social security reform

President Bush is revving up his propaganda machine to gather support for his social security reform. He is very good at using slogans and simple SoundBites to gain support from simple-minded. It reminds me of the era of Cultural Revolution in China.

The fallacy of Bush's social security reform is so obvious. But no one dares to point it out. Who dares to say that social security run by government is more secure and efficient than if run by individuals. Haven't we seen enough bankrupted 401K plans managed by individuals?

The main argument of Bush's reform is that social security fund, if invested in conservative stocks and bonds, will generate higher returns. Yes, that is true. But that objective can be achieved without privatizing social security. Social security fund in its current form can be invested in stocks and bonds if mandated. In fact, social security fund managed together will be more efficient and cost effective than managed individually. Individuals will never afford professional advise and oversight that is available to a centrally managed fund.

But that is not the point. Social security is meant to be secure. We all have 401Ks, IRAs, and other savings accounts that are invested in stocks. We need a truly secure safety backup, which is what social security was designed to be. Investing it in stocks and bonds defeats the original purpose.

The so-called "crisis" of social security fund is NOT due to low returns. It is designed to have low but safe returns, achieved by investing only in government bonds. The "crisis", if any, is due to the aging population. To fix this problem, we have to make hard choice, either lowering the benefits, or increasing payroll tax. Privatizing social security is apparently not the right prescription.

To many conservatives, government programs are taboo. Privatization seems to be panacea for all problems. In fact that cannot be farther from the truth. Private sectors, without proper regulations and government oversight, are prone to fraud. Enron, Arthur Anderson, WorldCom, Drug companies, insurance brokers, just to name a few examples. Government agencies, if proper oversight is in place, can be more efficient. In many cases, outsourcing crucial government functions to private sectors, not only creates conflict of interests, but also increases costs. In Iraq, the government itself admits that managing the military oil supply by itself is cheaper than outsourcing it to KBR.

It is appalling to me that many military operations in Iraq and Afghanistan are outsourced to private contractors! Wake up America! Haven't we learned from 9/11. Before 9/11, airport screening was handled by private companies, which hire under-trained, minimum-waged workers to do baggage screening. You think the private sector is doing a better job?