What impact will privatization of social security have?
• Increased investment in private enterprise – whether through stocks or bonds – should create more economic opportunities and boost domestic growth. • More investment capital in the private sector should result in productivity gains as companies make new investments in technology and people. This is a debatable, though. In recent years, despite a lot of cash on balance sheets, US corporations have not invested, at least not in the United States. • Younger individuals are likely to invest most of their contributions in stocks, and the increased demand would propel stock prices higher in the short term. Again, this will only be in near term. In the long term, equity prices will still be determined by fundamentals. • Capital invested in bonds, money market funds, and other types of safe investments will create greater demand for bonds – a traditionally conservative investment. This is likely to keep interest rates lower which is generally good for the economy. New Business opportunities
