DEBATE WORKSHOPS 2000

Resolved: That the United States federal government should significantly increase protection of privacy in the United States in one or more of the following areas:

EMPLOYMENT, MEDICAL RECORDS, CONSUMER INFORMATION, SEARCH AND SEIZURE.


Case #2: Privatize Social Security

Case #1: 
Repeal laws that centralize and universalize government data collection


Case #2: 
Privatize Social Security


Case #3: Deregulate strong encryption


Case#4:
Protecting Medical Privacy with Medical IRAs


Maintenance of database records requires that each record contain a key - a piece of data (such as an account number) that is unique to the individual, universal to everyone whose information is being stored, an accurate identifier for each individual, and secure enough to prevent intentional fraud or accident from generating errors. The greater the amount of information that is linked to this key, the more the data can be unified and categorized to create a complete profile of the individual. Thus, a critical goal for those who would increase the government's ability to monitor and control its citizens is to ensure that a single key be linked to every form of information available on individuals.

In this country the de facto key for government files on individuals is the Social Security number. Laws that ensure everyone has a Social Security number and that they frequently are identified by it as they go through their normal activities make government databases more efficient, accurate and detailed. But trading off with this efficiency and detail is the individual's personal privacy. Thus, reversing the trend toward the universality of the Social Security number is a critical factor in restoring individual autonomy and freedom -prerequisites for a civil society.

As long as the Social Security program is mandatory for all working citizens, it is difficult to stop the trend toward the centralization of personal data around the Social Security number key. For this reason, one excellent plan for reducing government's capacity to profile, track, and control people is the privatization of the Social Security program. Legislative changes that enable more people to opt out of the program and begin investing their Social Security "contributions" in privately managed Individual Retirement Accounts (IRAs) would allow citizens to avoid enumeration by the system. This, in turn, would significantly diminish the usefulness of the Social Security number as a key for government profiling of citizens.

Leading public policy think tanks have proposed alternatives to the current Social Security system.10 The most well known are those proposed by The National Center for Policy Analysis (NCPA) and Cato Institute. NCPA has a plan for privatization in which any working person could choose to join a private retirement system and opt out of Social Security completely (see www.mysocialsecurity.org). Workers and their employers would each pay into a special Individual Retirement Account (IRA), just as they do presently to social security, though at a slightly lower rate. For a few years, the remaining payments would still be paid into Social Security to help cover the continuing benefits for current retirees. But this tax could shrink rapidly and could come out of income tax revenue, eliminating the need for separate Social Security accounts and numbers-at least for the majority of workers who opt into the private plans. The NCPA plan actually offers greater security to current retirees and those remaining in the government program, while ensuring a range of superior private options.

Privatization of Social Security would bring about greater freedom and personal autonomy by significantly reducing government's capacity to form detailed profiles using data centralized from employment, medical, educational, financial, and criminal databases as well as thousands of others sources of information that have been keyed to Social Security numbers for convenience. But the freedom people would gain by regaining control over their financial destiny would be a tremendous advantage claimed by the plan as well. A major difference between the Social Security program and the private alternative is that in the private system money would be saved and invested in private capital assets over the worker's lifetime and the accumulated assets used to pay benefits at retirement. Under Social Security, taxes are not saved or invested in the economy (despite misleading rhetoric about a Social Security "Trust Fund"). Instead the government spends them to bankroll its current obligations. The net result of privatization, then, will be a massive increase in private savings and investment. This would expand the capital available for forming new businesses, increasing productivity and wages, and lowering prices throughout the economy. In short, it would enable a permanent boost in prosperity.

Since the collapse of the old Social Security system can at best be postponed for a few years by channeling additional tax revenue into it, its replacement with a sustainable system based on real investment will also avert a serious economic crisis otherwise bound to happen during the next few decades.11

Author: David Beers

Research Notes on SS Privatization:

     

  • (Political and economic analysis of the NCPA plan can be found at www.mysocialsecurity.org.
  • Information on the Cato Institute's proposal is on the www.cato.org web site.
  • See also www.ioptout.org for many articles on the benefits of allowing individuals to opt out of the current system.

 

 
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