Social Security reform. We've heard it's the third rail of politics- touch it you die. We've heard it's foolishly risky- putting America's nest egg in the hands of the Pets.com puppet and Enron energy schemes. On the other hand, we've heard endless debate on exactly when Social Security will be bankrupt- is it 2014? 2018? 2042?

All of these things are important, but secondary, political and economic points. The real legacy of Social Security reform- if it's done correctly and contains some form of privatization and investment opportunity- will have nothing to do with retiree benefits decades from now. It's the often forgotten piece of the puzzle- the privatization part- that will change the face of the American economy.

Without getting too bogged down in Advanced Economics Theory For Dummies, it is important to understand the single point that is probably the most critical, yet forgotten (or ignored) aspect of economics: circulation is good, stagnation is bad. The media, and thusly its readers and viewers, often think of the economy like we do our own bank accounts: that there is some final "net worth" which tells us how well we're doing, or how much trouble we're in. An economy, however, is not an individual. It's a closed system in which a finite and (essentially) unchanging amount of money moves.

To many, this is common knowledge. However, for whatever reason, when people (analysts, the media, CEOs) start talking about an economic issue like social security, they focus on simpler- but less significant- concepts like surplus, debt, bankruptcy, and the like.

The debate on privatization of Social Security really boils down to a battle between two economic systems. In one corner you have the current Social Security model: a closed system of taking from one group (younger workers) and merely giving to another (retirees). In the other corner you have the open system under which the rest of the American economy functions.

After the Great Depression, and heading into the post-war baby boom, the closed system of Social Security was a great quick fix to a massive problem. Older Americans were retiring relatively poor, with absolutely no means of participating in the great boom to the American free market that was occurring. Such an imbalance could only be corrected by the simple transfer of money from those participating in the free market to retirees.

In an effort to get such money dispersed quickly, Social Security bypassed a few very important steps which normally allow an economic system to live (conceivably) forever. Such steps would have crippled Social Security at its birth. Seventy plus years later, the lack of such steps are bringing Social Security to its inevitable death.

These steps can be summed up in three words: the free market.

The second the concept of "free market" is mentioned, everyone's attention immediately moves to the Enron scandal, the dot-com bust, and other tales of innocent money flushed down the drain. All interesting stories, but hardly representative of the entirety of our free market economy.