Social security privatization: what it can and cannot accomplish

This paper assesses the effect of social security privatization on the government budget, economic efficiency, national savings, and the distribution of resources across generations. It is shown that the benefits of privatization most often touted by privatization advocates can be achieved by simply altering taxes and social security pensions and leaving the basic structure of social security unchanged. In the conclusion, two simple arguments are given for why privatization might be a good idea nonetheless.