Proponents of this plan point to the magic of compound interest and argue that individuals will have more freedom over their money and will have the opportunity to get higher benefits. Opponents claim that pensions are too risky to entrust to the private market, and that private plans undermine the social solidarity of a public program. Furthermore, they point out that privatization plans have high "transition costs." Because current workers provide benefits for current retirees, if workers divert funds into their own accounts, there would not be enough money for current retirees. Consequently, all privatization plans include hefty tax increases for as many as 75 years.
College students, especially elite college students, lie at the heart of this debate for various reasons. Proof of this is that earlier this year, a leading proponent of privatization paid to have 400,000 pamphlets stuffed into newspapers on America's most prominent college campuses.
Privatizers know what you should know, that as students at a top university, you can probably do much better under a private system than a pay-as-you-go system. No one disputes that. A private system would certainly benefit high-wage workers because they can afford to take the market risk that yields high returns.
The question is, however, how will everyone else fare, and is that important? Privatization pushers say that even the poor will be better off under a private system. Opponents like the AFLCIO say a private system would not only leave low-wage workers unprotected, but would violate a basic principle of the welfare state, releasing the wealthy from any obligation help support lower-wage workers.
Like anything else, there are pros and cons to both privatization and to tinkering. What troubles me, and what should trouble you, is the extent to which people are trying to influence-us by pointing out how much we have to gain from something without telling us how much everyone else might lose. Social Security keeps over 40 percent of the elderly above the poverty line because we pay a little more.
Will privatization protect disabled workers, provide a minimum level of protection for low income workers, ensure benefits for non-working spouses or provide protection from market fluctuations? And what kind of taxes will be necessary to fund the transition? These are the kinds of questions we must ask our-selves before we can make an informed and sensible choice.
Conley Rollins '98, a social studies concentrator, is writing a senior thesis on the future of social security. He lives in Lowell House.