PRESTOPUNDIT -- feeding memeorandum & econRT daily

I assume the answer to Kinsley's conundrum is that defenders of privatization think switching from a pay-as-you-go system (in which each generation pays for its elders' retirement) to a pay-for-yourself system (in which each generation sets aside money to pay for its own retirement) will boost the national savings rate and result in greater economic growth. Why might this happen? Because Social Security's current pay-as-you-go benefits--though merely transfer payments and not a return on actual savings--eliminate some of the need to save for retirement. Why set aside money for your golden years when the government will supply that money later by taxing younger workers and sending you checks? According to this argument, Social Security's faux-savings have depressed the national savings rate--an effect that will presumably be reversed if today's young workers are required to set aside cash in personal accounts to pay for their own benefits. This increased savings will mean increased investment which should translate into higher economic growth.