Privatization premise

[National Dialogue Moderator <moderator>]

Thank you for adding to the list of questions that we will submit
to the sponsors of the major reform bills in Congress. Let's keep
that channel open, and please add to the questions as they occur
to you.

Michael Jones, in his second to most recent post, commented: "the
fact is that low wage workers as well as every other worker do in
fact "save" 12.4% of income through Social Security. In this sense
everyone is an excellent saver!  The question is, does this "saving"
provide the best benefits for these workers under the current
system? The answer is NO."

I think that is an excellent distillation of the privatization
premise.  Or, if you don't think that individuals should invest
their own funds, perhaps it helps persuade you that the government
should set those funds aside and invest them rather than spend
them.

If women and minorities are to prosper under such a system, regardless
of who invests the funds, the underlying idea of an America that
invests 12.4% of its earnings has to be a workable idea.  Currently,
the Social Security contributions paid by workers are recycled
directly to retirees and to the disabled, who then instantly recycle
it into the economy again.  What happens when 12.4% of our earnings
are recycled not into direct spending, but into either the stock
market (to prop up a market hit by the withdrawal of boomer money)
or into bank lending?  The Japanese, who have an historically high
rate of personal savings, rely on massive foreign investments to
put all that money to work outside their own economy.  Do we know
how our economy will respond to this massive redirection of capital,
and what the effects will be on women and minorities, and on lower
paid workers?  Is all this at least an argument for very gradual
conversion to privatization, if it is to occur?


-- Maureen West