Ranting to /dev/null

Why social security needs private accounts

Doesn't have anything to do with the rightness of social safety nets. Doesn't have anything to do with rate of return. Doesn't even have anything to do with averting the upcoming fiscal disaster - I'm not entirely convinced it's possible.

No, the real reason we need private investment accounts is because if money is set aside in an account in your name on it, then you know that it'll always be there, unless either 1) you spend it, or 2) the economy collapses to the point that it's worthless. If the former happens, you can't really complain, now can you? If the latter does, well, it doesn't really matter whether it's your money that evaporates or the money that taxpayers would have used to pay your bills, because both would be gone. Besides, if you've invested in something like T-bills (which is probably where they'd go, unfortunately) and they become worthless, it's because the US government has defaulted on its loans. If that happens, the world as we know it will come to a screeching hault. It'd be like cruising down the highway at 70 mph and accidentally shifting to reverse instead of fifth.

On the other hand, if you're depending on some third party for a defined benefit pension/social security check, you're in trouble. That promise is only as good as the financial health of the party in question, and only as good as their will to keep their promise. Airlines are defaulting on pension plans left and right, and there isn't any reason to think that other industries can afford to pay thousands of people for not working. The auto industry, which is pretty similar to the airline industry in terms of both union and pension obligations, is in bad shape, and now that the courts have let a few airlines default on pensions, it'll only be a matter of time before it happens elsewhere. But if these people had private investments like 401ks or a social security account, their money would still be there.