Wall Street Worriers

October 19, 1999

Recent jitters on Wall Street caused some commentators to question the future of Social Security privatization, which would allow workers to invest their payroll taxes in stocks and bonds. Last week the Dow Jones Industrial Average briefly dropped below the 10,000 mark, prompting ABC News' Cokie Roberts to declare, "That's the end of Social Security privatization."

But the benefits of Social Security privatization don't come only through bull markets or even average historical rates of return. Remember, many people won't even get back what they paid into Social Security, much less make any interest. And over periods of twenty years or more the stock market has never lost money, even during the Great Depression. In short, it doesn't take a bull market to beat a money-losing government program.

Forty-five years ago, when today's retirees entered the workforce, the Dow Jones index stood at around 149. Today, it stands at over 10,000. For investors in the stock market to do as poorly as future Social Security recipients are likely to do, the stock market would have fall a lot farther than it has.

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