As we know, Social Security phase-out advocates have been saying that low growth over the next 75 years will doom Social Security. But they've also been saying that we'll continue to get outrageously high stock returns, and that's why we should do private accounts. That sort of acrobatic logic caused Dean Baker to issue his "No Economist Left Behind" Test, daring people to explain just how we'll get such high returns if we have such crappy growth.

Now Tom Maguire has been saying it's perfectly possible to have low growth and high stock returns. But he's been smacked down for offering up a theory that's only "possible" and not "likely". (His theory, if I understand it, is essentially possibility #2 that Brad DeLong looked at here.) That critique seems a bit unfair, though. Given a decade or more of GOP rule in the U.S. Maguire's solution seems very plausible to me, depending as it does on increasingly high shares of corporate revenue going towards profits; real wages dropping as labor protections are gutted; and taxes on savings continue to be rolled back. In other words, exactly what we've seen over the past four years. George W. Bush, note, is creating a world in which the Tom Maguire theory looks not only possible, but increasingly likely.

Now the key point here is that I certainly don't want to live in a world with stagnant wages and obscenely high profit shares. Neither do most people, I assume, and eventually the gutting of American labor may well produce a real political backlash that will bring the whole project crashing down. More labor protections. More corporate regulations. More wage regulations. Etcetera. But then we're right back in a world where equities aren't likely to do as well as they have in the past, and private accounts become a worse deal all around.