Do not confuse stock market with gambling

If we’re to believe the AARP’s advertising blitz against partial privatization of Social Security, the U.S. economy is just one big casino. “If we feel like gambling,” declares one full-page newspaper ad, “we’ll play the slots.”

But is investing in stocks the same as playing the slots? Is it as risky as taking your retirement nest egg to the casino?

Older retirees who remember the Great Depression may quite understandably be reticent about relying on the stock market for financial security. Ditto with investors who threw every available dollar into dot-com equities in the 1990s, only to suffer huge losses when the bubble burst in 2001.

But even taking business cycles and business failures into account, the stock markets have been on a reliably upward trend since colonial days. That is because the U.S. economy — always one of the freest in the world — is programmed to grow. It is programmed to grow because it is linked to individual enterprise, and it is inherent in the human spirit to improve and grow — to make a better life for oneself and one’s family.

An economic history of this country clearly shows this, and it’s confounding that the nation’s largest retirees’ organization, the AARP, would simply sweep that irrefutable record aside and call it all a big gamble.

The more than half of all U.S. households that are now invested in securities — that is, owning a chunk of America’s productive might — should know better. Certainly today’s workers who wisely have taken advantage of company 401(k) programs should know better. In spite of market fluctuations, sensible, well-diversified stock purchases — the safest being in the form of reputable mutual funds — historically have been the most reliable way to build a comfortable nest egg during one’s working life.

So AARP’s comparison of proposals to allow private investment accounts in Social Security to playing the slots is simply wrong. It would be more accurate to compare the existing Social Security system to a Ponzi scheme that will require workers to pay an ever increasing amount in payroll taxes to keep benefits flowing to retirees.

Social Security needs reform, and hooking it to America’s economic growth engine is the smartest, safest way to do it. It’s also a good way to ensure retirees have some money left over for fun after paying living expenses — even to play the slots if they wish.