Andy Stern, President of SEIU, has a Blog that is definitely worth reading for people interested in labor issues (whether you agree with him or not – I’ve posted before about why I feel his Unity Partnership idea is destined to fail – he is one of the labor movement’s best thinkers). Today he posts about social security, an issue that I am also very concerned about. Linking to this .pdf of an article by Austan Goolsbee at U of Chicago, Stern makes the (undoubtedly correct) claim that Wall Street brokers stand to receive a huge windfall (around a trillion dollars) in fees if social security is privatized. Goolsbee argues (I don’t see Stern making any similar suggestions, but that is for a different post) that raising the retirement age by 6 months to a year – retroactively and immediately I might add – would save the system about the same amount of money. I totally agree with both Andy and Goolsbee that the fee windfall for Wall Street is hard to swallow. My guess is that if you opened this thing up for bids (competitive bids, mind you) that you could find some great firm willing to administer private social security accounts for much less than these estimates, but let’s assume for argument’s sake that it will cost somewhere around a trillion to do it. Doing nothing (which is what, as I can see from his post, Stern is proposing – I admit I haven’t searched around for anything else he’s written on the subject) or even adopting Goolsbee’s suggested raising of the retirement age still leaves the system bankrupt, barring huge tax increases. If you give people the OPTION of going into private accounts, you can make the system solvent, create about a million jobs, generate enormous savings and create huge investment in American businesses. Not to mention the fact that the current return on social security (assuming of course there is any money left when I turn 65 – not likely) is around 2 percent – Goolsbee’s worst case assumption is a return of about twice that, AFTER paying Wall Street.
