Making Old Age Less Safe

It is almost an optical illusion: looming on Japan’s horizon, and on Europe’s and on America’s, is a pensions crisis. The problem is real, though exaggerated. The illusion is in some of the plans being devised to deal with it.

The main question is whether privatizing pension systems, as President George W. Bush has proposed for Social Security in the United States, would solve the problem or merely make matters worse. With many countries pondering whether to adopt variants of the Bush plan, the question requires careful examination.

By itself, privatization is clearly not the solution. America’s troubled private pension system – now several hundred billion dollars in debt – already appears headed for a government bailout. There was a time when privatization – allowing individuals to set up individual savings accounts – seemed better than Social Security, which invests in lower-yielding Treasury bills. Advocates of privatization argued that funds would do much better if invested in stocks, predicting a return of 9%.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/ncjHX1V;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.