We can grant that capitalism – or at least freer market capitalism (no market is ever totally free) – will likely produce more economic growth, thus providing more overall wealth. Adam Smith has a point. Yet we also know that capitalism (or at least freer market capitalism) inevitably produces winners and losers – and that, in addition, there will inevitably be some people who fail not because of the economic system but because of circumstance (e.g., illness, death, bad luck or discrimination). This is why we need to have some kind of Social Security system.
Yet, subjecting a Social Security system directly to market forces (privatization) places it right back into the very economic realm it was designed to ameliorate. Unquestionably privatization will allow some people to do much better than with an authentic Social Security system (again, there will be winners), but it will also make some people do much worse (there will be losers) – something that will inevitably result in a rude awakening, especially for those losers. Social Security will become, for some, even for many, Social Insecurity.
Bush and most economic conservatives have been part of a tradition that has wanted to get rid of Social Security since its inception. They may soon get their wish. They see it as infringing on freedom (why should I be forced to give my money to help someone else?), as bad economics (it removes incentives and socializes risk and thus reduces overall wealth), or simply as helping people who don’t deserve it (the undeserving poor). But they clearly have no plan (except possibly a domestic “shock and awe” program) to deal with the inevitable social distress, dislocation or even catastrophe caused by an economic system that produces growth and winners and losers but lacks an authentic Social Security system.
Perhaps the inevitable bread lines, Bush-villes and destroyed lives that will be caused by privatizing Social Security reflect moral values, but I have my doubts.
Roger A. Berger