Conservative economist Stephen Moore spoke last night to students about "the ownership society," a society where all Americans become owners of personal investment accounts that would be created if Social Security were privatized.
"When you are actually an owner," he said, "your whole attitude about life changes … very dramatically. So you see huge improvements to neighborhoods. You see people starting to grow gardens in front of their homes … fix the windows that were broken … Why? Because they actually own it themselves."
The creation of these personal investment accounts, Moore described, would give Americans "two to three times higher … than [the benefits] Social Security promises" at the time of their retirement. While he admitted the stock market was risky in the short term, he argued the stock market was actually quite safe in the long term; the average return over any 40-year period in history, he pointed out, was 8.5 percent.
Moore, in one of his many anecdotes during the lecture, referred to an instance where a UPS truck driver named Theodore Johnson invested 15 percent of every one of his paychecks into UPS stock, and upon his death, had an estate of $68 million, much to the surprise of his heirs. He said that this example demonstrated the benefits of investing at an early age — benefits, he said, that people could take advantage of if Social Security were privatized. As a Libertarian, Moore said that he firmly believed in people's freedom to choose.
"There are some people in this country who are just genetically socialist, right? And they…want the government to take care of them," Moore said. "So those people might want to stay in the government-run system… You [can] stay in the system. For people who want to opt out and have this…personalized system, they should be able to do that." He added that he was for drug legalization, because people should be able to do what they want.
"They'd be insane to do heroin, you know, but what you do in the privacy of your own home is your own business," Moore said.
The benefits of the privatization of Social Security are many, according to Moore. Currently, if a worker dies before his retirement age, his Social Security funds are not given to his heirs, but if privatized, Moore argued, that money from Social Security would become his own estate.
Moore then referred to comedian Chris Rock, who frequently joked about how Social Security was a "white ploy" to get African-Americans. In this gig, according to Moore, Rock would point out that African-Americans' average life expectancy is 62 years, three years under the age for retirees to receive Social Security benefits. Privatizing it, Moore then argued, would prove attractive to African-Americans.
"It's a very…populist idea," Moore said, arguing that the inherent conflict in Marxism between owners of capital and workers is solved, because the workers become the owners of capital. Owners, he observed, more often vote Republican.
Moore also spoke briefly on the presidential elections, observing that the Republican victory was much deeper than it seemed. The "Reagan coalition," as he called it, solidified, and added that it was a "catastrophic development for Democrats" when Republicans began winning every state "south of the Mason-Dixon line."
Furthermore, he added, over 90 of America's 100 fastest growing counties are becoming overwhelmingly Republican, a phenomenon that he called "bad news for Democrats."
Moore also overviewed the extent of the Republican Party's political hold over the U.S.. He named the seven pillars of political power: the White House, the Senate, the House of Representatives, the Governorships, state legislatures, the Supreme Court, and Alan Greenspan, chair of the Federal Reserve. He pointed out that Republicans held the most control in each of these important institutions of policy-making and governance, and that Republicans would remain in such a position of power for many foreseeable years, specifically noting the opportunity for President George W. Bush to appoint several Supreme Court Justices.
"This is a life and death issue for the Democratic Party that the Republicans are permitted to privatize the most sacrosanct program in the government, the most beloved program…that is Social Security. Then…nothing that they've erected in terms of this corrupt welfare state is going to [remain]," Moore said.
Upon being asked about the danger of borrowing additional money during the current deficit, Moore argued that ultimately the benefits of privatization would create a surplus.
"We borrow $2 trillion dollars but we save $10 trillion over the course of the next thirty years so it's a good thing to do financially to borrow and pay for something that's a brand new system that's modernized," Moore said. "The only real question is, are we going to borrow now, or in 10 or 20 or 30 years from now."
Moore's final point was that this privatization proposal should have been implemented 13 years ago in 1982 when the lowest point of the Dow Jones Industrial Average was at 800 points. Now, he argued, the Dow Jones hovers around 10,800 points. This increase in wealth, he added, could have been shared with all Americans, but instead only a few have benefited.
"He made a very good case, a very strong case. The only problem with the case is just that it doesn't get presented as strongly and as well in the mainstream because I think that the administration has done a very poor job advertising their policies. It could be one of the greatest policies in the world, but it's not going to get publicized as well unless they start having people like this guy to discuss it in such convincing terms," said J. Peter Freire '05, an attendee of the lecture.
"He actually represents a good number of Republicans who are not terribly happy with everything that's going on with the party," Freire added. He explained that since 1994 Republicans have missed achieving two points of party discipline: balancing the budget and term limits. Opportunistic Republican politicians, Freire said, were passing many "pork barrel spending" pieces of legislature, and whom he claimed could not be relied on as much.
"I think the speech went very well. I think the case for privatizing Social Security was very compelling and that no person in our age group could possibly deny that these savings accounts will yield a higher rate than the Social Security system that we have now. I think that the personal anecdotes that he used really brought it home," said Sharon Stewart '06, editor-in-chief of the Cornell Review.
The lecture was sponsored by the Cornell Review and the Cornell Republicans. Approximately three dozen students attended.
Archived article by Julie Geng
Sun Staff Writer