Shared Risk vs. Social Darwinism

The debate over whether to privatize Social Security is really one about whether, when it comes to basic safety net issues, there should be shared risk, or survival of the fittest. The current system we have now is shared risk - we all put money into a big pool, and that means no one individual can really get too screwed over. Private accounts are in the spirit of Social Darwinism - everyone has to hope their individual accounts do well, or they are screwed, a casualty of a surival-of-the-fittest system. It's really a philosophical discussion.

I come down on the side of shoring up the current system, because Social Security is not a luxury item, or icing on the cake. It is the basic, bare minimum needed to retire, and when it comes to necessities like that, the less risk the better. I don't want just the fittest to survive, I'd rather everyone survive.

But that doesn't mean there aren't some creative hybrids that limit risk AND maximize returns. Rep. Jerry Nadler (D-NY), for instance, previously proposed to have an independent Social Security oversight board "invest a small portion of Social Security assets in broad index funds which track the market based on a fixed formula." In other words, a part of the big pool of money would be invested in the market. Because the money would be invested collectively - and not individually - the risk would be spread out, but the collective returns could potentially increase. And this is not a radical idea - as Nadler notes, "many state and local governments invest up to 60% of their assets in the stock market."

Rep. Peter DeFazio (D-OR) has also proposed a similar plan. It additionally tinkers with the payroll tax so as to provide some relief for middle-income families from this regressive levy.

Sure, these two proposals are a few years old and have some outdated budget assumptions (namely, that there was a surplus). And yes, maybe they aren't perfect. But their underlying principle is clear - there are ways to pragmatically increase returns for the system, without disproportionately increasing risk to individuals. And they highlight just how radical President Bush's privatization proposal really is. If he was interested in shoring up returns and fixing the system he would have started pushing something like this. Instead, he's pushing a polarizing, far-right proposal designed only to serve the interests of Wall Street.