Since there is in fact no separate stock of private sector assets, isn't the thrust of the Keynes point exactly the way the system works now? The only residual quibble would be that the payroll tax could be less regressive.
As to whether the existence of a fund implies a crisis, that depends on the notional balance in the fund. If it looks good, by your logic, it implies a non-crisis.
On Wed, Jun 23, 2010 at 12:23 PM, Doug Henwood <dhenwood at panix.com> wrote:
>
> On Jun 23, 2010, at 12:13 PM, Max Sawicky wrote:
>
> Why disparage the defensive institutions and benefits won by the working
>> class?
>>
>
> The whole idea of accumulating assets in the SS Trust Fund is a concession
> to bourgeois finance on the private pension-fund model: pre-funding
> liabilities. It also concedes that SS faces a long-term crisis, when at
> worst it's a solvable problem. There's no reason that SS can't pay benefits
> out of current revenues for as long as the USA keeps both nostrils above the
> waterline.
>
> Quoting myself quoting Keynes from Wall Street:
>
> But the whole notion of private pension funds, either of the sort that
>> prevail now or would prevail under a privatized system, depends on an
>> economic illusion. In one of the more profound passages of the General
>> Theory, Keynes (CW VII, pp. 104–105) made an argument that has been
>> virtually lost to modern economic thought:
>>
>> We cannot, as a community, provide for future consumption by financial
>>> expedients but only by current physical output. In so far as our social and
>>> business organisation separates financial provision for the future from
>>> physical provision for the future so that efforts to secure the former do
>>> not necessarily carry the latter with them, financial prudence will be
>>> liable to destroy effective demand and thus impair well-being....
>>>
>>
>> Individuals may be able to set aside money for the future, but not a
>> society as a whole; a society as a whole guarantees its future only by real
>> physical and social investments. But the financial markets are demanding
>> cutbacks in both public and private investment in the name of “financial
>> prudence.” Today, anyone making an argument like that at an American
>> Economics Association meeting or on Meet the Press would be regarded as
>> clinically insane.
>>
>
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