Published on Tuesday, February 15, 2005 by the Daytona Beach News-Journal (Florida)
Greed Behind 'Reform' Pitch to Let Wall Street at Nest Eggs
by Pierre Tristam
|Sears in its early years was famous for clever advertising. There was the "Astonishing Offer" of 1889 promising a sofa and two chairs of "fine lustrous metal frames beautifully finished and decorated, and upholstered in the finest manner and with beautiful plush," all for 95 cents. Customers bought in and received the furniture exactly as specified, except that it was sized for a doll house. Advertising for a $1 sewing machine also drew many takers. What they got in the mail was a needle and thread.
These days laws protect against deceptive advertising -- except when the government is the advertiser and the sewing machine is Social Security "reform." It would take an encyclopedia to give justice to the proposed swindles in all their mutating disorders. Last week this space explored a couple of those. But no matter how much he depends on the electorate's critical illiteracy, the president's proposal cannot live on dishonest math alone. Anyone can add, and in the end the numbers don't add up no matter what creative accounting you use. Yet the political climate is such that, whatever the numbers say, Bush's astonishing offer is being taken seriously.
Two reasons come to mind. First off, it is no longer about the math and probably never was. It is about a shift in what an embarrassingly sizable number of people believe they, through their government, ought to be responsible for. Franklin Roosevelt instituted Social Security on the assumption that most Americans agreed that it's fair, decent and necessary to give up part of one's earnings to alleviate others' poverty (namely, the elderly's) and ward off one's own. Most agreed, too, that giving up more money than one received, as some do, was not necessarily a sin, that a measure of wealth redistribution was something the wealthiest nation on the planet could afford. It might have seemed just as fair and decent to give up a fraction more of one's earnings (that's all it would be if it came to that) to ensure the retirement of baby boomers. In its working days that generation has, after all, insured the greatest prosperity any economy has ever known. A little payback would not be out of line.
But sharing minimally in the care of the poor or the elderly is no longer considered to be the national responsibility it has been for a few decades. That thinking is out of line now. It's been replaced by the coarse materialism of dizzy prosperity. That is, selfishness. An ownership society is another way of saying, "Get as much as you can now and let others take care of themselves, come what may."
The second reason Bush's proposal is finding a greedy audience is about a belief in the stock market indistinguishable from belief in God, and just as pointless to argue with. (It is not a coincidence that fewer people attend church than tend to their stock portfolio.) Blessed are the investors, for the kingdom of Mammon will be theirs. There's no reason to take issue with the belief or its practice through the market. It is every individual's right to invest where he pleases, assume the risks he chooses, gamble all he wants, or make little deities of stock market symbols. But that right has always been there for those who could afford it, and it's been made easier -- as easy as hopping on a casino boat -- since the creation of 401(k) plans. It is a fallacy to suggest that the government is somehow preventing anyone from taking "ownership" of his retirement, if that kind of risk is what he chooses to own.
Social Security privatization is not about enhancing that right. It is about Wall Street salivating at the sight of ordinary Americans' guaranteed nest egg. Wall Street doesn't want it invested in Treasuries (as most of the Social Security surplus is invested). Wall Street wants it invested, and risked, in Wall Street. The sales pitch is that it'll benefit investors, make them part of the money class, as if a mutual fund is a synonym for wealth. Look at the 1990s' skyrocketing returns, brokers say. The reality is different. The richest 10 percent of investors reaped almost 90 percent of all stock market gains between 1989 and 1997. The rest fared less well or not at all. And the more expensive stocks become, as they have, the smaller the returns. As the economic historian Kevin Phillips put it, "The middle class has often been pulled into the 'money class,' but frequently to be relieved of some of its savings." It is about to be fleeced.
Why the persistent buy-in? Because a $1 sewing machine always sounds better than the cost of true, decent mending. Hold on to your needle and thread when you get them. You'll need them.
Pierre Tristam is a News-Journal editorial writer. Reach him at firstname.lastname@example.org.
© 2005 News-Journal Corporation