Comments (12)

• Don Lloyd

  That brings up the question of the present and future combined level of stock ownership of all of the Union, State, Local and Federal workers' pension funds.

  The political power of the managers of these funds is both growing unchecked and increasingly being exercised.

  Regards, Don
  

  Published: March 16, 2005 11:37 AM

• Vache Folle

  Doesn't this also contain the seeds of a federal takeover of the market and the companies themselves?

  Published: March 16, 2005 11:55 AM

• Vanmind

  "Doesn't this also contain the seeds of a federal takeover of the market and the companies themselves?"

  Could be, but I think maybe the direction of approach to this particular brand of totalitarianism is polar opposite--with large US corporations now sensing that they are close to having the entire population by the short hairs.

  American workers might soon hear: "You're in it with us now, serf, so back into the mines with you to keep our stock price inflated or else your pension will disappear."

  Same result in the end, though, no matter which tyrants make the moves. Either corporate criminals take over the government or government criminals take over the business sector. Only individuals can keep liberty safe, by following their own primary rule of microeconomics:

  1. Businesses must try to maximize market share
  2. Political parties must try to maximize precinct/district/riding share
  3. Individuals must make sure that 1 or 2 never happen, because otherwise creeping totalitarianism becomes a foregone conclusion

  Published: March 16, 2005 2:32 PM

• Brad Dexter

  What is the real difference than the current system? When the Federal Government takes more cash in than is needed for payouts, they shift the excess over to the general fund to pay for current expenditures, thereby lowering the assessments needed in general taxation. Of course it will have to be taxed later, and so really stands as a deferral of general tax, or better yet it is simply a hidden loan to the taxpayer. In essence the excesses taken are loaned back to/invested in the citizenry. This still makes the Federally mandated system now an investor in the economy.

  The answer, of course, is to end the distortions the government forcefully creates, regardless of how it is caste. But at least private accounts would be less oblique than the current governmental investment scheme we now have.

  If the argument that Bush's plan is a failure, and really isn't privatization, fine, but let's always offer up what real solutions should be. People who are against government interventions should not be seen to stand along those who disagree with Bush on the grounds of supporting transfer payments.

  Published: March 16, 2005 3:24 PM

• Logan Buck

  This article, a past Mises.org Daily Article by George Reisman, covers the issue at hand.

  http://mises.org/daily/1751

  Published: March 16, 2005 3:58 PM

• Personalization vs. Privatization

  I don't think you can call Bush's plan "privatization". Maybe you can call it "personalization", but not "privatization".

  What's the difference? Simple: think of the difference between your computer at work and your computer at home. You can do anything you want to your computer at home, from adding new hardware to changing out the operating system. You can replace the desktop with a laptop if you want. It is a privatized good.

  With your computer at work, however, you have real limits to what you can do with it. Any changes beyond the trivial require bureaucratic approval. Many proposed changes are flat-out refused. If you want to replace your computer, the replacement is another IBM PC. You don't get to choose a Toshiba laptop or an Apple or a Linux box. Your computer at work can be personalized with wallpaper and screen colors and fonts, but in no sense is it a private good.

  From what I understand about Bush's plan, it resembles the work computer a lot more than the home computer. Taking the analogy one step further, Social Security is a dumb terminal. For my purposes, the differences between the dumb terminal and the company PC is negligible. I don't think the cost of personalization is worth it. I'd rather have outright privatization.
  

  Published: March 16, 2005 7:47 PM

• tz

  But will they allow "investing" in gold, or precious metals funds, foreign stocks (like a european utility that will pay dividends in euros), foreign bonds, or short-selling funds? Probably not.

  Published: March 16, 2005 9:20 PM

• Dennis Mangan

  Right now the percentage of securities owned by institutional investors and pension funds, including government ones like Calpers, is huge. That needs to be factored into any discussion of stock ownership by Social Security accounts.

  Published: March 17, 2005 9:28 AM

• Brian Moore

  I don't think you can call Bush's plan "privatization". Maybe you can call it "personalization", but not "privatization".

  Yeah. I have the distinct opinion that this will give "privatization' a bad name. How someone can have "privatization" and "mandated" and "regulated" and "government-controlled" in the same idea confuses me.

  That is an interesting thought. Company A is on the stock market. The government invests your social security in company A stocks. Alone, your share is tiny -- you have no say in how A runs itself. However, the government, investing for hundreds of millions, has quite a bit of company A. What happens if they get 51%?

  That's what stock means, right? It's not just "the stuff you invest in." It means ownership. And since they're not changing to law to state that you own your social security investments (you're merely "entitled" to them) this would mean the government would own the companies. And since we all know about how well regulators do on the stock market, they could easily pass laws that would favor the stock of the companies they own. This would have 2 effects:

  1. Making the current stockholders richer and allowing further purchases, increasing their share
  2. Enriching the benefits paid to the SS recipients, solidifying their political power. They could point at how successful their "private" account have been.

  I think I have a new reason to oppose this.

  Am I wrong? Or is this the apocalypse?

  Published: March 17, 2005 3:29 PM

• Alex

  Thanks Brian! I felt like I was the only one who saw the sillyness of calling SS personalization SS 'privatization'.

  It gives a band name to free market ideas, and also clouds the ideas of what is private and what is State. Not a good deal.

  It's amazing how conservatives can say "SS privatization" with a straight face. If I tried that I might burst out laughing.

  Published: March 17, 2005 7:44 PM

• Ted Friedman

  Regardless they have fallen on hard times when they are eying granny's bingo money to prop up their failing, rigged markets. The GOP and Dems are both morally bankrupt. Half of every tax dollar goes to war. It's not prudent. Anyone that isn't saying very loudly "stop war" is an obvious tool. That is the only reform we need. Any other conversation is just a distraction from the one great discussion we should be having: how to live peacefully and charitably with our neighbors.

  Published: March 19, 2005 11:09 AM

• arielb

  Crying out "stop war" like the left in Europe isn't going to do nuthin. I have a much....smarter idea.

  How about advocating this instead: sound money and unilateral free trade with everyone.

  It's very hard to finance a war if you can't inflate your way out of it and it doesn't make sense to attack a major trading partner. Furthermore, the reason why middle eastern dictators have so much money in the first place is because they took advantage of our messed up dollar in the 70's. Oil would've been just another cheap commodity and Saddam would be just another 2 bit thug like Mugabe with a 1 bit socialist economy.

  Published: March 22, 2005 4:16 AM