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Privatization Of Social Security Essay

1018 words - 5 pages

My Position Statement
My position is that social security should not be privatized because the economic impact for individuals and the nation are enormous.
Economic Argument against My Position
A number of economists support privatization of social security ideology for a variety of reasons. First, there is a general argument that the social security is not an investment system (Estes 10). Thus, workers inject their money for a considerable length of time with very limited returns emerging from this form of saving.
Secondly, current system tends to limit an individual’s ability to engage such savings in diverse investment platforms that would lead to an improvement in their returns (Idemoto ...view middle of the document...

There is a higher likelihood that individuals will start operating individual or joint business ventures from such savings. The returns from such businesses will be taxed and thus contribute to national income. In addition, opening and operating licenses for new businesses will lead to an increase in national income on a consistent level. Opening new business enterprises will increase cash flow in the economy and thus improve economic growth and outlook.
Economic Arguments Supporting My Position
Although the economic issues raised above hold valid grounds, the enormity of economic and ethical issues surrounding privatization of social security are daunting. First, the cost expected for this transition from government operated social security will be in the range of $ 100 to $ 200 billion (Idemoto 4). Such exorbitant funds will create a dent in the national economy that might cripple national growth for a moment. In addition to this transition cost, the social security trust fund necessary for taking care of the elderly persons is higher and thus privatization will create an anomaly with respect to care for the elderly.
The previously identified ideation that privatization will lead to increased autonomy is flawed. Researches from countries like Chile that have privatized their social security have shown that individual investment is far much more expensive to both the country and the individual (Idemoto 4).
A large number of middle and low-income earners may not be able to make proper investment decisions (Williamson 25). Not everyone will be able to invest for their future otherwise the country would be saturated with stagnant business venture that have very little, if any, sales. This would derail national growth. A large majority cannot save for retirement for a variety of reasons. For instance, individuals with elderly or sick family members cannot invest their finances at the expense of these sick or elderly family members. Moreover, individuals that have children find it considerably hard to save their money due to various demands.
The next challenge is one of inequality. First, women are ordinarily known to work for fewer years coupled with fewer hours as compared to their male counterparts (Estes 12). Privatization will disadvantage these women because their returns...

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