News Is Privatizing Social Security Really the Solution?

  • Thread starter Thread starter kcballer21
  • Start date Start date
  • Tags Tags
    Security
Click For Summary
The discussion centers on the potential privatization of Social Security and the implications of such a move. Participants express concerns about the motivations behind privatization, questioning whether it serves public welfare or other interests, particularly in light of claims that Social Security is facing a crisis. There is a debate over the merits of privatization, with some arguing that it could lead to better management and investment returns, akin to Individual Retirement Accounts (IRAs), while others warn that it could jeopardize essential benefits like disability and survivor support. The conversation highlights the complexities involved, including the potential impact on Medicare and the welfare system, as well as the risks associated with relying on market performance for retirement security. Critics of privatization emphasize that it could prioritize profits over care quality, leading to negative outcomes for vulnerable populations. The discussion also touches on the broader implications of privatization in healthcare, suggesting that profit-driven motives may not align with public interest, and calls for a balanced approach that ensures both service quality and financial viability.
  • #31
Well, here's Krugman's take: From 'The Economists' Voice'
From this article and the many other I have read, it seems the social security issue is an easy fix. So what's the problem?
 
Physics news on Phys.org
  • #32
kcballer21 said:
Well, here's Krugman's take: From 'The Economists' Voice'
From this article and the many other I have read, it seems the social security issue is an easy fix. So what's the problem?
What is the problem usually? Politics exacerbated by the fact that people tend to act irrationally when their money is involved.

Another part of the issue is timeframe: Someone who is in their 60s doesn't much care what happens to Social Security 30 years from now and will fight (vote) tooth and nail to prevent any changes. Someone in their 30s cares greatly about it and will fight hard to make positive changes. And a lot of what would be positive for a 30 year old and 60 year old are mutually exclusive.
 
Last edited:
  • #33
If by privatization, people mean "The government ceases taking that amount of money from you and you can spend or invest it where you please," then it sounds good to me.

If by privatization, someone means "The government takes a certain amount of money, charges an administrative cost (in taxes), picks certain areas you can invest it in (all of which charge aditional administrative costs) and then allows you to take it out when and how they choose" then I think those people are being dishonest, because there is nothing really privatized about that.

Social security and medicare are currently disasters. If people think that the government is capable of playing the market (which they would be doing by restricting investment choices) then those people are extremely naieve. The current administrations proposal to somewhat diversify, but still largely governmentally control portions of social security savings is absurd. I almost want it to happen, just so pretend-capitalists can see how absurd it is.
 
  • #34
russ_watters said:
Another part of the issue is timeframe: Someone who is in their 60s doesn't much care what happens to Social Security 30 years from now and will fight (vote) tooth and nail to prevent any changes. Someone in their 30s cares greatly about it and will fight hard to make positive changes. And a lot of what would be positive for a 30 year old and 60 year old are mutually exclusive.

This is a great point by the way. As far as I can tell, there are three groups of reasonably informed people out there:

Those who will die before 2050 and see no problem with social security.

Those who will be alive then, and would like something done to fix the program.

Those who will die before 2050, but feel that they owe it to the next generation not to leave a disaster of a program to them.

Not everyone fits in these categories, but they certainly contain many. Especially the first. I've found it amusing how many people think that SSecurity is ok, but medicare isn't. Both will go bankrupt in my lifetime. The difference is that both won't go bankrupt in theirs.
 
  • #35
Well, I'd further subdivide according to confidence in one's ability to be responsible and fear of luck.
 
  • #36
Not Social Security, but the Deficit

Here's an analysis showing that instead of the SS running out of money it's the economy that will run out of money because of the deficits. The SS is supported by taxes now, and will continue to be after the "day of reckoning". But where will the taxes come from if the country is broke?
 
  • #37
Well there is a certain truth to that - SS has been investing its surpluses in govt bonds for decades. If the government can't pay, SS will be bankrupt very soon.

However, even without this problem, SS would be bankrupt before 2050. So althought his is an important issue, it hardly means the more fundamental problems aren't there.
 
  • #38
russ_watters said:
...Another part of the issue is timeframe: Someone who is in their 60s doesn't much care what happens to Social Security 30 years from now and will fight (vote) tooth and nail to prevent any changes. Someone in their 30s cares greatly about it and will fight hard to make positive changes. And a lot of what would be positive for a 30 year old and 60 year old are mutually exclusive.
I made choices in the past, sometimes with difficulty, so as to not be dependant on the government when I retired. I'm sure there are many like me who wish to rid their children and grandchildren of the burden of supporting and caring for their elders.

Only a young fool and a selfish bastard would want to preserve SS in its present form.
 
  • #39
it might be beneficial for america to analyze the perspectives of europe's retirement system when it comes to the elder generation...perhaps compromise that into a corporate/free enterprise system?
 
  • #40
Kerrie said:
it might be beneficial for america to analyze the perspectives of europe's retirement system when it comes to the elder generation...perhaps compromise that into a corporate/free enterprise system?


European retirement systems are going down the tubes. Europe has nothing to teach and much to learn from the worlds oldest constitutional government.
 
  • #41
that is why i mentioned a compromise. obviously our system is going down the tubes as well, social security specifically.
 
  • #42
GENIERE said:
I made choices in the past, sometimes with difficulty, so as to not be dependant on the government when I retired. I'm sure there are many like me who wish to rid their children and grandchildren of the burden of supporting and caring for their elders.

Only a young fool and a selfish bastard would want to preserve SS in its present form.
I'm glad to hear that, but I'm sure you know that some of the most fervent supporters of the current system are those now (or soon to be) getting money from it. My dad gets AARP magazine and there is an article urging opposition to any changes in virtually every issue. You're a minority.
 
  • #43
Someone in their 30s cares greatly about it and will fight hard to make positive changes
"The date at which the trust fund will run out, according to Social Security
Administration projections, has receded steadily into the future: 10 years ago it was 2029, now it’s 2042. As Kevin Drum, Brad DeLong, and others have pointed out, the SSA estimates are very conservative, and quite moderate projections of economic growth push the exhaustion date into the indefinite future."(Krugman)
It appears that the urgency of the situation has been exaggerated for political purposes. What better time to lie about the hopelessness of the SS system than while we are fighting a war that isn't going very well.
Social security and medicare are currently disasters.
Maybe, but they don't have to be disasters. "The bigger problem for those who want to see a crisis in Social Security’s future is this: if Social Security is just part of the federal budget, with no budget or trust fund of its own, then, well, it’s just part of the federal budget: there can’t be a Social Security crisis. All you can have is a general budget crisis."(Krugman) Which means that instead of making SS the immediate problem, maybe fiscal incompetence should be addressed.
Europe has nothing to teach and much to learn from the worlds oldest constitutional government.
Maybe, but Britain can teach us something about the actual costs of privatization in the form of fees. SS isn't perfect, but it isn't going directly down the tubes. It would work fine if the trust fund was treated as a 'lock box' and if the gov't were not so reckless. To paint partial privatization as this cure-all that we have been denying ourselves for decades is to be deceptive. Did anybody read the article?
 
  • #44
kcballer21 said:
"The bigger problem for those who want to see a crisis in Social Security’s future is this: if Social Security is just part of the federal budget, with no budget or trust fund of its own, then, well, it’s just part of the federal budget: there can’t be a Social Security crisis. All you can have is a general budget crisis."(Krugman) Which means that instead of making SS the immediate problem, maybe fiscal incompetence should be addressed.

No doubt that fiscal incompetence should be addressed. However, just because we've been cheated by our representatives who have tricked social security into being "just part of the federal budget" does not mean that they can keep doing this, or that we should allow it.
 
  • #45
kcballer21 said:
"The date at which the trust fund will run out, according to Social Security
Administration projections, has receded steadily into the future: 10 years ago it was 2029, now it’s 2042. As Kevin Drum, Brad DeLong, and others have pointed out, the SSA estimates are very conservative, and quite moderate projections of economic growth push the exhaustion date into the indefinite future."(Krugman)
It appears that the urgency of the situation has been exaggerated for political purposes.
There is controversy over the numbers, but that's not the only reason to want a change: if you invest your money conservatively, you can do far, far better on your own than with SS. So its not just about whether or not the system will stay afloat or fail, but how well will it do what it was designed to do.
 
  • #46
Apparently I was incorrect re: European Social Security. We can, it seems, learn from the Swedes who have a mandatory ”privatized” social security system per:

http://www.ssa.gov/policy/docs/progdesc/ssptw/2002-2003/europe/sweden.html

“… In 1999, a new social insurance system plus mandatory private "premium pension" accounts was established. There will be a gradual transition from the old system to the new for persons born between 1938 and 1953. Persons born in 1954 and later are completely within the new system; those born in 1937 or earlier will remain entirely within the old system.”

I was aware that Chile has a privatized system, perhaps someone from these countries might wish to comment.
 

Similar threads

News Should Social Security be privatized?
  • · Replies 56 ·
2
Replies
56
Views
7K
News Should Social Security Taxes Be Optional for Younger Generations?
  • · Replies 65 ·
3
Replies
65
Views
9K
News Bush looks to reform Social Security
  • · Replies 10 ·
Replies
10
Views
3K
News Is Social Security Reform really viable?
  • · Replies 17 ·
Replies
17
Views
3K
News End of Social Security - or a Warning?
  • · Replies 25 ·
Replies
25
Views
5K
News Social Security Trust Fund No More?
  • · Replies 10 ·
Replies
10
Views
2K
News Bush solution to Social Security?
  • · Replies 3 ·
Replies
3
Views
2K
News How Galveston, TX opted out of Social Security
  • · Replies 2 ·
Replies
2
Views
5K
News US-Iraq Security Pact: Impasse over Sovereignty
  • · Replies 12 ·
Replies
12
Views
3K
Is increasing diversity and decentralization the key to grid cybersecurity?
  • · Replies 2 ·
Replies
2
Views
3K