It probably shouldn’t come as a surprise to anyone that I am opposed to the Bush administration’s plan to reform Social Security, just as I am to the concept of school vouchers. Now, this is not to say that I support the existing Ponzi scheme anymore than I support the public schools, it’s just that the history of government reform teaches that such reforms are better described as expansions. The problem with both vouchers and the Bush administration’s proposed “privatization” of Social Security is that the reforms are designed to maintain government control over resources that are otherwise on the verge of escaping it via systematic breakdown.
The only true privatization of Social Security is its abolition. The clueless blatherings of those who simply dial back the clock and compare what they had to what a mythical investment in the Dow would have been fifty years ago proves nothing except that they do not understand how the stock market works. The fate of an individual stock cannot be compared to an index because all of the major indices are changed – the preferred term is “rebalanced” – regularly. The rise of the markets since the October 2002 low meant absolutely nothing to those holding Enron and WorldCom stock, for example.
Nor would investing in index-matching funds change anything. I’m not exactly sure how the concept of having trillions of dollars pegged to a much-smaller underlying basis of dynamic investment valuation would work out, but I have no doubt that massive scandals resulting in huge losses to investors would eventually be the result.
Finally, there is no money to be invested. The “trust fund” is nonexistent and has already been spent. The incoming funds are already allocated for spending and that money will come from somewhere, most likely the inflationary thin air from which the Federal Reserve daily spins our collective delusion. “Privatization” and school vouchers, like government-sponsored “free trade” are ships flying under false flags of freedom.