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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

privatisation US-style. « Previous | |Next »
April 15, 2005

The big issue in the US is the Bush administration's policy to partly privatise Social Security by directing some of the Social Security payroll taxes to accounts invested in stocks and bonds.

Under one version of the President's reform, younger workers (under 40) would be allowed to opt-out of most of their social security payroll taxes. Instead they would put aside 4% of their income in a personal retirement account which they could invest in the stock market. The workers can dabble in stocks and shares, earn some good money, and become new stock-owners.

This Republican proposal is seen as as the first step to the complete privatisation of social security.

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Nick Anderson

Presumably the Wall Street free marketeers would say that the government has no business running an insurance service. The welfare state should be opposed on principle as the free market always yields the best of all possible worlds. So it is a good idea to allow workers to invest their Social Security contributions in the stock market. Support the Republican privatization plan and help build an ownership society.

I mentioned the welfare state. To the average yank that means all that hammer-and-sickle/ socialist stuff so loved by the foreign Europeans. It means the kind of state interference that is not tolerated in the freedom-loving USA, where a man stands on his own two feet, fends for himself and fights to ensure that everyday life is free from Big Brother.

| Posted by Gary Sauer-Thompson at 3:48 PM | | Comments (2)
Comments

Comments

Gary, Isnt this just a rerun of the Savings and Loan scam of the Reagan years. The Bush boys did very nicely in that scam too.

John

John,

To be honest I dunno. It sure was a great public scandal in the US in the 1980s.

From memory the Reagan administration deregulated the savings and loan institutions and put them on an equal footing with commercial banks. That meant that the S&Ls could pay higher market rates for deposits, borrow money from the Federal Reserve, make commercial loans, and issue credit cards.

As I understand it the S&L's competed against the big banks by attracting a large amount of deposits through offering the highest rate of interest. In order to make money off this expensive money, they had to lend at even higher rates, which meant that they had to make more risky investments and they lent more money than was prudent.

Then a large number of S&L customers' defaults and bankruptcies resulted, and the S&Ls that had overextended themselves were forced into bankruptcy.

That mismanagement happened here in Australia during the 1980s. The US case seems to have had more scams and fraud (Mafia) and criminal conduct than Australia. It resulted in a very expensive US taxpayer bailout of the S & L system.

You are right. The Bush family was deeply involved.

However, the core of the scandal was not the crime and fraud. As was the case in Australia, most of the money lost in the scandal was lost by savings and loan directors who acted well within the laws passed by Congress.