Social security program

Social Security Programs and Privatization

Social security programs are available in practically every country throughout the world and are designed to aid low-income residents. The aided group includes, but is not limited to, the old, children, and the sick. Yet, there has recently been a surge in interest in privatizing this industry. As a result, this paper advocates against the privatization of social security. In addition, the article will examine some of the advantages of privatizing social security. Privatization of social security refers to removing the system from the public domain, for instance, by allowing beneficiaries to take charge in investing their money in other perceived profitable ventures (Dolgoff, Ralph, and Feldstein, 49). However, economists, actuaries, and policymakers warn that such a move will create more harm than good and therefore, privatization must not be practiced.

Risks of Privatization

To start with, the risk of investing, privatization does not provide a safer and more solid way of investing people’s saving. On the contrary, it opens doors for people to put their savings in mutual funds, bonds and stocks which are riskier than the current system. Although stocks can be safer, it is still an investment with a potential risk (Kamerman, Sheila, and Kahn, 71). Considering the stake of savings for people who are about to retire have, it is not a good idea to gamble with their money, but rather put their saving in a more secure way that would guarantee benefits upon retirement.

Expense and Disabled Individuals

Another reason why it should not be privatized is that such a move would be too expensive for a country. For instance, during Ronald Reagan administration, the government had to raise tax to support his initiative of trying to privatize social security partially (Kamerman, Sheila, and Kahn, 81). Additionally, according to US policy makers, for privatization to take place, it would need a budget of $2 trillion. The figure suggests that the undertaking is so expensive and should be avoided at all cost.

Furthermore, there is a big threat to the disabled should privatization of the system be put in place. Due to their physical condition, they cannot spend most of their time working (Sagiri, 761). Thus, the current system of social security assists them to afford for their upkeep after retirement. Privatizing the system will, therefore, make their life so difficult. Also, not all people possess the knowledge and wisdom that one needs to succeed in business or even invest wisely.

Advantages of Privatization

On the other hand, there are benefits that both the government and people can gain from privatizing social security. Firstly, the move will give employees contracted rights for their salaries. The current social security system cannot guarantee employee’s compensation. By privatizing the system, it is going to offer contracted reimbursement. Lastly, the move can reduce taxes as the government will not be burdened to raise money for beneficiaries of the system (Sagiri, 774).

Conclusion

Although the current social security system faces some challenges, it is clear that privatization must not be the option. Some of the reasons for this include, privatization puts people’s savings at risk, the program will disadvantage the disabled, and that it will be so expensive for the government. On the other hand, giving employees contacted rights to their salaries and reducing taxes are some of the benefits of privatization. All in all, there are enough reasons to argue against privatization.

Works Cited

Dolgoff, Ralph, and Donald Feldstein. Understanding social welfare: A search for social justice. Pearson Higher Ed, 2012: 49-62.

Kamerman, Sheila B., and Alfred J. Kahn, eds. Privatization and the welfare state. Princeton University Press, 2014: 70-101.

Kitao, Sagiri. “Sustainable social security: Four options.” Review of Economic Dynamics 17.4 (2014): 756-779.