Paying Attention to Social Security

I've been taking notice of the debates surrounding proposed changes to Social Security lately, mostly because Josh Marshall has been blogging about it a lot, pointing to all kinds of information sources, such as thereisnocrisis.com and this editorial in the Star-Tribune exposing problems with the Heritage Foundation's -- and the Bush Administration's -- claim that African Americans do not benefit as much from Social Security as whites due to shorter life expectancy (an argument taken up again in today's New York Times).

Okay, so one of my new endeavors has been trying to keep up with the publications that are coming out of think tanks, and to that end, I've been checking The Brookings Institution's site periodically. On it, I found the big wake-up call, an essay that describes the stakes with vigilant lucidity:

At the libertarian Cato Institute, Michael Tanner, the director of the project on Social Security choice, makes the same case. "We're changing fundamentally the relationship of people to their government," he says. It would be "the biggest shift since the New Deal."

Bingo. Once you cancel the zeros on both sides of the equation, neither creating private Social Security accounts nor ratcheting down the growth of future benefits would be an economic milestone. Conservatives need to frame Social Security reform as a dollars-and-cents issue, but that is not really why they are excited. What they really hope to change is not the American economy but the American psyche.

Conservatives used to speak derisively of liberal social engineering. The attempt to create private Social Security accounts is, so to speak, conservative social counter-engineering. Government should help provide for unforeseeable contingencies: tsunamis, unemployment, open-heart surgery. But if there is one event in all of human life that is wholly foreseeable, it is the advent of old age. Why, then, shouldn't people save for their own retirement, instead of relying on welfare from the government — which is what Social Security, as currently constituted, really is?

Tanner argues that people who own assets behave differently and see their place in society in a different light. Private accounts, he says, would encourage a culture of saving and personal responsibility; they would discourage political class warfare; they may, he argues, improve work habits, and even reduce crime and other social pathologies. Create private Social Security accounts, and millions of low-income Americans will be stockholders and bondholders. Republican political activists look at the way portfolio investors vote — and salivate at the prospect of millions more of them.

I don't know much at all about economics, but: Wouldn't there be consequences? My first impulse might be to protest that capitalism is global, and even if privatizing Social Security were to make everyone in the U.S. wealthier, wouldn't that windfall come at the expense of developing nations? Or would a privatized, free-market approach, not only to Social Security, but applied more broadly and on a global scale, really be best? I'm asking sincerely; I seriously would be interested to know how that would work. It's a radical change, and those always require leaps of mental faith to understand fully. I don't know that I could make such a leap, but I want to learn as much about both sides as possible, so if anyone would like to respond or just post some links to material I can read, I'll play the believing game.