RE: Questions for Sam Beard:"Investor's License"

[Michael Jones <powderfinger99@yahoo.com>]

<<<
The cohort risk issue is extremely real.  No privatization solution
that ignores it has a ghost of a chance.  You think the notch baby
issue caused a political firestorm? Imagine the firestorm that
would be generated if Cohort A had annuity payments three times
higher than Cohort B, simply as a result of the workings of cohort
risk.  Set up private accounts without any mechanism for dealing
with cohort risk? Can't do it.
>>>

This would at first seem to be a very real political issue. 
However, the structure of the current system encourages this
attitude. The system is designed to be taken advantage of.
The trick is to try to minimize contributions while maximizing
benefits through political pressure.

Under a private system, the incentives are all changed. The 
citizen can see plan and clear what his contributions were,
investment return and account value. Accountability will
result because the citizen owns the account.

There should be some basic values in the system. The first
value, which I believe is uniquely American is the premise
that the government should help to provide opportunity but
not guarantee results. The current Social Security system,
or more specifically, the retirement component,
does not have this value. ( There are many other government
programs / laws which have this defect - I'll leave this
discussion for another day ).


Michael