[lbo-talk] Fwd: SS

Wojtek Sokolowski sokol at jhu.edu
Tue Jan 4 08:19:15 PST 2005


Michael Pollak:
> > But their contributions are likely to be dwarfed by those from corporate
> > trade associations, spearheaded by the National Association of
Manufacturers.
> > Other likely contributors include the financial services and securities
> > industries and other Fortune 500 companies, GOP officials say.
>
> The interest of securities firms is obvious. But why would this be a
> priority for manufacturers?

There are two possible reasons. One is that they can weasel out of paying their 50% share of the social security tax. At this time, they have to pay it no matter what, but in the world of private account they will not. Even if they are required by law to match employee's contributions to maintain the current 5/050 rule, if a young worker chooses to contribute less and consume more, this is a net saving for his employer.

It works pretty much the same as manufacturer's coupons. A failure to redeem them by customers (the figure I heard is that about 1/3 of all coupons are not redeemed) offsets transaction costs of processing the coupon (instead of an instant rebate at the cash register).

The second reason was pointed to me by JHU Professor Vincente Navarro, who was on the Clinton health care reform team. Answering my question why manufactures oppose public health care system even if they stand to benefit from lower costs of health care, Navarro answered simply "power." If a benefit is discretionary rather than mandated by law, it gives the benefactor certain power of the recipient.

The same is true for privatized retirement benefits. It gives the management more control over not only the total amount, but what form those contribution take (cf. Enron stock). Private retirement benefit will transform corporate bosses to feudal lords who control the life of their serfs literally from cradle to grave.

Wojtek



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