Well, you live long enough, and sooner or later, you end up agreeing with Alan Greenspan. How right he is, that clever Mr. Greenspan -- investing Social Security funds in the stock market is a truly bad idea.
This particular lemon is the pet project of Wall Street, which stands to make a killing from it, and of conservative Republicans. That President Clinton should embrace this barmy notion is a typically Clintonian political play. He really wants to do something about Social Security, and opening up the stock market option as well as individual savings accounts should get the Rs, who have been pushing both ideas, excited enough to try to work out a deal.
Of course, putting Social Security money into the stock market is not solely the intellectual province of such folks as Martin Feldstein, chairman of Ronald Reagan's Council of Economic Advisers. Sen. Patrick Moynihan and some other liberal lights are for some variation of the plan.
And not all Republicans favor it: Rep. Bill Archer, chairman of the powerful House Ways and Means Committee, said: "We can save Social Security without making the government an owner of private markets. The proposal will lead to mischief, political favoritism and less money for Social Security recipients. It's a very bad idea."
Since Clinton has proposed the ideas, some Republicans are now backpedaling, on the theory that anything advocated by the man they regard as Beelzebub must be wrong. Several congressmen have decried Clinton's idea that the government should invest the funds.
"The decisions will be made by government bureaucrats instead of professional money managers," cried one. Right -- professional money managers like Michael Milken, Ivan Boesky, Charles Keating, Nick Leeson (the guy who brought down Baring's, the old bank in Britain) and John Meriwether (the hedge fund genius who had to be bailed out to the tune of $3.6 billion). Yes, we certainly want those professional money managers involved.
I'm all for letting people make their own decisions, but can you feature a zillion senior citizens, many of whom are getting vague from old age, many of whom never learned a thing about stocks in their whole lives, suddenly put in charge of investing their Social Security money? They'd be sitting ducks for every con man in America.
This seems to me the equivalent of the equally daffy idea that we can solve Social Security's problems by extending the retirement age to 70. The first idea shows how out of touch Washington is with the intellectual realities of old age, and the other shows how out of touch it is with the physical realities of old age.
Of course, if you're a congressman, you can go on voting and bloviating until you're as old as Strom Thurmond without any difficulty. But have you ever looked at the feet of an old waitress? Do you know what it's like to do heavy lifting all day in your 60s?
You must admit that there is evidence for the concern about whether government money managers might take political correctness into account when making investment decisions. In fact, Texas recently decided to pull $43 million in its permanent school fund out of the Walt Disney Co. because fundamentalist Christians on the state Board of Education were upset about Disney's support of gay people.
The one country that has carried out privatization of its social security system is Chile, during the reign of Augusto Pinochet and under the influence of Milton Friedman. The results have been awful. And Britain's partial privatization from the Thatcher era is an unqualified disaster.
Wall Street has been telling us that the sky is falling to panic us into precisely the kind of dumb moves that Clinton recommended. The fact is that Social Security projections are based on extremely pessimistic economic assumptions: a growth rate of just 1.8 percent during the next 20 years (a lower rate than any comparable period in American history), with more low growth after that. The July 1998 issue of the Atlantic Monthly carried an important article debunking much of the hysteria over Social Security; I highly recommend it.
Fort Worth Star-Telegram