Generational Equity and Privatization: Myth and Reality

For more than two decades, policy analysts and advocates have debated the question of generational equity (Williamson, Watts-Roy, & Kingson, 1999). Generational equity refers to the distribution of resources among generations. Advocates of generational equity believe that social welfare programs benefit older adults at the expense of young people (Williamson & Watts-Roy, 1999). According to Richard Lamm (1985), former governor of Colorado, "in the name of compassion for the elderly, we have handcuffed the young, mortgaged their future, and drastically limited their hopes and aspirations" (cited in Williamson & Watts-Roy, 1999, p. 14) Generational equity theorists are particularly concerned about social security. Third Millennium, an advocacy group for young people, describes social security as a "generational scam" that requires today's workers to support retirees who, in most cases, are more affluent than those supporting them (Third Millenium, 2000). In light of social security's financial difficulties, young people eventually will be forced to "renege" on their "obligations to retirees" or raise payroll taxes to as high as 40 percent" (Third Millenium, 2000). This debate has now moved center stage. In a bold move, George W. Bush has proposed partially privatizing social security (Dao & Mitchell, 2000; www.georgewbush.com/speeches/promise.asp). This would allow individuals to invest part of their payroll deduction in individual investment accounts. Although he has yet to provide details, Bush clearly hopes to capitalize on the widespread perception that the baby boomers and their parents have taken advantage of young people. According to him, "without reform, younger workers face...a lifetime of paying taxes for benefits they may never receive (Dao & Mitchell, p. A18). This column considers the implications for young people of the debate over generational equity and social security in particular. It also discusses how social workers might get involved in the effort to defend social security. EMERGENCE OF GENERATIONAL EQUITY The current debate over generational equity dates back to the 1970s, a time of great flux and transition. During the early post--World War II era, the United States was clearly the dominant power in the world. While Europe and Asia struggled to recover from the war, the United States possessed "an abundance of... land, food, power, raw materials, industrial plant, monetary reserves, scientific talent, and trained manpower" (Hodgson, 1978, p. 19). This wealth and relative advantage helped create "the most br6adly based middle class that the world had ever seen" (Phillips, 1993, p. 14). Many people, particularly those who were white, believed that they and their children were "destined to live happily ever after...in a fairy tale of health, wealth, and happiness" (Patterson, 1996, p. 311). These "grand expectations" were shattered during the 1970s (Patterson, 1996). The Vietnam War, Watergate, and other events fueled a growing distrust of government (Patterson, 1996; Skocpol, 1997). This distrust was exacerbated by economic changes. During the 1950s and 1960s, economic growth and increased prosperity were taken for granted (Patterson, 1996). Beginning in the early 1970s, however, the economy took a "great U-turn' as wages and family incomes stagnated and inequality grew (Harrison & Bluestone, 1990, p. 5). Corporate profits also feil, leading many companies to introduce a "Big Stick" strategy (Gordon, 1996). During the 1950s and 1960s, labor and management in many industries reached an accord, linking wage increases with increases in productivity. Consequently, workers generally enjoyed rising standards of living. During the 1970s, this agreement broke down, as corporations faced increased competition at home and abroad. Cooperation now gave way to conflict, and many "firms went directly after their unions, aiming to tame . …