Fighting SS privatization (was Re: The Nation - Selected Editorial)

Max Sawicky sawicky at
Tue Jul 21 12:09:53 PDT 1998

> > The problem for advocacy in this area is that any
> > explicit proposal for a tax increase to finance the
> > existing system is a political loser. That's because
> > the public thinks privatization will give them gain
> > without pain.
> Exactly. Since the stock market is like a savings account paying 30%
> interest, why not put all SS money there?
> The best way to fight it, I think, is stall the whole thing until the
> bubble bursts. Should be any time now.

There will be action next Spring on this, so we may not be so lucky.

Actually the Chilean system, often used as an illustration of the glories of privatization, has already taken a dive.

> Alternatively, one could try to explain to people that the stock market
> will _not_ give 30% returns, or even 15% or 10% real returns, forever.
> I've tried to, and don't recommend it. Very painful.

You don't get these returns under privatization, even if the stock market keeps chugging along. A forthcoming EPI report by Baker discusses this. He has already dealt with a different aspect in a piece for the Twentieth Century Fund, the basic message of which is: if you believe the SS trustees projections, the stock market CAN'T continue as it has. If it can, you can't believe the trustees. I've found that people understand that if the economy poops out and jeopardizes SS, stocks will take a beating as well. The problem is addressing the "I'd better get me to a lifeboat" mentality.


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