Privatizing the Social Security Trust Fund? Don’t Let the Government Invest

Link: https://www.cato.org/sites/cato.org/files/pubs/pdf/ssp6.pdf

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Given Social Security’s dire financial condition, there is growing interest in attempting to harness the power of private capital markets to bail out the faltering system. However, despite its surface attractiveness, allowing the government to invest funds from the Social Security trust fund in private capital markets would be a terrible mistake that would have severe consequences for the U.S. economy.

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Allowing the government to invest the trust fund in private capital markets would amount to the “socialization” of a large portion of the U.S. economy. The federal government would become the nation’s largest shareholder, with a controlling interest in nearly every American company. Government ownership brings with it serious problems of government control and is a threat to the efficiency and competitiveness of the U.S. economy.


Moreover, experience in other countries has shown that government investments seldom achieve the rates of return
seen in private investment. Attempts by the government to manipulate the markets could further undermine returns and threaten general market stability.

Author(s): Krzysztof M. Ostaszewski

Publication Date: 14 January 1997

Publication Site: Cato Institute

Is life insurance a human capital derivatives business?

Link: https://math.illinoisstate.edu/Krzysio/KO-JII-Invited.pdf

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Abstract:

Life and disability insurance, as well as annuities, traditionally have been analyzed as products providing protection against random losses. This article proposed that these products can be viewed as derivative instruments created to address the uncertainties and inadequacies of an individual’s human capital, if human capital is viewed as a financial instrument. In short, life insurance (including disability insurance and annuities) is the business of human capital securitization.

Author(s): Krzysztof M. Ostaszewski, PhD, MAAA, FSA, CFA

Publication Date: 2003 — vol 26, pp. 1-14

Publication Site: Journal of Insurance Issues