Since the beginning of this current round of the privatization debate — now going back more than four months — critics have made a simple and I think unassailable point: the privatizers’ argument for the gains to be had from private accounts don’t hold up because they use optimistic economic assumptions to forecast returns from private accounts but very pessimistic assumptions to predict the future of Social Security.
In other words, it’s a bogus comparison. Whether our economic future is rosy or grim, we can only compare a future with private accounts to one with Social Security by using one common set of economic assumptions.
Suddenly now, this point is all the rage. A majority of economists surveyed by Bloomberg say that private accounts won’t do as well as the White House says if we’re really heading into a 21st century of anemic growth. And the Times devotes a whole article to the point in tomorrow’s paper.
There’s nothing shocking or untoward about the sudden interest in this point. And the Times piece is pegged to a paper that is set to be presented tomorrow at Brookings. But I’m always struck by the lack of rhyme or reason to why a particular point or argument suddenly gains traction after a long period of inattention, even when the facts on the ground and the governing assumptions haven’t changed a bit. It’s no more true today than it was four months or two months ago.
The only difference is that the market for articles predicting the demise of privatization has become more bullish.