Generally, I oppose private investment accounts for Social Security. Just call me conservative, but I think the country is a lot safer with the assurance of retirement money actually being there than taking a chance on the "market". But it just dawned on me that if such a system was to come about, what would the political and structural ramifications for the "investors" and the Market.
First, this wouldn't be like normal people investing in the stocks and bonds, opening up investments accounts and putting in their life savings. There would have to be a new government bureau (bureaucracy) to manage the investments and to keep track of the money. Your average citizen investor would be intensely interested in the fairness of the market and the performance of her retirement investment and would probably be obsessively following every nuance of their accounts behavior.
Second, let's just imagine that, oh, say 30% of the people move half of their Social Security account into the Market. Everything is going swimmingly, they are getting a better return on their money and Wall Street investment companies are raking in their fees.
But then the market drops. It drops precipitously. Suddenly, people aren't so happy and are asking a lot of questions. Why is CEO compensation so high? Are they churning my account for more fees? Someone just made a pile, why wasn't it me?
Then imagine another Enron or Worldcomm. Suddenly there's a hew and cry for reforming the Market and investment companies. The checks and balances imposed on the banking and investment industry after the '29 crash (you know, the ones subsequently gutted under Reagan and, later, the Republican Congress) start looking mighty good again. Congress opens up a myriad of investigations and the Justice Department is bullied into finally doing its job. Watchdog agencies pop up like prairie dogs. Multi-millionaire investment managers are forced to do the perp walk.
So in their efforts to funnel yet more billions to their political supporters, the Republicans issue in a new era of Government regulation and control.
The U.S. Government becomes the biggest institutional investor on the planet and now can dictate to the markets what behavior is right and wrong and who's going to be allowed to benefit from "their" investors.
Sounds like a win-win to me.