Dorothy Brown (Washington & Lee) presents The Ownership Society and Private Accounts at 12:30 pm today at Boston College as part of its Faculty Workshop Series.  Here is the abstract of the talk:

President Bush has called for an ownership society that leaves no one behind. One of his building blocks is the creation of private accounts under Social Security for younger workers. Yet the impact of private accounts on low-income whites and communities of color is cause for concern given how dependent they are upon social security payments.

That dependence is largely a function of the lack of wealth found in low-income white, black, and hispanic communities. While low-income whites are far more likely to invest in the stock market than low-income communities of color, low-income whites and communities of color are far less likely to participate in employer provided pension plans, or hold income producing assets. Further, data suggests that investment options vary by race because blacks have a very different tolerance for investment risk than whites. While whites are more likely to invest in the stock market, blacks are more likely to invest in real estate. As a result, without special efforts, one could anticipate that private accounts would increase the ownership society opportunities for white social security beneficiaries to a greater extent than black and hispanic beneficiaries.

This Article proposes three requirements which must be found in any private account proposal if the goal of creating an ownership society is to be attained. First, private accounts can only be used as an add-on to the existing social security benefits. Second, the option of private accounts must include investment education for retirees. Third, private account balances can be inherited by retirees’ heirs.