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Against Privatization Arguments For And Essay

Take the simple case of the retired Americans, who live on social security. Their income -- in the context in which it is limited to social security -- is not sufficient to ensure a decent life style. In other words, the system is unable to adequately support the individuals, and these need to also ensure their pension funds from other sources. "To have a comfortable retirement, Americans need much more than just Social Security. They also need private pensions, savings and investments" (Federal Citizen Information Center, 2005).

The current social securities system is complex and inefficient and, as the editors at How Stuff Works point out, it is no longer applicable in the current context of the dynamic and modern day society. This is explained through two elements:

1. The aging of the population. In the time when it was created, the working population was significantly higher than the retired population, meaning as such that it was easy to finance those in need of social assistance. The contributions of both employee and employer to the social securities system were not larger than 2 per cent. Today, as the proportion of the working people continues to decrease in contrast with an increasing proportion of retired people, this contribution is of 15 per cent. And in the context of the retiring baby boomers, it is expected for it to further increase in the future, generating additional instabilities and increasing federal deficits.

2. The means in which the retirement income is computed under the norms of the social securities system is inefficient and ineffective. The final result is also financially unappealing,...

Today however, it is no longer applicable and it should be replaced with a more suitable system. One suitable alternative in this sense is constituted by the privatization of the social securities system, and the support for this alternative is generated by its ability to reduce several of the current systems' problems. For instance:
A privatized social securities system would be more efficient

A privatized system would be better able to invest the collected money, and to as such generate higher final returns and higher pension funds and medical funds for the contributors

A privatized social securities system would be more efficient in collecting and distributing the taxes

A privatized social securities system would reduce the strains placed on the federal budget and it would as such support the reduction of the national deficits

Additionally, in a context of a continually aging population, the current system would eventually prove unable to support its population. This argument alone constitutes grounds for the need to change the system. And the successful privatizations of the past constitute grounds to support the privatization recommendation.

Resources:

Boskin, M.J., Break, G.F., The crisis in social security: problems and prospects, Transaction Publishers, 1977, ISBN 0917616162

Mishra, B.N., Dynamics of social security administration, Anmol Publications PVT. LTD., 1993, ISBN 8170418321

Sacks, A., Social security explained, CCH Incorporated, 2004, ISBN 0808010719

Social security: understanding the benefits, Federal Citizen Information Center, 2005, http://www.pueblo.gsa.gov/cic_text/fed_prog/ssundben/ssundben.pdf last accessed on October 11, 2010

How does the Social Security system work? How Stuff Works, 2010, http://money.howstuffworks.com/question385.htm last accessed on October 11, 2010

Understanding the benefits, Social Security Online, http://www.ssa.gov/pubs/10024.html last accessed on October 11, 2010

Sources used in this document:
Resources:

Boskin, M.J., Break, G.F., The crisis in social security: problems and prospects, Transaction Publishers, 1977, ISBN 0917616162

Mishra, B.N., Dynamics of social security administration, Anmol Publications PVT. LTD., 1993, ISBN 8170418321

Sacks, A., Social security explained, CCH Incorporated, 2004, ISBN 0808010719

Social security: understanding the benefits, Federal Citizen Information Center, 2005, http://www.pueblo.gsa.gov/cic_text/fed_prog/ssundben/ssundben.pdf last accessed on October 11, 2010
How does the Social Security system work? How Stuff Works, 2010, http://money.howstuffworks.com/question385.htm last accessed on October 11, 2010
Understanding the benefits, Social Security Online, http://www.ssa.gov/pubs/10024.html last accessed on October 11, 2010
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