It can be argued that for a very short time, the federal government was interested in protecting individual citizens against the shortcomings of a laize faire economy because the government began to protect the public. While the ideal of public protection may be desired by a few representatives, funding such an enormous enterprise is proving to be impossible without further jeopardizing the financial position of those they seek to protect. One of the most expensive government systems ever created in the U.S. is the social security program. It is not only expensive economically, but its creation has led to a dangerous public mindset that believes that the government will come to its rescue at the time of retirement. The problem with this belief is that it has never been true. Originally, the social security program was meant to help widows and orphans who were not expected to work but had no means of support after husbands and fathers died. From this meager beginning, the program has expanded to support all retired people, but only at an income level that is inconsistent with subsistence. The demographics of the program evidence that the government can never raise enough money to support every person who retires, especially when life has been dramatically extended beyond just a few years of retirement. The problem is now that the public expectation is that the government will perform this task, how can the government meet its obligation? The facts show that it cannot meet it in the long term. However, since it feels an obligation to do so, it is considering other options. One of these is privatization. The foremost example of the success of privatization of a social security program is the sixteen-year privatization program initiated by Chile. While Chile’s program was initially viewed as highly successful, limitations are beginning to surface, and some believe it will not work for the U.S.
This paper will focus on these issues by presenting the evolution of ideas contributing to the crisis, demographics, statistics, and a discussion of privatization and other various issues affecting wealth, retirement and the U.S. social security program.
EVOLVING U.S. ECONOMIC POLICY When Alexander Hamilton designed the monetary system for the United States before the Constitution was signed, his interest was to create a government that would support and protect the industrial complex and the individual wealth of businessmen. His intent was to create a network of self-interested wealthy traders who would contribute to the wealth of the nation. Therefore, the reason behind the design of the U.S. government was toward protection of wealthy men, and this bias exists today, although it has been changed by the adoption of various economic principles and theories Adam Smith introduced a theory in The Wealth of Nations based on his observations that every person/family desired a certain amount of sustenance and would sell goods or services to achieve that level. According to his theory, the margin between cost of production and sales (consumption) was absorbed through natural law back into the system—purchase of materials, expenditure on wages—and through this process, a natural equilibrium or redistribution of wealth was achieved (Casson 195). The outcome of this natural pursuit of “wealth” would be that “the nation will be better or worse supplied with all the necessaries and conveniences for which it has occasion” (Smith 1:1). For the first time, the concern over equilibrium was based on a microeconomic view of the worker and the nation’s dependence on a class of workers that had