Pro & Con: Should Bush scrap plans to privatize Social Security?

The Social Security system faces a demographic problem. Because the baby boomers have had fewer children, there will be fewer workers to care for them when they retire.

These worsening demographics can only be improved by demographic means, such as easing immigration. Otherwise, some tough choices will have to be made about how to distribute the increasing burden of retirement.

But those who would privatize Social Security assert that real problem with Social Security is that its rate of return is too low. As if if only we knew how to "buy low and sell high'' -- and were permitted to do so with our Social Security money -- there would be more workers per retiree.

Nowhere is the trade-off between meeting the needs of the young and meeting the needs of the old clearer than it is at the very end of life.

A retiree who is lying in a hospital bed presses the button for a nurse. How long until he arrives? That depends on how many nurses per patient there are. But the greater the number of nurses, the smaller the number of child-care workers, or of teachers, or of workers in many other jobs that meet the needs of the young rather than of the old.

If privatizing Social Security won't change how many workers are available altogether, there is no doubt that it would change the numbers of those who work to meet the needs of the young versus the number of those who work to meet the needs of the old.

How these numbers will change, however, is anyone's guess. If the Dow Jones index were to go up, retirees would be wealthy and there would be more nurses taking care of them in hospitals and fewer teachers helping the young in schools.

If the Dow Jones were to go down, retirees would be poorer, schools well-staffed -- and nurses too few to arrive in time to help a retiree cling to life.

Of course, with increases in productivity it is possible that fewer nurses will be needed in hospitals and fewer teachers needed in schools. But even if this were true, an increase in needs accompanies any increase in productivity. MRIs supplement X-Ray machines in the hospitals, and schools must now have computers and computer teachers. Increases in productivity cannot change the fact that there is a tradeoff between meeting the needs of the young and meeting the needs of the old.

Privatizers would have us believe that it is possible to increase the claim that retirees have on society's resources -- through higher rates of return on retirement accounts -- while doing the same for workers, through lower Social Security taxes. This is, of course, not possible.

The demographic problem that the Social Security system faces is real. Although the projected deficit of the system will not occur for 30 years, the workers-to-retiree ratio will begin to deteriorate in a decade.

In other words, unless benefits are reduced, in just 10 years the share of national product that retirees consume with their Social Security benefits will start to increase.

Letting the young absorb the full increase in the burden of retirement may be justified. But the decision should be the result of a public discourse. With a private system, such a disourse could not take place.

For some things, the market works fine. But let's not forget that the Social Security system was created not as an investment program but as an insurance plan.

Instead of abandoning old people to fate, Americans chose to rely on each other to guarantee that everyone will have minimal dignity in their old age. What a great idea.

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MOSHE ADLER teaches in the urban planning department at Columbia University and writes frequently about economic policy issues as an economist at the Fiscal Policy Institute, a nonpartisan think tank in Manhattan.