Hedging our way to retirement: high risk, high return will breathe new life into social security.

The concept of setting up private accounts as a partial remedy to the impending Social Security crisis has been discussed by experts in this country in a mood of depressing sobriety. Proponents of the measure have gone to great lengths to assure naysayers that these accounts will be relatively risk-free, that they will be managed by respectable institutions with proven track records, and most important of all, that gullible or unsophisticated pensioners' money will not be put in the hands of scoundrels, as has been the case in at least one European nation that has already implemented this same bold strategy.

But the truth is, if private accounts are ever going to grab the timid public by the lapels, now or in the future, proponents are going to need to sweeten the pot. They're going to need to make the public an offer it literally cannot refuse. One obvious suggestion is to let gutsy young people put a portion of their retirement money in the hands of seasoned hedge fund managers. After all, what's the point of stuffing a piddling amount of cash in a conservative bond fund or stock market index fund when you can have your nest egg managed by hedge fund managers who can earn you some real money? What's the point of saving for a rainy day, when the whole point of the grand American experiment is to save for a sunny day--and, in fact, to save enough to make that sunny day a very sunny one.

This is why the Bush Administration, which has already acted with commendable audacity in moving this previously taboo topic to the center of the national debate, should make its proposal even more appealing by vastly increasing the amount of money workers can divert to these accounts and by setting up a Department of Hedge Fund Management.

Private hedge fund accounts, which would only be offered to intrepid Americans fully cognizant of the risks involved, offer numerous tantalizing advantages over conservatively managed accounts. For starters, they virtually guarantee an infinitely higher rate of return. Second, hedge funds have the legal authority to short stocks. Yes, yes, many Americans view short-selling as the quintessence of evil. And for obvious reasons, no one would want to put the Social Security system in a situation where it would be actively betting against American companies--even crooked, fly-by-night outfits or ones sabotaged by inept management.

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But what would be the harm in shorting unethical companies based in countries we dislike, or companies operating in countries we view as a military threat, or foreign corporations that steadfastly cook the books, demand bribes or otherwise refuse to play by the rules? Not only would hedge funds be producing a much higher rate of return for investors; they would also be performing a patriotic duty by hammering our rivals, thus substantially reducing our foreign trade deficit.

Perhaps the greatest appeal of having private accounts managed by hedge fund savants is the excitement the innovation would generate. If Americans are merely setting aside a minuscule chunk of their retirement money in conservatively managed funds, they are unlikely to get very excited about the Bush proposal. But if they know that they can earn some real money on their investment, they're much more likely to rip open their checkbooks. Americans will no longer be setting aside a few bucks as a cushion against disaster; they'll be putting themselves in a position to get rich. And getting rich is what this country is all about.

Pundits are always complaining about how hard it is to get top-notch people to work for the federal government. And once these individuals have availed the Republic of their expertise for a few years, it is even harder to get them to stay. But once a cabinet-level Bureau of Hedge Fund Management is established, top-flight investment mavens will flock to Washington. The Social Security system, as currently constituted, is stodgy and paternal; the Bureau of Hedge Fund Management could give Social Security some pizzazz.

I, for one, have little interest in seeing my widow's mite earn a paltry 6 to 7 percent per annum, but if I knew I had a chance of going out in style, I'd fork over my life's savings to federally mandated hedge fund managers. So let's get cracking! This is supposed to be the land of the free and the home of the brave. Let's be brave for a change. Let's roll those dice.