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¶ … Social Security Privatization is a Bad Idea
It is possible to use a Toulmin-based argument structure to help explain why privatizing Social Security would negatively impact both the results as well as the effectiveness of the program itself. Using this structure, the argument is broken down into six separate sub-headings as it is discussed further.
Claim:
Social Security should be left in the hands of the U.S. Government and not be privatized.
Grounds
There is much proof that privatizing Social Security would lead to a less effective and efficient system. This social safety net program was originally based on the idea that people would claim their benefits at the age of 62 after working and contributing to the resource pool their entire lives. In the 1930's, when Social Security was first implemented, not as many people lived long enough to claim their benefits or didn't live long enough to claim them for very long (Shipman, 1). This meant that the risk the government was taking in essentially insuring each citizen was much less than the risk they now bear given the fact that more people are living well into and through their 60's. It has been argued that by privatizing Social Security, government will no longer have to absorb the higher levels of risk of payout of benefits,...
They are essentially arguing that resources are lost at a rate higher than they are gained. In other words, privatization of social security in an economy populated by overlapping generations of individuals that have time-consistent or time-inconsistent preferences, face mortality and individual income risk as well as borrowing constraints (Fehr, Habermann, and Kindermann, 884).
What the proponents of privatization do not understand is that accumulating assets, if held by individuals, are equal to those if held by the government; resources are not lost. Rather, they are reallocated and the government's benefit obligations fall as individuals' assets rise (Shipman, 2). This means that there is no net resource loss as long as the government is still able to efficiently dole out benefits. Privatizing Social Security would shift the risk from the government to private corporations, which, if they were to go bankrupt of lose money due to privatization, would ultimately shift the fiscal responsibility or burden onto the taxpayers. The current system does not give this potential burden to the taxpayers and, instead, leaves it squarely on the back of the government as a low risk form of…
Works Cited
Fehr, Hans, Christian Habermann, and Fabian Kindermann. "Social security with rational and hyperbolic consumers." Review of Economic Dynamics 11.4 (2008): 884-903.
Shipman, William. "Slippery Social Security Slope." Washington Times, March
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