Doug Ross called his criticism of my earlier post "Fisking." I had no idea what that meant, so I looked it up in Urban Dictionary. Apparently, it refers to taking apart an argument, paragraph by paragraph. I had been doing that for years in STF and had no idea that it had a name! (I guess it didn't have a name until recently.) Anyway, here are some things Ned had to say:

Cynical is an understatement. Yes, corporations will benefit from private accounts, and that does include CEOs. But so will average workers whose 401ks or IRAs hold these stocks, or John Doe who owns a mutual fund.

CEOs have much more money than "average workers" invested in stocks, either in other companies or their own companies. Stock options are very common for CEOs these days. An average CEO is 65,000 shares of company stock as part of his compensation package, reports Ron Kasznik of the Stanford Graduate School of Business. Furthermore, The Economist reports that 58% of the compensation of US CEOs in 2001 came in the form of stock options. Furthermore, only 1.7% of non-executive employees received stock options in 2001. (Source.) As for the "average worker," he probably doesn't own that much in stock. A New York University study showed that "the wealthiest 1 percent of Americans owned 33.6 percent of stock market wealth, while the poorest 80 percent owned less than 11 percent" in 2001. (Source.) Having stocks is all about quantity. The more stocks you have, the more money you make. If you have a few investments here and there, you're making chump change compared to people who own thousands and thousands of shares.

Come to think of it, more investment means these companies will have more capital. That translates into more jobs.

Only if these companies decide to transfer their increased revenue into hiring more workers. Giving corporations more money does not mean that they will hire more people. This same debate occurred in 2003 when Bush planned to lower the dividend tax from 38.1% to 15%. In response to a lower tax rate on dividends in 2003, a study found "an overall increase in dividend payments following enactment [of the Jobs and Growth Tax Relief Reconciliation Act of 2003]." The study also found "that a firm’s dividend increases [were] positively correlated with the percentage of its shares held by individuals" (Source). I have not yet seen a study which purports that an increase in corporate revenue necessarily entails an increase in jobs.

Beyond that, what no one is mentioning is how this new reform is completely consistent with FDR's philosophy. The New Deal was one big experiement, and that includes Social Security. FDR once said "...this country needs bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something."

I'm certainly not a proponent of this. It's a terrible ideaa: "try something"? Even if it probably won't work? Even if it costs trillons of dollars, and economists agree that it won't solve the long-term problems with Social Security? Why not "try something" that will be guaranteed to work instead of trying the first idea that comes to mind? Shouldn't there be a commission created to look at the problems with Social Security and recommend solutions? There's a better idea. Social Security problems are not so dire that they will result in insolvency tomorrow. There's time enough to examine the problem and come up with a better solution.

And if you're cynical enough to believe that private accounts are sure-things for executives, then that means they are sure-things for every shareholder. You've just answered all the neighsayers who warn of Enron-style doom and gloom. Thank you for that.

They're sure things for executives because they have far more money invested in the system than the "average shareholder." It's not merely about having money; it's about how much money. Bush tax relief was supposed to be a great thing for John Q. Taxpayer, except that when you reduce individual income taxes for very wealthy people, they will tend to save their money rather than spend it. The Laffer hypothesis has been "rejected, including by a heavy majority of Republican economists," says Jeffrey Frankel of Harvard's Kennedy School of Government. Theoretically, people who make a lot of money will inject more money into the economy when they get a tax break. In practice, that's not what happens. A three-percent tax cut for John Q. Taxpayer is much less in real dollar amounts than a three-percent tax cut for Warren Buffett. The amounts of the same percentage differ between small numbers and large numbers, and we are concerned with dollars, not percentages.