Monday, February 07, 2005
Social Security and the Ownership Society
There has been a lot of press lately, especially since Pres. Bush gave his inauguration speech, about the creation of an "ownership society" through Social Security reform. The Democrats have, predictably protested that Social Security reform plans as needless because Social Security is not in crisis.
Well maybe it is. Maybe it isn't. What I know is that if Bush intends to use Social Security contributions to create an "ownership society" he needs to have some folks go back to the drawing board.
I don't want to quibble with the merits of having a portion of Social Security contributions make their way to Wall Street via personal accounts. I think it can be adequately demonstrated that the risk of investing in stocks and bonds and indexes thereof can be controlled. What such investment will not do is lead to an "ownership society." Ownership implies control...and so far the Bush proposal does not include any process by which America's working people express their will directly to corporate boards of public companies listed on stock exchanges.
But even more importantly, the Bush proposal leaves out small and medium-size business ("SMEs"). America's SMEs create the overwhelming number of jobs created in USAmerica, despite a huge disadvantage in gaining access to capital. Under the Bush proposal our Social Security personal accounts will be invested on Wall Street. What do stock markets do? They trade corporate shares on a secondary market. Unless you buy a stock directly out an IPO you're just joining the endless trade of securities on the secondary market. Such activity does not directly create jobs, finance plants or buy new equipment unless someone liquidates some portion of their portolio to invest in an IPO, a primary private equity transaction or their own business. Furthermore America's workers run the very actual risk of being offered yet another way to invest in the downsizing and offshoring of their own jobs, no matter how much of Corporate America is held in trust on their behalf.
Which brings us to Bush's grand and glaring omission. This secondary money isn't headed directly to the mainstreets, farms and factories in your community, and the Bush proposal doesn't suggest a way for our Social Security personal accounts to be invested in a direct manner. SMEs create nearly all the jobs in USAmerica and right here in Kansas, and they could use the capital, and we could use the security that comes with local control of the billions of dollars that Kansans would contribute to Social Security personal accounts. Democratic leadership ought to be falling all over themselves to highlight this most interesting fact. States ought to be falling all over themselves to use Social Security personal accounts to adequately capitalize SMEs in their states.
Well maybe it is. Maybe it isn't. What I know is that if Bush intends to use Social Security contributions to create an "ownership society" he needs to have some folks go back to the drawing board.
I don't want to quibble with the merits of having a portion of Social Security contributions make their way to Wall Street via personal accounts. I think it can be adequately demonstrated that the risk of investing in stocks and bonds and indexes thereof can be controlled. What such investment will not do is lead to an "ownership society." Ownership implies control...and so far the Bush proposal does not include any process by which America's working people express their will directly to corporate boards of public companies listed on stock exchanges.
But even more importantly, the Bush proposal leaves out small and medium-size business ("SMEs"). America's SMEs create the overwhelming number of jobs created in USAmerica, despite a huge disadvantage in gaining access to capital. Under the Bush proposal our Social Security personal accounts will be invested on Wall Street. What do stock markets do? They trade corporate shares on a secondary market. Unless you buy a stock directly out an IPO you're just joining the endless trade of securities on the secondary market. Such activity does not directly create jobs, finance plants or buy new equipment unless someone liquidates some portion of their portolio to invest in an IPO, a primary private equity transaction or their own business. Furthermore America's workers run the very actual risk of being offered yet another way to invest in the downsizing and offshoring of their own jobs, no matter how much of Corporate America is held in trust on their behalf.
Which brings us to Bush's grand and glaring omission. This secondary money isn't headed directly to the mainstreets, farms and factories in your community, and the Bush proposal doesn't suggest a way for our Social Security personal accounts to be invested in a direct manner. SMEs create nearly all the jobs in USAmerica and right here in Kansas, and they could use the capital, and we could use the security that comes with local control of the billions of dollars that Kansans would contribute to Social Security personal accounts. Democratic leadership ought to be falling all over themselves to highlight this most interesting fact. States ought to be falling all over themselves to use Social Security personal accounts to adequately capitalize SMEs in their states.
