Monday, January 17, 2005

For the record, I'm not really opposed to Mandatory Retirement Savings

Over the last couple weeks, I may have given the impression that I'm opposed to Social Security Privatization, or more appropriately, mandatory retirement savings. (Privatization implies moving the trust fund into the private equities market.)

I see a lot of benefit to a program like this, but, what I am opposed to is offering this as a solution to Social Security solvency issues and exaggerating the "crisis" element of Social Security to quell debate.

I have one more complaint - privatization can't be done now. The transition costs are much too high and the government is too far in debt to try this right now. If Republicans really want this to happen, they should get their financial house in order first - curb spending, roll back tax cuts to finance war efforts, and wait four years. If they do it right, it can be the first major initiative of the [Jeb] Bush administration.

There is no solid plan beyond pronouncements about privatization, but it's interesting and worth discussion. If all citizens are actively involved in managing their own retirement, maybe they'll be more apt to do real private savings programs like IRAs.

Stock ownership, if people have real choice and control, also can provide a tool for collective action. When Henry Ford had to pay people a wage that allowed them to buy his cars, U.S. companies will have to adopt practices that encourage people to buy their stock. If you're really concerned about the environment, offshoring of labour, or just corporate governance in general, you can punish and reward companies for behavior. When 280 million people own stock in GM, if they anger enough of them to move their money to Ford, they'll feel it.

Bond ownership, in addition to stocks, is a great way for citizens to take back the country. Rather than relying on China to finance our government, they just borrow the money from U.S. citizens.

I'll be honest, I'm intrigued to see what a final proposal looks like and I'll listen to something like this with an open mind. I just don't like the timing or the duplicity in the message.


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