Privatization Pep Rally

Max Sawicky sawicky at
Wed Jul 29 11:45:58 PDT 1998

>Yes. I haven't read their latest, but last year's report had a 1.4% average
>growth rate for the next 75 years, lower than the 1930-40 growth rate. At
>2.5%, the funding problem disappears. Privatizers never explain how the
>stock market could continue to return 7-10% a year with the economy growing
>at 1.4%. I suppose the profit share of GDP could rise to 100%, but that
>might bring about a little realization crisis.

It remains for us to explain why we'll get to 2.5, and why the arguments that we won't get there are wrong.

There is obvious inconsistency in the other side's propaganda. The virtue of the 'official story' is that the same wonks who give us the 1.4 growth rate are writing stuff discounting the returns to privatization, since their gloom is consistent. The General Accounting Office, Congressional Research Service, and I believe the Congressional Budget Office have all put out wet-blanket studies of privatization.

The only variant which is an unmitigated gainer is having the trust fund own financial assets with higher returns than those credited to the bonds it holds. Granted this is a slippery political slope, since under such a regime (which I would only endorse as a last ditch resort) there would be pressure to distribute the assets to direct individual ownership. Note that in all variations I've seen, this aggregate option does not fix the presumed shortfall entirely.



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