Posted on 03/26/2002 8:55:04 AM PST by b4its2late
Why Enron still captures so much of the public's attention, unlike many financial disaster stories of the past, is a consequence of the two-decade-long publicity campaign of the rabid pro- privatizers of Social Security. Bad ideas often have random good consequences. The privatizing lobby has trumpeted the growing participation in stock market, claiming that most every American owns stock.
Well, not every American, but estimates show that 54 percent of American households own some stock, mutual funds, or retirement accounts, up from just over a third in 1989. And when there is ownership there is interest. With any luck, the Enron debacle may produce some healthy legislation and accounting reforms, much to the distress of business sector, because of this growing participation and concern.
Of the 54 percent who owns stock, slightly over three-fourths of the total amount is held by the top 10 percent of income earners. Of that 78 percent, 42 percent is owned by the top 1 percent, according to Edward Wolff, a New York University researcher.
Everyone else below the top 10 percent owns around 21 percent. And 46 percent of the country owns no stock, money market funds, or retirement accounts. Except for Social Security -- which President Bush, and the administration's foot soldiers of money market managers, still wants to privatize.
The lure of the stock market is enhanced by the get-rich-quick crowd, exemplified by Enron's top executives, who turned their company stock into millions of dollars. What they appeared to be running was a huge pyramid scheme and them that got there first got out wealthy.
The public has seen a decade of that sort of instant riches; the dot-com world of the '90s produced dozens of millionaires and thousands of bilked and busted investors.
In the past, stockbrokers felt they had done well if their holdings matched, or beat by a point or two, Treasury bonds. The sort of astronomical winnings of the Enron brass and the dot-com few, nonetheless, was the carrot that brought so many people to the market. Many Americans are used to playing state lotteries and the odds of cashing in big are not too dissimilar.
Though not likely to happen during Bush's first term, the long march to Social Security privatization is not over by any means, demonstrated by the president's cheerleading pro-privatization remarks to the national retirement summit held recently in Washington. There is too much money at stake for those who want it to happen and that includes a great many of the folk who surround Bush.
The growing gap between rich and poor continues to serve up egregious examples. Bar bills of $62,000 for one night's dinner libations rung up by bankers at Barclay's in London raise a few eyebrows these days, whereas the millions spent on the Olympics is deemed well-spent, even though it cost nearly a million dollars an athlete to put on, and the corporate sponsorship was unstinting, beginning with the bribes the folks in Utah had to shell out to get the games in the first place. At least that was a show, a circus for the whole country to watch, not a dinner for a few in a fancy London restaurant.
One would hope that Enron put an end to the campaign to privatize Social Security, but Bush still hopes to parlay his war-on-terror popularity to the patriotic "reform" of Social Security. If the growing participation in capital markets proves anything, it shows that if people want to speculate and invest in equities they can do so on their own. But President Bush still describes Social Security as a mutual fund, not the insurance program it is.
Rep. Clay Shaw, R.-Fla., chairman of the House Ways and Means subcommittee on Social Security, and House Majority Leader Dick Armey, R.-Tex., want to send recipients of Social Security a letter saying that their current benefits will never be reduced. That may sound like a good, reassuring thing, though what that wasteful mailing is meant to do, is to convince Americans that it is safe to proceed with privatization, since the government will set a floor below which benefits will not fall. Let's hope that the majority of Americans do not fall for it.
William O'Rourke is a professor at the University of Notre Dame. His latest book is "Campaign America 2000: The View From the Couch."
This guy gives meaning to the saying that those who can, do; and those who can't, teach.......
Absolutely, and both of your points are on target, but I liked the second one the best.
I wonder how a fool like this can stand up in front of a room full of young people who would be the primary beneficiaries of a privatized system. He must assume none of his students will think to run the numbers. If they did, the contempt factor would drive this prof out of the classroom.
I still wonder if any of his students are competent or intellectually curious enough to run the numbers. Any ND students here?
As far as privatization goes, if its ultimate end were to eliminate SS then maybe it'd be a good thing. Otherwise, I'm not so sure. It seems like a mistake, on some very basic level, for the federal government to be holding large amounts of private stock. Or am I barking up the wrong tree here?
The Big Lie is that Social Security is some kind of retirement savings plan.
It is NOT.
Social Security is a socialist income redistribution scheme, nothing else.
Those who are working are taxed to provide a "safety net" for those who are less fortunate.
Originally, this meant retirees and surviving dependents.
Congress has, of course, complicated it far beyond this over the last 65 years.
But one fact remains: it is NOT a "savings plan", it is an income redistribution scheme.
A major facet of The Big Lie is that "we have to do something so that Social Security remains solvent in the future.
Poppycock!
In today's age of modern computerization, the computation for operating an income redistribution scheme that remains perpetually solvent is quite simple:
The only change necessary to the current system is that monthly payments to eligible recipients would be a variable amount, not fixed.
THERE IS ABSOLUTELY NO NEED FOR A MULTI-TRILLION DOLLAR "TRUST" FUND!!!
Congress should NEVER have been permitted to confiscate so much money from the American People in the name of The Big Lie. This fund is nothing but a slush fund that Congress raids to pay for other government expenditures. If private sector employers did the same thing with their companies' pension funds, they'd be placed in prison. The "privatization" plan proposed by Bush is merely an attempt by Wall Street brokerage firms and financial institutions to get in on the scam: grab a portion of a constant revenue stream (guaranteed by taxation) from which they can skim their commissions.
Daschle's "concern" over the Social Security system is a lie.
Bush's plan to Enronize the system is worse.
The American People need to wake up and put these liars and thieves in prison.
My new employer offers a 401K cafeteria including "no-load" mutual funds (5 pounds of slick brochures). HR said "no management fees." But in reality if I invested the max in the 401K, my portion of the fee of the plan administrator would be 6%. If I invested less than the max, my part of his fee would be more than 6%. None of the 50 odd participants already in the plan realize this.
I was in two 401k plans in 85-87 and 91-92 with big companies. Over $4,000 was deducted from my paycheck and placed in "no-load mutual funds". But the fees of the plan administrator were so large that during the booming 90's my balance never exceeded what was deducted from my paycheck. Due to the slump in the market, the account is currently at 70% of what I put in over 10 years ago.
It is my understanding that a company MUST have a plan administrator and thus must have the expensive overhead. Until a system is designed where the middle men and their fees are not required by law, most of us are, and will be, losers. The advocates of privatization who understand how to build wealth need to address this pragmatic obstacle.
No, you're not.
Our capital markets work well because participation is voluntary.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.