By David A. Sargent,Special to the Sun Journal

LEWISTON – The pros and cons of the proposed Social Security private accounts were aired in a panel discussion Wednesday afternoon at Bates College.

Two of the program’s participants examined possible results if young workers get to invest a portion of their Social Security contributions.

Michael Murray, a Bates professor of economics, took the scholarly look at private accounts for Social Security. He concluded that privatization is only one factor in Social Security reform and is, in fact, an enhancement of the program’s historical format rather than an answer to a problem.

Webb Harrison, a retired Bates coach, told the audience that he taught himself about investing just recently. He strongly advocated the benefits of private Social Security accounts and backed up his claims with research that looked at stock investment results for a number of 40-year periods.

Each scenario of investing $1,000 a year reaped a bonanza for the investor, he said. In fact, he claimed that a scenario ending this past Sunday would have yielded $608,244.79. At 5 percent interest, that amount would yield an annual retirement income in the $30,000 range, Harrison said.

Harrison told the audience he had come to the meeting as a member of the public, and he had intended to present his findings for the panelists’ reactions. He was asked to sit with the panelists and take part in the presentation.

Murray disputed a number of Harrison’s assumptions. In particular, he pointed out that the high-risk investments that would lead to the huge yield are not likely to be the choice of prudent Social Security investors.

Harrison’s hypothetical stock market exercise was basically a powerful demonstration of the power of compounding, Murray said. While advocating due diligence in playing the stock market, he told the students in the audience they should heed the bigger lesson and start making investments early in their lives.

Nathaniel Walton of Marblehead, Mass., a first-year Bates student and vice president of Bates College Republicans, told the audience he believes the Social Security crisis is actually a lot more serious than it seems because Social Security trust fund relies on government securities. Turning the government’s financial obligations on the securities into cash leads to raising taxes or cutting benefits, Walton said.

Murray emphasized that the current debate over Social Security reform fails to keep all of the relevant issues apart. President Bush’s proposal for private accounts is only one component, and it’s an enhancement, not a solution, he said.

In response to a question about the impact of Social Security reform on blacks, Murray said it’s misleading to cite a shorter life expectancy among blacks as evidence of unfairness. Noting that the statistic citing a shorter life span comes from deaths among young blacks, he said that among blacks of retirement age, benefits under Social Security are on a par with whites.

The Bates event was co-sponsored by Amandla!, the Bates College Republicans, the Bates College Democrats and the Bates Economics Society.

Amandla! is an African-American organization at Bates that provides a mentoring program serving children of African descent in the Lewiston-Auburn area.