Larry Elder
The stock market reached a record high last week, closing over 17,000 for the first time. Good news, of course. As President John F. Kennedy famously said, "A rising tide lifts all boats." But it sure helps if you own a boat.

In this case, the "boat" would be the dynamic American stock market.

But investors in the stock market disproportionately come from the top 1 percent, and they hold about 35 percent of all stocks and mutual funds. The next-richest 9 percent control about 45 percent. The remaining 90 percent have less than 20 percent. While nearly half of Americans have either direct or indirect investments in the stock market, half of Americans do not. And even for those who do, their home equity is still, by far, their largest investment.

President Obama wants to focus his remaining years in office on fighting "income inequality." To do so, he has proposed things like "promise zones" where federal grants and tax incentives is supposed to spark development. He has promoted silly income-transferring schemes like "cash for clunkers" and "cash for caulkers," and HAMP to help homeowners fight off foreclosure.

But there is something we could do immediately to help to increase the net worth of the bottom 99 percent -- allow private accounts for Social Security.

Chile recently celebrated its 33rd year of private retirement accounts. Its then-secretary of labor and Chilean pension system, Jose Pinera, went on television day after day to explain to cabdrivers, housewives and construction workers the benefits of allowing private savings accounts.

Pinera successfully persuaded 93 percent of Chilean workers to invest their "social security" contributions in one of several types of managed portfolios. Those who feared the "risk" of the stock market could continue as they did before. While U.S. workers pay 12.4 percent of their wages into Social Security, Chileans put 10 percent (or up to 20 percent) of their earnings into a private fund, earning compound interest. On retirement, workers can choose a life annuity or make programmed withdrawals. Heirs inherit what's left.

The result? Chilean workers averaged a near double-digit annual return on their money -- 9.23 percent above inflation -- over the first 30 years. In the U.S., Social Security nets a theoretical 1 to 2 percent return -- less for newer workers. Not only do they allow private accounts for "social security" in Chile, but also in Australia and the United Kingdom.

Larry Elder

Larry Elder is a best-selling author and radio talk-show host. To find out more about Larry Elder, or become an "Elderado," visit