Atrios has a couple good posts for those who gloss over at the discussion of actuarial predictions, but I’ll introduce a different reason.
The many economic problems created by social security privatization aren’t nearly as bad as the likely political problem created by social security privatization. No system of private accounts can guarantee the same level of support for beneficiaries as the current system can. At best, such a system will be uneven, as is the basis of any system with increased risk. But what happens when retirees find that they don’t have enough to pay bills?
Two things to think about here.
1) Who votes?
Answer: Old people
2) Who else votes?
Answer: Middle aged people who really don’t want their elderly parents moving in.
So what does any government elected from the two groups above do?
Answer: Make them happy.
So when a bunch of bad decisions are made by private account holders or the government depending on the mechanism and there isn’t enough to support seniors how seniors were supported previously, the logic of political action is that the government will move to make benefits similar to those before and hence, blow a hole in the budget again and regulate the investment mechanisms being used then more.
So if you want the government more involved in the stock markets and how they operate beyond fixing information assymetries, push a privatization plan and wait to become more like France.