Why Privatizing The Golden Years Wouldn't Work

This is an historic moment. Republicans and Democrats are no longer at odds over whether to tackle Social Security. The main issue is how much to cut. The right, like Rep. Paul Ryan, wants to entirely gut it. Leading Republican presidential candidate Gov. Rick Perry is even calling it a "Ponzi scheme." And Herman Cain wants to privatize it like Pinochet did in Chile. But Democrats, too. are taking a few swings at the program. Obama himself has even targeted it.

For a moment, leave aside Social Security's financial outlook. That political debate is more rhetoric than reality. In fact, Social Security has been running surpluses for years and there is a good chance that we will never exhaust the so-called trust fund. But even if it does run out decades away from now, as some suggest, raising the wage base is a reasonable option to get funds flowing back in. American politics rarely reflect what is really going on.

Instead, what would be the consequences of cutting the program? What would the elderly do if it were reduced? Could occupational pensions substitute for our public system?

It's hard to point to another country to offer insight. In comparison to the other advanced democracies, the US is already the most reliant on occupational insurance programs. In 2005, expenditures on private social programs accounted for 10.1 percent of gross domestic product, far above the Organization for Economic Cooperation and Development (OECD) average of 2.9 percent.

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