A Cato Institute press release. Note the authors' employer - State Street Advisors, a large portfolio manager. Doug ---- >July 22, 1997 > >Objections to Social Security privatization don't withstand scrutiny > >"The most common criticisms of a market-based retirement system are >unfounded," says William Shipman in a paper released today by the Cato >Institute. At a Cato Policy Forum on Capitol Hill, Shipman addressed the >eight most common objections he's heard in the course of giving more than >100 speeches and interviews about Social Security privatization over the >past year. > >In "Common Objections to a Market-Based Social Security System: A Response," >Shipman and coauthor Melissa Hieger discuss common criticisms of >privatization, including questions of market risk, potential difficulties >for unsophisticated investors in the system and the plight of survivors of >deceased workers. "None of those objections survives a careful examination >of the evidence," say the authors. "In fact, most represent a >misunderstanding of financial markets and how a privatized Social Security >system would work." > >Some critics of privatization claim that private markets are risky and that >only knowledgeable investors can successfully handle such risks. "In >reality," Hieger and Shipman write, "long-term investment in private capital >markets is less risky than the current Social Security system and can be >handled by even inexperienced investors." > >Social Security privatization will not hurt low-wage workers, according to >Hieger and Shipman. They note that, because of its much higher returns, a >market-based Social Security system would benefit individuals across all >income, age and education levels and offer more security than does the >current pay-as-you-go system. Hieger and Shipman argue that benefits from a >privatized Social Security system will greatly outweigh any fees and >administrative costs and that survivors' benefits would be better than under >the current system. > >"The privatization of Social Security is an idea whose time has come," say >the authors. "Common criticisms of a market-based retirement system are >unfounded and should not stand in the way of providing a better and more >secure retirement program for today's workers." > >William Shipman is a principal with State Street Global Advisors, and >Melissa Hieger is a vice president with the firm. Shipman is also >co-chairman of the Cato Project on Social Security Privatization and >coauthor of the book, "Promises to Keep: Saving Social Security's Dream." > > >Social Security Paper no. 10 >(http://www.socialsecurity.org/studies/ssp10es.html) > >Contact: >William Shipman, principal, State Street Global Advisors, 617-654-3137 >Melissa Hieger, vice president, State Street Global Advisors, 617-664-6668 >Dave Quast, director of public affairs, 202-789-5266, [EMAIL PROTECTED] >
