher payments into the fund applies, e.g. building-trades funds investments in union construction projects.
If pensions haven't been able to depart from fiduciary rules even though the arguments have made over and over, and there's a real constituency pushing for it, what makes you think Social Security will when no one is even talking about it?