As long as SS remains defined-benefit (social insurance), I don't really care what the predicted returns on the stock market are. For me, the tradeoff in investing in equities is that more money goes to the private rather than the public sector (bad) but opportunities are presented for intervening in corporate governance (good). Peter Max Sawicky wrote: > > >From my friend Dean Baker, at the Preamble Center > ([EMAIL PROTECTED]), who would probably prefer that NATO > invade Switzerland, or possibly Virginia, rather than Yugoslavia: > > Return to [EMAIL PROTECTED] Not to me. > > mbs > -------------------------- > > The following is a petition requesting that the Social Security > Administration produce projections on stock returns before any > Social Security money is placed in the stock market. Most of the > debate around placing Social Security funds in the stock market > has used the assumption that the real returns in the stock market > will be between 6.75-7.0 percent based on past averages. > > This assumption ignores the fact that current price to earnings > ratios for major stock indexes are over to 30 to 1, compared to > an average of less than 15 to 1 over the prior fifty years. It > also ignores the fact that the Social Security Trustees project > that domestic profits will grow less than 1.5 percent annually > over the next seventy five years, compared to an average growth > rate of more than 3.0 percent over the previous seventy five > years. No one has yet demonstrated how 6.75-7.0 percent real > returns can be obtained with current stock valuations and the > projected growth rate of profits. > > Please pass this petition along to other economists. To have your > name added, you can mail a copy to: > > Preamble Center > 1737 21st, NW > Washington, DC 20009 > Fax # 202-265-3647. > e-mail [EMAIL PROTECTED] > > Thanks, > > Dean Baker > Senior Research Fellow, Preamble Center > > Economists' Petition for Complete Social Security Projections > > If the stock market is part of a Social Security reform plan, > then it is necessary to have explicit projections about future > stock returns. The Social Security trustees already make explicit > assumptions about annual rates of economic growth, population > growth, trends in life expectancy, and other factors that are > relevant to the health of the program in order to provide a basis > for its seventy five projections of the solvency of the Social > Security program (see pp 58-63 of the 1999 Social Security > Trustees Report). > > Before adopting any proposal that puts Social Security money in > the stock market (either collectively through trust fund > investment or individually with private accounts), the > undersigned economists urge Congress to require that the Social > Security Administration produce a set of assumptions for the two > components of stock returns (capital gains and dividend payouts) > that have the same level of detail as the other projections that > appear in the Trustees Report. > > Name Affiliation
