Here's an article I did a few days ago comparing benefits from a hypothetical
stock market account vs. social security benefits.
From: http://www.republicanspeak.com/socialsecurity1.html

Summary: As might be expected with the wide swings in the stock market,
some folks will do better than social security and some will do worse.
So do you feel lucky? Do you want to play roulette with the safety net?

-------------

Caveat Investor

Introduction

President George W. Bush and the Republican Party are working very hard
to convince the nation that Social Security is broken and moreover that the
only solution is to privatize Social Security.

The driving force for privatizing, is that it will allow individuals to invest their
life savings in the stock market. The theory is that speculating in the stock
market will provide the individual with greater returns than can be obtained
through the current Social Security system.

Below is an investigation of the claims of President George W. Bush's
privatizing plan.

The conclusion is that after including Disability Insurance, Survivors Benefits
and Cost of Living Adjustments, President George W. Bush's privatizing scheme,
is inferior to Social Security for 30%-50% of the population.

1 - Stock Market Returns

The stock market (as measured by the S&P 500) has returned about 7%
annually (compound annual growth rate, CAGR) over the long term.
Social Security Common Sense for more information.

In general the S&P 500 tracks the underlying economy (as measured by GDP)
which grows about 7% annually. See Figure 1.0 (Plot of S&P500 vs GDP
from post-WWII to the present).

Note: Figure 1.0 is derived from the raw data in Table 3.0 (see appendix).
Also see MarketCagr


(FIGURE 1.0)

2 - Social Security Interest Rate Projections

The 2004 Social Security OASDI Trustees Report (section V.7, Table V.B2) deals
with interest rate projections. Currently,the average annual nominal interest rate
is about 6.0%.

Projecting forwards, Social Security estimates a future average annual
nominal interest rate of 5.8%.

3 - Benefits: The Stock Market vs. Social Security. Which Pays More?

This is the question everyone wants to know: which pays more.

Figure 2.0, shows the results of a simulation using data from table 4.0
(see appendix) that estimates benefit payments for a typical worker retiring
in 2040 at age 65, for a hypothetical privatized stock market account.

The stock market benefit amounts include a 33% deduction for Disability
Insurance and Survivor Benefits. However, these values do not include a
yearly cost of living adjustment (current Annuities do not have a COLA).

The percentile indicates the number of people in the population below or
above a certain point. For example, the 20% percentile indicates that 20%
of the population are below this number and 80% are above this number.
The lowest 10% of the population would receive about $46792 a year, the
next lowest 10% would receive about $58370 a year, etc.



(FIGURE 2.0)

Table 2.0, compares the stock market results vs. what Social Security would
pay. The COLA column indicates at what age Social Security, with its yearly
cost of living adjustment, overtakes the stock market benefit.

Notice, that the lowest 30% of the population do not even match Social
Security benefits, and by age 74, half the population would not match Social
Security benefits.

Things would be even worse for the stock market, if the simulation didn't include
an extra four years of salary income. Per Social Security rules, benefits are
calculated over a span of the workers best 35 salary years. Any additional
years are not included in the benefits calculations. For a private account however,
all salary is used in calculating benefits. For example, if a worker worked an
extra four years, they would all be included. If these extra years weren't
included the stock market results would be even worse.

Table 2.0 - Benefit Estimates for a Worker Retiring in 2040
Percent..Principal.....Total....TotalAfterTaxes...Benefits...COLA
.10%....$607667......$970,000......$649,900.......$46,792....-
.20%.....607667.....1,210,000.......810,700........58,370....-
.30%.....607667.....1,480,000.......991,600........71,395....-
.40%.....607667.....1,740,000.....1,165,800........83,937....69
.50%.....607667.....2,010,000.....1,346,700........96,962....74
.60%.....607667.....2,370,000.....1,587,900.......114,328....80
.70%.....607667.....2,810,000.....1,882,700.......135,554....86
.80%.....607667.....3,420,000.....2,291,400.......164,980....93
.90%.....607667.....4,750,000.....3,182,500.......229,140...105
SocSec...607667.....1,780,000......included........75,919....na

Notes:
Percent=Percentile, Principal=How much the worker paid into SS, Total=Principal+MarketGains, TotalAfterTaxes=Total after 33% for disability
insurance and survivors, Benefits=Yearly Benefits Paid
1a) The stock market uses a CAGR of 7.2% less 1% for expenses. And a SD of 16%
1b) Social Security uses a CAGR of 5.8%. And a SD of .86% (expenses already included)
1c) Note: SD (standard deviations): stock market: from table 3. Social Security from historical data
2) Totals (principal + interest) were obtained using by simulating 1,000,000 trials of a 40 year period, from the raw data in Table 4.0.
3) The Social Security benefits are calculated using an estimated AIME formula.
4) Stock market benefits are calculated assuming by that at age 65 the "Total" is used to purchase a Single Life Annuity, with estimated monthly payment of $600 per $100k.
5) Single Life Annuities: Single Life Only, Without Refund: Level payments are received for the annuitant?s lifetime and cease upon the annuitant?s death.


Conclusion

President George W. Bush and the Republican Party are using "scare tactics" to
frighten the American people into believing Social Security is in crisis.

They are also making exaggerated claims as to the benefits of privatizing Social
Security, while at the same time down-playing the significant risks involved.

After including Disability Insurance, Survivors Benefits and Cost of Living
Adjustments, 30%-50% of workers will do worse with President George W.
Bush's draconian privatizing scheme when compared with traditional Social
Security benefits.

The stock market, like a roulette wheel, is a zero-sum game. Someone
wins someone loses. President George W. Bush and the republican party
shouldn't be playing roulette with the security of the American people.

-------

Appendix tables see: http://www.republicanspeak.com/socialsecurity1.html

In addition take a look at studies done by TRowe Price on the effects on your retirement funds by the condition of the stock market when you start drawing retirement benifits. Withdrawals early in your retirement when the market is down will destroy all of your plans to fund a 30 year retirement. In other words you will run out of money. That fact is another part of the gamble. In addition, assuming everyone can effectivly play the market games and manage money is not realistic. Most people cannot read a balance sheet or know what a PE ratio is. When you work full time who has the time to manage money? I talked to my stock broker this morning. Even she personally invests in funds which manage money because she does not have the time to manage her own money. Even when you choose funds to invest in, there are 7,000 funds. Which ones are suitable to manage your future retirement? There is a skill to picking funds to manage your money also. Most people will not be able to manage there own money.

This is further evidence that the Republican "Plan" is to DESTROY Social Security, without saying so, while enriching their already rich Financial Industry buddies!

DO NOT TRUST ANY REPUBLICAN, WITHIN A MILE OF SOCIAL SECURITY, OR MEDICARE!!

Also, if I recall correctly, the current privatization scheme won't allow you to deposit your funds wherever you want, it would be put in "selected" funds which a person could choose from.

Even having a limited selection of funds requires making decisions. Studies show people make emotional decisions when making financial decisions. When the market falls most people sell in a heard instinct instead of buying low. When the market is high, everyone buys instead of selling high. These tendencies do not create wealth or a secure retirement.

Dear Dave,

You compare S&P to GDP, but you omit to compare it to compound interests of treasury bonds over those 53 years!

Compare: S&P____GDP
1950______17____285
2003_____848_ 10'847
Growth__7.62%__7.11%
Multiple_49.05__ 38.11

But even though, S&P had a compound average annual performance of 7.62% (or 49.05 times) while GDP increased only by an average compound rate of 7.11% (or 38.11 times)!

I am strongly opposed to privatization as I don't see the need but I'm strongly in favor of a balanced asset management and asset management that are limited only on treasury bonds are economic suicide!

Dear Dave,

You explain yourself, that S&P 500 CAGR in 53 years did better than treasury bonds!
You stated that treasury bonds will provide 6% p.a. while S&P 500 performed a CAGR of 7.62% during the last 53 years and GDP a CAGR of 7.11%! If you estimate a CAGR of 6.00% for treasury bonds, you might be far too high in the first, as I assume real TB CAGR was less than 6.00% and in the second, you have to understand that taxpayers, not the economy, had to pay this 6% TB CAGR, while S&P 500 was paid by the economy. Your real SS model needs 6% taxpayer CAGR plus SS contributions in excess of what it would need with a S&P fundings. Without S&P, you will need almost three time more public money, contributions and taxes!

Assuming you invested a $500 billion in 1950, you got in 2003 $24,528 bn with S&P 500's CAGR, $19,056 bn with GDP CAGR or only $10,969 bn with your assumed 6% CAGR on treasury bonds!

However you will argue, your arguments are not professional and you ignore the Singaporean Central Provident Funds that is a best practice sample we have to use.

The gap between TB minus GDP in 53 years, say ($10,969 bn minus $19,056 bn) minus $8,087 bn would have to be financed by additional taxes while the gap between S&P500 minus GDP in 53 years, say ($24,528 bn minus $19,056 bn) plus $5,472 bn leaves you with an excess and a sound and balanced SS account!

It's not wise, Dave, if your own arguments prove how wrong your assumptions are. Social Security need invesments in shares!

Wrong, no insurance company only invests in shares or bonds but use both vehicles as hedges. When interest rates start to decline, insurance companies sell shares and buy bonds and when insurance rates start to grow, insurance companies buy shares and sell bonds. They have to comply with all relevant risk factors. Your system of only TB's would create an excessive country risk, credit risk, liquidity risk. market risk and volatility risk.

Only TB fundings was the reason why all SS around the Western world are needing more and more social taxes to finance them.

And you ignore delocalization! Don't mention only S&P 500 but mention world exchanges!

Only investings in S&P 500 would be a tremendous country risk as S&P 500 is composed mainly of US corporations!

I have been focusing on Social Security for a long time. It does seem as though we would be better off, as a group, to invest, the new surplus as it is paid, into index funds. We have enough bonds! Most financial advisors advise about 50-50 bonds and funds if you are near retirement. If the government could pay back some of the bonds to the TRUST Fund soon that could be put in the market too. It would have to be in several different index funds including international funds to give it balance.

The biggest problem in group investing is that some do not want Social Security in the market at all. I have thought about that a lot and came up with this plan. It isn't very good and I am hoping someone else will think of a better one. My plan would be for all who pay Social Security now to be given a limited time period to vote if they don't want the money to go into the market funds. If 60 per cent want to stay in bonds and 40 want to invest, then we could invest the whole surplus until it was 60-40 funds to bonds. It may take up to 20 years to build the surplus up to say 40% funds, I don't know. The increase made in the funds would be reinvested until needed then the retirees could be paid with bonds and funds and it would not be so hard to pay back the bonds all at once.

The investment part could be speeded up if the government would repay part of the bonds now by rolling over the treasurie bonds about 5% a year and putting that into the market each year too.

We would need fund managers that could get out of the market if they deemed it too risky at certain times.

Dedicating the taxes on the 401ks and restoring and dedicating the estate tax to replenish Social Security would also fund the investments. Some say that would hurt small business to restore the estate tax, but if it really would, then maybe the tax could be lowered for businesses up to certain sizes progressively. I think the estate tax was on estates over 3.5 million before they stopped it. It was designed at the beginning for very wealthy families and to keep too much money from getting in too few hands.

The main thing is it would keep the social security surplus we pay in from now on out of the government's hands. It would be safer in the market.

It just doesn't make sense to keep giving the government the surplus money while they are saying they want to cut our benefits and not pay it all back because it would hurt the economy.

The truth is that no matter what you put your money into, the securities owned are just a call on the economy of the future. If the future sucks I would perfer bonds. If the future is good then it does not matter.

Historically the return on the s&p500 is around 7%. (less a bit for expenses, and lots of risk)

The SS trustees report projects 5.8% return on their bonds (risk free)

For America's safety net, I'd be happy to take 5.8% risk free vs. 6.75% or so, with lots of risk.

As to that 50-50 mix, I've never been able to find any hard math that justifies the number, as best I can tell it's just some rule of thumb they came up with. I've stopped listening to financial advisors.

I don't have any info on the long term performance/risk of International funds.

Not sure if you intended to address this to me or Dave.

I used 5.8% for Trust Fund bonds per SS trustees projections.
7.2% for s&p500 per historical data and http://www.sscommonsense.org/page16.html


Both the SS model and s&p500 model use the same amount of contributions:
$607,667.70.

It's true that the trust fund bond interest is paid out of the general fund (ie taxpayers). And market gains are made by the buying and selling of shares by individuals. (ie taxpayers) Either way it's just us "taxpayers".


The model I used invested the employees contributions over a 40 year time period, not a lump sum all at once. Also, it included a 16% variation in annual stock market gains, so you get a range of final amounts for the stock market. The model also included expenses for fund overhead (about 1%), disability insurance and survivor benefits (about 33%) and COLA (about 2.8%).



I believe your s&p500 number is a bit high and doesn't include fund overhead costs. Also you need to include stock market risk, expenses for disability insurance, survivor benefits and COLA.

This study primarily focused on risk. The 5.8% for bonds is zero risk. The s&p500 is about 7.2% but with a large risk (a standard deviation of 16%.) Also the study focused on the final benefit payments to an individual (modeling a privatized account), not raw return numbers, and as such included disability insurance, survivor benefits, COLA and annunity payments.

And yes, I haven't looked at Singaporean Central Provident Funds.
Do you have a link?

Dave,
You always assume that social security would once sell its shares but I don't see the reason why social security would do so! Shares have three integrated dynamics, treasury bonds don't have!
First: Shares are market driven, not taxpayer driven!
Second: Shares offer dividends that are never fixed but are each year on a statistical average increasing
Third: You are the owner, not the lender.

If Social Security invested $100 billion in 1950 into TB's at 5% and for a duration of 53 years, Social Security would have earned year after year $5 billion in constant revenue that taxpayer would have paid to the treasury.
Total cost:
Static model of Social Security: funded only in Treasury Bonds
Contributors to Social Security_: $100 billion
taxpayers to treasury of the US: $265 billion
Total by citizen and corporations: $365 billion

Assets of Social Security in 2003: $100 billion (converted back in cash)
Revenue of Social Security in 2003: $5 billion
Revenues between 1950 - 2003_: $265 billion

Static model of Social Security: funded in global equities and bonds
Assuming we get an average annual performance of S&P500 (CAGR 7.5%)

Assets of Social Security in 2003: $4,620.1 billion (remaining the owner)
Revenue of Social Security in 2003_: $92.4 billion
Revenues between 1950 - 2003_: $1,297.8 billion



Static Social Security based on Treasury bonds in 53 Years
Assets of Social Security in 2003: $100 billion (converted back in cash)
Revenue of Social Security in 2003: $5 billion
Revenues between 1950 - 2003_: $265 billion

The contributors paid in 1950: _ $100 billion
The taxpayer paid 1950-2003: _ $265 billion (interests)

Dynamic Social Security based on global equities in 53 Years
Assets of Social Security in 2003: $4,620.1 billion (remaining the owner)
Revenue of Social Security in 2003_: $92.4 billion
Revenues between 1950 - 2003_: $1,297.8 billion

The contributors paid in 1950: _ $100 billion
The markets paid 1950-2003: $1,297.8 billion (dividends)

The dynamic SS model would have earned (for a 1950 contribution only) 4.9 times more! But the investment from 1950 would have generated 46.2 times more in wealth thanks to a dynamic system than it would have generated in a static one. Taxpayers wouldn't have been asked to pay another $265 billion!

Its clear that the social security needs equities (they had to be of excellent rating)

Now, if we model a crash test in 2000 and assume a loss of 95% of all our equities, we still would be the winners!

Instead of assets worth $3'719.0 billion, the assets in this crash test would be worth only 5% or $186.0 billion! The assets still would be in excess of $86 billion and the earning in dividends still would be $74.4 billions instead of $5 billion.

The United States of America cannot afford any longer the actual Treasury bond financed system of social security!

Here is the link of Singaporean's CPF: http://www.cpf.gov.sg/cpf_info/home.asp

We mainly have to classify three types of risks:
Credit Risks,
Market Risks and
Operational Risks
and we can mitigate all risks in accepting only AAA dominated equities as funding!

We shouldn't argue about buying and selling of shares by individuals as this would be almost meaningless in social security funds!

Warren Buffet tells that he buys shares, he almost never sells them!

If I go back to my 1950 to 2003 comparison between shares and bonds, social security never should use its principal but pay out benefits from earnings, here dividends, instead of interests.

In my 1950 to 2003 assumption of a contribution of $100 billion, the annual earning in 2003 thanks to Treasury bonds at 5% would be $5 billion but thanks to dividends it would be $92.4 billions, transforming it in a 18.48 times higher revenue!

Actually only 0.78% of HNWI's (high networth individuals) earn those dividends, 99.22% of the population, mainly the insured by Social Security, don't!

Again I must say that the Warren Buffet example does not wash in this discussion. Mr. Buffet takes part in the management of the firms he owns. I believe he puts some of his people on the board of directors of the corporations he purchases. In some cases he owns entire business enities. He is not an investor, in most cases he is an owner. Do we wish the government to do the same? In any case, with the kind of money we are talking about, even Warren Buffet could not beat the market. Also the S and P 500 index does have some international exposure. Most large corporations are multinational and do business in 50 or more countries. It is a way of having international exposure with less risk. It is not the pure play of an Asia Fund, but exposure nontheless.

Right, but I focused on the dynamics of dividends versus the statics of interests! You mention a detail of no importance, stock prices! Even stock prices increase far stronger than Treasury bonds, they basically have a dynamic dividend structure!

GE paid $0.46 on 01/25/1996, then the shares splitted twice, once a Two-for-One Stock Split, certificate dated 05/09/1997 and then a Three-for-One Stock Split, certificate dated 05/05/2000! On 01/25/2005 one sixth of the 1996 GE share paid a quarterly $0.22 or compared to the original 1996 stock, a dividend of $1.32! That makes a dividend CAGR of 11.11% (I dont' care about GE's share prices here and I only have a nine year period under review).

As you know, the average of all S&P500 dividends probably each year increased during the last 53 years, while Treasury bonds basically only offer the same interest during the whole duration period.
The dynamics of equities for social security pensions are not the stock prices but the stock dividends. Social Security never will sell the stocks they have once purchased as long as the rating is outstanding.

Lets mention a real case to your understanding.

The richest canton in Switzerland is Zug. John Kerry went there during two years at school. Zug has the lowest taxes in Switzerland. Zug has something no other Swiss canton does have, shares! Zug owns a nice participation in NESTLE!

Zug never will sell its stake in Nestlé

You really don't have to bother about stock prices! They are only an issue for private customers but for social security, insurance companies or pension funds they are almost never of any imortance.
What's really important is the earning of dividends you may be able to pay to the retired!

GE's dividend CAGR between 1.25.1996 and 1.25.2005 was 11.11%
If I use an equal dividend CAGR from 1950 until 2004 for an investment of $100 billion I would get 54 years after the following formula: ((1+.1111)^54)*$3 bn=$591.2 bn.

On the other side, Treasury bonds interests would have paid since 1950 and until 2005 for a principal of $100 bn an annual $5 bn.

But I started in 1950 with a dividend 60% lower dividend, instead of $5 bn I only used $2 bn!

With Treasury bonds, I will get in 2004 still my projected $5 bn but with a 11.11% CAGR of my GE shares, it would be a dividend income of $591.2 bn (almost 6 times the principal).

Useless to mention that Warren Buffet, had he only invested in bonds during his entire life, would not even own $10 million. But thanks to shares and the dynamics of dividends, he won something exceeding a wealth of $35 bn.

There is no sound argument against shares, there are only sound arguments against bonds because their CAGR is not enough and never will be enough to cover the difference of the demographic slowdown
!
Useless to say that with an annual earning of $591.2 bn (2004) no further contributions or taxes would be needed as social security paid less than $591.2 bn in 2004! It's obvious that only shares are able to solve the demographic problems we all are faced with!

there is not enough bonds out in the market to support an entire 1 trillion or so dollar social security budget.

what do u when the fed raises interest rates? everyone's benefits go down then? the interest rate decision then becomes too political and our economy will suffer.

also, the return of the stock market does not take into account securities that became defunct and reached zero. people only take the average return of stocks that actually survived the past 80 years or so. it does not include delisted and bankrupt companies.

Hi rayray222

According to Risk studies on all rated shares, the default rate on AAA shares is almost 0. We have to distinguish between two main indicators:

• KPIs or Key Performance Indicators and
• KRIs or Key Risk Indicators

You ask about the VAR (Value at Risk) coefficient on equities? The default rate or VAR of AAA rated shares is almost zero! The worse the rating, the greater is the VAR or default rate of shares. Ratings agencies will start to downgrade the best-rated shares as soon as there are the first signs of not optimal disclosures and weakening. There is IMHO no known AAA rated company having defaulted suddenly without having been downgraded before several times by rating agencies. As soon as the ratings start to decline, there are many measures to be taken, like the sale of the equities.

I'm not speaking of ratings nor default. you entirely missed my question.

What I am saying is that if all of our social security is invested in US Treasuries, sure it won't default, but it will have other types of negative impacts.

First of all, prices of bonds will skyrocket as there is a limited supply, and yields will go closer to zero than its ever been. Then when the Fed decides to raise interest rates, now he will have to consider the fact that if he does, a lot of people will lose part of their retirement and social security as bond prices will fall.

This makes the interest rate decision by the Fed more politically based than economically based. Imagine if a Republican president is faced with massive drops in values of social security based on rate hike decisions with a senate election coming up. He would wrongly encourage the Fed Chairman not to raise interest rates, and it would be based more on political reasons than economic ones. Which would make our economy suffer in the long run.

Right now bond yields are 1-1.5% lower than it should be. Your figures are wrong because right now there is a lot of speculative excess in bonds.

Do not tie social security to bonds or stocks. Just leave it the way it is. I worked on both buy side and sell sides on wall street. Social Security reform that Bush suggests would be very detrimental to the long term economic health of AMerica.

Look at Chile's example. Those that paid into private accounts get 1/3 of what normal retirees get. Not everyone will pay into the social security fund, they will use that money for living expenses a lot of the time. Then u have many retirees with below poverty income levels when they retire, and everyone loses. Don't gamble with ur future.

If you do not get alot out of a privatized account you will bankrupt very soon.

If you live too long you will bankrupt it as well.

Hi kleenex,

It's not a question of ownership, government, mutual private, but of funding. the actual sitatuation is by far the worst, as all the financial burden is on the same group, the people. People contribute to the Social Security and pay the interests to the Treasury through taxes. If shares are admitted as investment vehicles and the dynamics of dividends starts to stimulate the CAGR, then everything is solved!
But once again, it has nothing to do with the ownership. It's independent of the fact wheter Social Security remains to be owned by the government or wheter it is transformed into a mutual or a private organization.
Personally I think, the best ownership would be neither private nor governmental, but mutual. The people of the United States should be the owner. But these are details. The most important issue is to invest in shares as heavily as possible and as soon as possible to have a better risk distribution and mitigation.

I'm not sure where you got your number from.

GE's current dividend yield is 2.4%

The s&p500 average dividend yield is currently 1.5%
Since 1996 dividend yields have been below 2%

Hi Bill,
I mean the compound annual grwoth rate of GE's dividend between January 25, 1996 and January 25, 2005!

And I got the data from GE's dividend history: http://www.ge.com/en/company/investor/dividend_history.htm


We had to share splits, the first splitted two for one, the second three for one. So the dividend of January 25, 2005 was from one sixth ot the share from January 25, 1996 or at equal share share potential, it was 6*$0.22=$1.32!
Now do integrate this by the following formula:
(($1.32/$0.46)^(1/9))-1=01243 -> 12.43%
((actual dividend /historic dividend )^(1/9 time annual interval)-1=CAGR

I do not wish to bet my future on the management of any corporation including GE. I would still like to have the social contract that Social Security provides. That is the base of my retirement planing. On top of that I have my IRA and personal stock market investments (and German Government Bonds). I do not wish to have my SS invested in stocks. That is too much risk. There is nothing wrong with SS financially. The cries of crisis are political BS. In any event, removing cash flow from SS to fund personal accounts will cause cuts in current benifits eventually. Bush is a lier when he said everyone 55 years old and up are safe. He cannot promise that and bind future presidents and Congress.

It's not betting the future on the management of any corporation including GE! It's taking back a democratic control of the corporate governance future the people of the United States has lost. It's mitigating the risks of the Corporate World and bring it back to the people. It's about empowering a bottom up movement of citizens who are controlling democratically the top down aristocracy of the Corporate World. It's about a redistribution of wealth. It's about more checks and balances from the basis, the people. It's about more democracy. Its about less corporate aristocracy, we have to discuss. And last but not least, it's about global risk mitigation.
If Social Security holds 51% of Michael Dell's, Bill Gate's, Warren Buffet's, etc. companies, other rules can be established. Companies can be managed in a more democratic fashion.
Democracy is not only a political process, it's also an economic need!
Actually, the United States of America only has a political democracy but an economic oligarchy, aristocracy, dictatorship where economically human rights are not equal to the political human rights. Only the empowerment through a mutually based social security could change this.
The money of the social security belongs to the people, not the state, the politicians or the economists and the people has to decide, how it wants the money invested. If common sense proves that money invested in shares with excellent ratings are by far better than Treasury bonds, the people will chose what is better economically.
It's Charles Handy's citizen corporations that will be the new model, even of the social security.