When social security privatization was being debated, I looked at successful schemes like the ones in Chile and, er, Sweden. And of course, sovereign wealth funds like Norway’s. But I didn’t think about the vast gulf between us and them. The US has the largest, deepest, most liquid capital markets in the world, by a fair margin. Small countries can safely invest in our markets (and others) without moving prices or outcomes much.

The unfunded liability of social security, by contrast, is in the tens of trillions (net present value). Where would we put enough investment to cover that kind of liability? Our investments would swamp markets, including our own, in a way that Sweden’s just don’t. And if they were directed by a single government entity, that swamping effect would hand a disastrous amount of power to the investment committee.

This sort of stuff is often obvious, if you think about it a bit. But mostly we don’t. Liberals and libertarians alike are prone to look at stuff that works well in a very small society and assume that there is some way to translate it to the US. When we think about obstacles, we tend to talk a lot about culture and institutions, but we rarely simply talk about sheer size: that what is desireable on a small scale may be disastrous writ large.