Towards A Good Samaritan World

Sunday, January 30, 2005


At first, I was impressed by this WaPo column, which chides the Democrats for being in denial about Social Security. But then they propose 1) raising the $90,000 payroll tax cap, and 2) investing the Social Security fund in private stocks and bonds. They still oppose privatization. Raising the cap-- that is, a large tax hike on the rich-- is a bad idea, and for Bush to allow such a tax hike would betray all his campaign promises, but what is the WaPo thinking proposing that the federal government invest the trust fund in the stock market? This would make the government a major assetholder in most of corporate America-- a big step towards nationalization of industry. I'm in shock. How stupid can they be, not to understand that this is beyond the pale in America?

I'll say this for them though: congratulations on showing their colors! Now we advocates of partial privatization don't have to talk about the possibility of the government investing in private assets as an abstract bogeyman. A prominent institution has actually advocated this approach. Now our argument can run: "In order to resolve Social Security's unfunded liabilities problem, so that the promise of future retirement benefits are backed up by real assets, it is essential to create private accounts. The only alternative is to have the government invest the trust fund in private assets, and thus to compromise the private character of these assets and alter the very free-market capitalist nature of our economy, as advocated by the Washington Post..."


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