Soft privatization

Max Sawicky sawicky at
Fri Jul 31 11:36:23 PDT 1998

> Max Sawicky wrote:
>> The required tax increases are not large and
>> not needed now. Even with present, pessimistic
>> projections of growth, after-tax wages in 2030
>> should still be much higher than presently, so
>> "our children" will be richer, even with the
>> higher tax.
> But you're talking about aggregate wages. Wages may go up 1% a year or
whatever on average, but most actual workers will still be seeing zero growth or less over the business cycle (if things go on as they are). You want to add 0.1% a year to that wage erosion, when you could just have the trust fund invest in stocks? I understand the concern about privatizing the stock fund, but how likely is that? How
>would the stocks be distributed, etc?

Clearly aggregate wage growth will not mean wage growth for all workers. Wages will be distributed unequally, as will wage gains. But it is the wage base that finances the program. If the base is there, the program can be financed.

Note that when we say wages among the bottom X percent of workers are stagnant, this is typically not the same people every year. Individuals' wages can increase, so a slightly higher tax rate can still leaves them with higher after-tax wages.


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