Round 1
Pro: There is a lot of controversy over government spending, one of the largest government expenditures being Social Security payments. While the old may have paid into the system for their entire lives, that money is not pooled into a Social Security bank account. It has long since been spent by the government which means that funding for Social Security will come from young taxpayers. The only feasible way to maintain this system is for the population or productivity to increase infinitely, neither of which is sustainable, especially with a large aging generation like the Baby Boomers. By privatizing Social Security, the money paid by the old is what they get out plus extra if good investments are made with the money. This removes the tax burden from young people and assures that the old have money. Privatizing Social Security also opens up the door for competition, forcing Social Security companies to be vigilant with their clients’ money or risk losing them.
Con: While it is theoretically true that competition will force Social Security companies to be vigilant with the money brought in by their clients, it wouldn’t necessarily be the case. Instead of it being under the guidance of the government to make certain the money is used properly, it would be left to financial institutions and advisors who might take advantage of clients that aren’t familiar with retirement investing. The same competitiveness that should cause these companies to work hard to benefit their clients might also cause them to mislead them. Furthermore, if Social Security were left in the hands of private investors, there is the possibility that these investors would favor the wealthy over the poor. After all, they would be more likely to put extra into their retirement accounts, and thus, into the investors’ pockets. At least the current system deducts money in a fair manner.
Round 2
Pro: The private sector will arguably be much more invested in your future than the government. If they can provide a good service to their customers then they will attract more of the market and grow as a company, their success is largely dependent on how well they service their clients. Government-run Social Security, however, has no real motivation to do well because everyone is forced to do business with them and there are no alternatives. While lack of supervision may be a concern to some, privatizing Social Security doesn’t mean there won’t be government regulation. There are already laws on the books for how investors are allowed to spend their clients’ money and new ones could be passed specifically for Social Security. Another concern is that Social Security would become dependent on the stock market but I argue that it is one of the few things that may save it. Social Security in its current state is unsustainable; with the Baby Boomers retiring soon, the tax burden on younger generations will become unbearable. Currently, almost a fourth of all government spending is on Social Security alone and this number is only going to increase. Unless we want to create a massive tax burden upon the entire country, privatization of Social Security is the only way to sustain it.
Con: The idea that privatizing Social Security would be a better option than the current one doesn’t take into account things like the comparison of efficiency. By having all of the retirement accounts handled by one group, the U.S. government, the administration can be handled in the same manner for everyone. In addition, having all of those investment groups means having all of their administration fees. Because of competition, they may be fairly low, but that is no guarantee. And again, because the wealthy are more capable of contributing to the investors’ programs, it’s likely that the investors will try to win their loyalty before anyone else. An easy way to do that would be to lower fees for those customers. Not only that but by having Social Security run by private financial firms, it would be more susceptible to the whims of the stock market. This makes it less of a guarantee than Social Security as it is now. The question we should be asking is whether or not privatization of Social Security is actually a secure choice.
Pro side debated by Stefan Teodoru from Young Americans for Liberty
