Ownership Society

By GotDesign
Several weeks ago, when President Bush spoke in acceptance of his re-nomination for President at the Republican National Convention, I was extremely happy to hear President Bush lay out his plan for his second term. Particularly his economic/domestic policy -- the "Ownership Society." One point in particular caught my attention -- the proposed changes in the Social Security system.

In today's WSJ Opinion Journal, Pete Du Pont describes what he thinks makes a president great -- policyies that have a long-term lasting efffect. Du Pont goes on to describe two of President Bush's policies that he feels will define Bush's greatness -- preemption and the "Ownsership Society."

I have always been a proponent of preemption. Many people "poo-poo" preemption, but even the U.N. Charter includes an article allowing nations to act preemptively in defense of their nation. But it just makes sense. If you can stave off the catastrophic taking of life by acting in advance to remove the threat, by all means strike hard and strike fast. The Clinton policy of reaction and litigation in regards to terrorism brought us over 3,000 dead in the 9/11 Attacks. Had there been aggressive pursuit of threats to the U.S., Osama Bin Laden would now be in American custody (thanks to the Sudanese authorities). Strike hard, strike fast, and keep America safe.

Back in the mid-90s, I worked as a paid intern for Republican congressman Rob Portman (OH). While serving on The Hill, I attended a seminar on alternatives to the current Social Security system at the Cato Institute. The seminar focused on a system the nation of Chile (if I remember correctly) used to replace its failing social security system (which was modelled on the current U.S. system). Chile allowed its citizens to choose between staying in the existing system ("old system") or move to the new system. Enrollees in the new system would be required to put 10% (but could choose to invest up to 20%) of their income into a numbered investment account. The account's investment portfolio was defined by the government (so that it would not be overly risky). Participants could monitor the progress of their account and could retire from the workforce upon reaching a certain savings level. The government eventually began to offer two options for the level of portfolio risk (and growth). During the time between the instution of this new system and the time I took the seminar, Chile's economy grew (on average) 6% per year for over 15 years. The seminar also mentioned that the Chilean government was also considering offering a health savings/insurance program for an additional 5% of income. Sound familiar? This is almost exactly what the president is proposing.

Now, by instituting this new system while maintaing the existing system and its benefits (until its participants exit the system), there will be some strains on the economy. But these strains will be more than offset by the massive infusion of investment in the economy and the increase in public savings . I would only hope that participants would be required to choose between the two systems and that new entrants into the system would be required to participate in the new system. But the shocks of going "whole hog" into the new system would be a lot more tolerable in the long-run than the systemic instabilities of maintaining two systems until Congress gets brave enough to make a choice of one versus the other. Get the nerve and dive in (no toe testing).

It is my hope (even my prayer) that President Bush be supported his desire to pursue the "Ownership Society." It will be good for the economy. It will be good for the nation.
 

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