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logo    Privatizing Social Security


Well, Scott, I had a difficult time making up my mind to send this message, but, in the end, I decided I had to. It is occasioned  by your recent article about privatizing Social Security, although it is not limited to that issue. Although I find that many of your articles present real issues in a true light and accomplish an important public service, I generally disagree with about everything you say about investing in the market. And I have good reasons. It is not that I am against investing in the market. Far from it, but I believe that people should be truthfully informed about it, and I have found that people in your line of work always present sometime benefits as if they were certain benefits which, of course, is not the truth.

Let me begin with some absolute truths.

1. No absolutely safe way of investing in the market exists.

2. Any investor, no matter how careful, can lose his shirt.

3. If such a safe way of investing were known, almost all investors would utilize it, and the market as a source of capital for new ventures would collapse. And since all the money being invested by those using the absolutely safe method would be chasing the same securities, the effects of that are impossible to calculate.

4.Attributing attributes of the whole to its parts exemplifies an invalid form of reasoning named the fallacy of division that is taught in all introductory logic courses.

Now people like you are always either saying or implying that because the market has had returns of so and so over so over so period of time, investors can achieve similar returns. But I suggest that if you had a list of every person who invested in the market in any time period chosen that showed how much each person invested and what each person's returns were, you would find that practically no one got the returns indicated by the statistical analysis of the market as a whole. Some people would have gotten far greater returns, and many would have gotten far fewer. So by not pointing out the obvious truths about investing and merely presenting its sometime benefits, you are in some way duping a lot of people. I do now and always will object to that kind of behavior.

Yet, I agree with you on many things. You say a lot that is true and do a lot of good. For instance, I don't disagree that the Social Security System needs reform. Certainly it does. But the alternatives presented always seem to be either leave it as it is or privatize. Any thoughtful person should be able to think of at least half a dozen other ways to reform it. But I don't see any other ways of reforming it ever being mentioned. And that failure makes me suspicious. It gives the appearance of gross intellectual dishonesty.

I have been a close observer of the Congress and other legislative bodies for fifty years. I even, for a short period of time, was a successful political consultant, having advised a number of successful state-wide campaigns (not in Texas) and for the U.S. Senate. And what this half century of observation has taught me is that neither state legislators or the Congress can be expected to pass legislation that solves any problems. For I, for one, cannot name a single piece of legislation enacted over the past fifty years that succeed in solving the problem it was aimed at.

Look at how many times the internal revenue code has been modified. Has it ever been improved? Tell me about it.

Look at how many times immigration law has been modified. Why do we still have a problem?

Look at how many times weve gotten tough on crime. Ha!

And to stop at just a few, look at the health care mess which gets worse every time a legislature gets involved.

You know, its amazing. There is one political party that is against everything that would better the lives of ordinary people. That party was against Social Security in the 1930s and is the chief proponent of its privatization now. That party is also against reform of the health care system. Of course, its members always claim that they are against these programs because this economy cannot afford them. But economies considerably smaller that ours afford such programs.

This party was making this argument before the events of 9-11, yet after 9-11, while arguing that we don't have the money for medical care, the Congress found a couple of billion dollars to bail out the airline industry, a couple of billion more for compensation of the victims of 9-11, a pile of billions for homeland security, and a yet undetermined number of billions for the wars in Afghanistan and Iraq. And Mr. Rumsfeld wants money to compensate the abused Iraqi prisoners; yet I never hear anyone ask, how can we afford all this stuff if we can't afford social programs? There's a dead rat in there somewhere.

In fact, I concluded a long time ago that there are a lot of dead rats in this political system. Its not that we can't afford programs, too many legislators don't want social programs, and when one is enacted, they do everything they can to see that it will not work effectively, because that provides them with arguments for its reform which really means abolition. And that's why our legislators cannot enact effective legislation.

Which brings me back to Social Security. Neither you nor the other advocates of privatization says anything about how it will work. You remember Satan. He's in those details somewhere. How does privatization differ from abolition? What happens if the market's return turn out to be no better than the current system in providing benefits? Tell me about it. It seems to me that there is only one way to privatize Social Security successfully. Let the government guarantee an average market return on the part of Social Security invested in the market whenever the investments don't attain that level. I can just see the party alluded to above accepting that idea; yet that idea merely asks them to put their money where their mouths are. That's a sure way to catch a fraud which I believe the movement for privatization is. For if the proponents of privatization are so sure of its success, asking them to guarantee it should not be a problem. And if they are unwilling to do that, then they don't have the faith they proclaim in their proposals.

When I was, for many years, a university professor, I read the complete writings of V I Lenin. He was no dumb-bunny. And one sentence he wrote is relevant here. "When any piece of legislation is proposed, ask Who stands to gain?" In this case, I doubt very much that it is the common people. (Scott Burns 5/15/2004)