Media Neglect Support for Personal Accounts
Why are the media ignoring 450 economists in favor of personal accounts, including 5 Nobel Prize winners?

by Todd Drenth
June 2, 2005

     One of the biggest problems with media coverage of Social Security reform is what isn’t included in those stories. On May 11, 2005, the Cato Institute released an advertisement featuring the names of 450 economists, including five Nobel laureates, on a petition supporting personal retirement accounts as part of Social Security reform. However, the major television networks and the nation’s prominent newspapers largely failed to report on the economists’ support for personal accounts.

     The prestigious economists come from varying backgrounds in academia, business and government. Robert Lucas, Robert Mundell, Edward Prescott, and Vernon Smith all have been awarded Nobel Prizes in economics within the last 10 years, and fellow Nobel laureate Milton Friedman has been a trendsetter for economic reforms around the globe. They have the credentials to debate such a complicated issue, yet the media continue to ignore their petition and with it voices that could help balance coverage of reform proposals.

     The Cato Institute is widely recognized as a free market leader in the Social Security debate and has more than 20 years of experience with the issue. While Michael Tanner, director of Cato’s Project for Social Security Choice, has been quoted by stories in The New York Times and Los Angeles Times, no mention has been made of the 450 economists whose names are on the Cato petition in support of personal accounts.

     The petition calls for reforms that will “uphold the time-honored principles of ownership, inheritability, and choice.” It states how currently under Social Security, as clarified by the Supreme Court in Flemming v. Nestor (1960), taxpayers have no ownership over what they pay into the system and consequently benefits are not constitutionally guaranteed. The economists whose names are on the petition advocate a system of personal accounts where individuals would own real assets within Social Security that they could freely choose to invest in stocks, bonds, or mutual funds that “will grow over time, providing higher benefits than can the current system,” the petition said.

     The media, however, remain doubtful of the American people’s ability to invest their own money wisely. A Free Market Project analysis of Social Security reform coverage found the networks emphasized the risk of investing. The study, “Biased Accounts,” showed how far the media have gone to stress this point – even setting one interview in the gambling locale of Reno, Nev.

     Los Angeles Times staff writer Peter Gosselin wrote in a May 11, 2005, article that “millions of Americans fail to get even the most elementary investment decisions right.” Gosselin used examples of Nobel laureate economists who admitted that they had made poor investment decisions. None of the Nobel laureates Gosselin interviewed for the story was directly quoted as being opposed to personal accounts, but Gosselin suggested that in terms of handling retirement accounts, “few are terribly good at the job, and fewer have the time or inclination to get better quickly.”

     Dr. Gary Wolfram is one of the 450 economists whose name appears on the CATO petition as a proponent for personal accounts. A professor of economics and political economy at Hillsdale College and an adviser for the Free Market Project, Wolfram said in a phone interview that he is encouraged by the greater responsibilities and choices the American people would enjoy from personal accounts.

     “People are reliant on government for their retirement,” Wolfram said. “We have come to jettison the idea that we are responsible for our own actions.” He said he hopes that through a system of personal accounts Americans would once again “identify the system for what it is, a social safety net.”

     Wolfram said he is optimistic that if Americans took on greater responsibility for their own retirement through personal accounts, they would see greater returns because “the market system is more efficient at allocating resources than government.”

For more information:

“Biased Accounts,” is the first of three parts of a Free Market Project analysis of Social Security media coverage.

“Investing for Dummies,” a Free Market Project critique of Peter Gosselin’s Los Angeles Times article

FMP National Chairman Herman Cain comments on coverage of the Social Security debate: “News Coverage Skews View of Social Security Reform”