Personal Retirement Accounts should replace Entitlements

As a non-US citizen I will be attacking my opponent"s case primarily on theory and logic rather than specific American rules/laws/schemes. I will therefore not be using many/any sources and will be giving/supplying my own ideas. I leave it to the voters to decide if the logic follows and hope they don"t take the sources point from me. My argument is extremely simplistic and is basically this statement. The Government can/does achieve a higher rate of return than individuals. What it then does with the proceeds is irrelevant as a net benefit to society has already been achieved. R1: Personal Accounts Generate Higher Returns There are flaws with my opponent"s argument. I will outline the problems first before going on to explain why actually the Government (in this case the USA) can achieve a higher rate of return for a lower risk. Flaws: My opponent has used the average S&P 500 CAGR for his personal account which he states shows an average return of 7%. Flaw 1: Of course the 7% return is going to be higher than that of a Government Pension scheme as the Government hold a mixture of stocks, bonds and other investments. They do this to reduce the risk in the portfolio and guarantee a return. Shares are known to be a higher return, higher risk instrument. Flaw 2: If you look at the data for the S&P 500 you will see that the closing level in June 1968 was 100. It then took 19 years to double to 200. Then 6 years to double again to 400. Again 6 years to double to 800 in 1997. In the following years it reached a high of 1,565 in 2007. My point here is that though the average return may be 7%, as my opponent claims, the affect would be massively different for someone that joined in 1968, someone that joined in 1991 and, god forbid, someone that joined in 2007. Flaw 3: The return you receive from the Government is not the "true" return merely what they decide to payout to you. The "excess" is used for other state operations. If it were not then the Government would be forced to raise taxes to fund these other projects. A direct comparison then between state pension and private pensions is therefore pointless. Government can achieve a higher rate of return for lower risk. I ask my opponent to specifically counter these if he can. 1.The government can hire professional/expert investors to manage the pension pot. Professional/Expert investors can achieve, on average, a higher rate of return for lower risk than the average day joe bloggs with his personal account. 2.By having such a large pot (i.e. everyone"s theoretical personal pot) the government can exercise purchasing power thereby achieving higher rate of returns. (Example: You receive higher interest if your investment is over a certain limit) 3.The Government does (obviously) not pay tax on any investments and can change the portfolio at will to market conditions. Personal Accounts (I"m not exactly an expert of American schemes) are only allowed specific investments, can only increase so much per year etc. 4.The pension pot is guaranteed. Some private run pension schemes to fail and when they do the investors lose money (I believe in USA 80% of the pot is guaranteed by the state but it would still result in a loss) Logic Follow-On which counters C2: Improves the Economy So if we can agree that the Government can achieve a higher return then any surplus the Government makes (i.e.what it earns minus what it has to pay as pension) can be reinvested or used to reduce taxes (including your example of payroll taxes) or increase services. This results in a net benefit to the economy as a whole R3: No C3 given R4: Liberty/Freedom and Tax relief My opponent argues that everyone should be able to choose how they spend their money/where they invest which would lead to improved "personal wellbeing - ".greater take home pay" This is a classic argument of state intervention or not. Let"s consider my opponents solution. People can invest in whatever and where they like. Outcome: Some people (more sensible and better off) save money and put it in a pot for their future (earning a lower rate of return than Government can achieve). Some of these people may invest wisely and some may not. However realistically many MANY more do not and spend the money now saving nothing for their future. This leads inevitably to massive problems later on as pensioners run out of money. The normal effects of poverty (crime, civil unrest etc) will come to the fore and in the end the Government of the future will probably have to come and mop up the mess (at assuredly a net higher cost to the tax payer). Payroll Taxes: Please refer to C2 counter. R5: Historically Safe Investments There can be no argument that a state pension is safer than a private one hence this is actually a point for State pensions over personal accounts. As to the rate of return please refer to R1. Regarding the use of funds for wars in Iraq/Afghanistan to be squandered etc etc: If it was not taken from to social security pot it would be taken from somewhere else (further borrowing or payroll taxes maybe!). Again the main argument that Government can achieve higher returns for lower risk trumps all other points. The same logic need also be applied to your health care in retirement point Conclusion Solution: Government achieves higher rates of return on investments due to better management and higher purchasing power resulting in a net gain. How this extra gain is used (higher pension payments, reduced payroll taxes, reduced insurance costs or funding the Afghanistan war) is irrelevant as the net benefit has already occurred. http://en.wikipedia.org...