Via Paul Krugman, imagine what would have happened had the Greedy Old Party (GOP) succeeded in pushing through Social Security privitization. But why imagine? We can just look at Italy:
Italy did for retirement financing what President George W. Bush couldn’t do in the U.S.: It privatized part of its social security system. The timing couldn't have been worse.
The global market meltdown has created losses for those who agreed to shift their contributions from a government severance payment plan to private funds meant to yield higher returns. Anger is rising both at the state, which promoted the change, and money managers such as UniCredit SpA and Arca Previdenza, which stood to profit.
Prime Minister Silvio Berlusconi's administration is now considering ways to compensate as many as 1.2 million people who made the switch, giving up a fixed return for private plans linked to financial markets. It's also letting people delay redemptions on retirement funds to avoid losses after Italy's benchmark stock index fell 50 percent in 2008, destroying €300 billion ($423 billion) in wealth.
Oops. Keep in mind, a lot of people got rich on the program: the people selling the investments.
On a much smaller scale, let's keep this example of privatizing a necessary government function in mind when the Chicago street parking privatization blows up in scandal a few years from now.