This comes from The State-Corporate Complex: A Threat to Freedom and Survival, lecture given at the The University of Toronto, April 7, 2011
Political figures understand perfectly well that with an election coming up, nobody’s going to say let’s raise the payroll tax. So that essentially makes it permanent, which is a way to defund Social Security. Social Security is actually in pretty good shape despite what everybody screams about. But if you can defund it, it won’t be in good shape. And there is a standard technique of privatization, namely defund what you want to privatize. Like when Thatcher wanted to defund the railroads, first thing to do is defund them, then they don’t work and people get angry and they want a change. You say okay, privatize them and then they get worse. In that case the government had to step in and rescue it.
That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, you hand it over to private capital. That’s the Social Security scam. If they can succeed in defunding it — they’ve been trying for decades, it’s too popular to do much about, and very efficient incidentally, miniscule administrative costs. Nothing like the privatized health care system. So it’s kind of hard to get rid of. But if you can defund it, it might work out. That’s the point of this decision in the lame duck session. That’s kind of important. First of all, if it can be privatized it’s a huge bonanza for investors. There’s a ton of money in the Social Security system. It’s kept in a trust fund or invested in government bonds and goes back to working people. But if that can get into the hands of financial institutions, they can make a ton of money by using those funds to enrich themselves. And as usual when the system crashes, going back to the taxpayer to bail them out.