Volume 4, No. 2 (Summer 2001)
The cognoscenti behind the Bush (Campaign 2000) proposal call their plan “privatization.” Privatization, as typically understood by economists, means the transfer of capital ownership and resource allocation from the state to private individuals or organizations. Social Security is a tax-revenue stream from workers to dependents. Thus true privatization would involve repealing the FICA tax and allowing individuals to save or spend the attendant increase in income however they wished. Is this genuine privatization the vision of the academic Beltway brain trust behind President Bush’s and others’ proposals for Social Security reform? Or is it their intention to convert the Third Rail into a Third Way? Two recent “pro-privatization” volumes—the first authored by Daniel Shaviro and the second edited by John B. Shoven — will unavoidably lead the thoughtful reader to conclude the latter.
