As always, this was a letter to the editor of the Rapid City Journal. This letter appeared in the Feb. 11, 2004 edition.
Diverting Social Security taxes into Wall Street is the goal of many politicians. This is a political approach to a serious problem.
Individuals should carefully consider the risks of transferring Social Security support from our entire economy to individual stock picking. It should be understood that owning a few shares of the l7,000 publicly traded corporations is much more risky than dependence on the 6 million private and public companies now supporting Social Security.
Whether government or individuals assume the risk of providing minimum support for old age, funding retirement must come from American productivity, not gambling. Workers encouraged by government to contribute capital to corporate America will be gambling that a few publicly traded companies are more secure than the entire wealth of America.
Diverting payroll taxes into Wall Street will strengthen the bond of multi-national corporations on American government. Financing elections already provides multi-nationals disproportionate government influence.
Some politicians believe increasing the “investor class” through Social Security tax investing will guarantee a more conservative electorate. Social Security is too important to politicize.
Marrying Wall Street and Social Security with the wedding ring of Social Security taxes is the antithesis of security.
I will begin by admitting that my disagreement with Mr. Stone’s letter originates from my belief that Social Security should be privatized. I, personally, would love to quit paying into something from which I will never receive benefits. As happy as I am to support the elderly of America, I am too darn selfish to pay into something that will never pay back to me.
“It should be understood that owning a few shares of the l7,000 publicly traded corporations is much more risky than dependence on the 6 million private and public companies now supporting Social Security.”
The problem is that it isn’t just “6 million private and public companies” supporting Social Security. It’s you and I and Joe Bloe down the street taking a cut from our paycheck to pay into something that will not be able to sustain itself until our retirement. So what do I do? I depend on my own retirement savings and essentially end up paying double (so to speak) for my retirement.
Additionally, a diverse portfolio is the first rule of investing. Or, put another way, “don’t put all your eggs in one basket.” (On a side note, Mr. Stone seems to think one can only invest in private corporations. Untrue. There is a government bond market.) Of course, investors will individually have to decide the level of risk they are willing to bear for a certain return.
Also, it is not as though privatizing social security would be a leap into untested waters. Chile has had such a system for quite some time with amazing results for its workers/empowered investors.