In their Sept. 29 Other Views commentary, "Invest Social Security, but don't privatize," the late Franco Modigliani and Arun Muralidhar note very valid reasons why the U.S. government should not privatize any part of the Social Security Trust Fund, given the inherent "social contract" nature of the system. They also suggest that there is reasonable evidence to support the idea that the Social Security system can be "fixed" if assets could be invested in the securities markets.
I tend to agree with them on both of these points, but there's a problem. It is a problem that Alan Greenspan, chairman of the Federal Reserve System, has discussed. When a government becomes a shareholder of a company, there is a temptation for that shareholder to become an activist — and that activism is politically motivated, not bottom-line motivated.
At its best, the activism might be a simple extension of the "pork barreling" we see in government spending. At its worst, the activism might be a step toward socialism, French style. I see the potential risks to our free capital markets being too great and would not support the concept.
TODD C. GANOS
Doolittle & Ganos Investment Counsel, LLC