Re: Privatizing SS will destroy SS

js wrote:
Alan Lichtenstein wrote:

El Castor wrote:


"Harry Thompson" <me@xxxxxxxxxxx> wrote:

From Brad DeLong's blog:


People have brains designed by evolution to figure out whether it's safe to
leap to the next branch and when the fruit is ripe. They don't have brains
designed to make long-run investment decisions.

Then he points to this depressing study:
http://www.capitalspectator.com/archives/2006/07/selection_risk.html

The subjects are MBAs at Wharton. Read the report and weep.

Hap


I agree with everything -- but those who are opposed to privatization
should come up with their own solution for Social Security. That, they
can't or won't do.

The obvious solution, which has been discussed and posted to, and
supported by the American Association of Actuaries through their Social
Security Game, is to invest the funds through some kind of public trust,
akin to what many large state pension funds do.


With resounding success (see San Diego or the state of C`alifornia, for
example).

Before you become sarcastic, you ought to check out the 'resounding examples' you cite. In each case, the plans attempted to include basic medical and prescription drug coverage without funding for it. This is virtually the same thing as the Republican mantra of fooling the public by telling people that they can have their cake and eat it too. Doesn't work for reactionaries, and doesn't work for liberals either.

Now, if you want to check out the other pension plans which have no such difficulties, perhaps you will be better informed and have a better basis to compare. And of course, you'll see that virtually all are on VERY sound actuarial and financial footings.

And that just goes to the old saw that the exception, does not determine the rule, but the majority. By citing one singular example out of thousands and attempting to infer that that singular example is the rule, you demonstrate the logical fallacy of generalizing from the singular.

But of course, you knew that, didn't you?

Doing so reaps the
benefit of market investment, which over the years has shown long term
growth, giving the benefit of a very diversified and large assortment of
equities and other instruments( well beyond the ability of any
individual to acquire ), and reducing the investment risk to the individual.


Thanks - you go right ahead and do this. I'd rather take personal
responsibility for my money. I want MY account. Not a public trust
account. I want a retirement plan, not a social insurance plan.

Fine. You can do that. There's always those foolish individuals who somehow think that they with their limited assets can do better than funds with billions. For the rest of us, who understand that we lack investment acumen, the general trust will ALWAYS turn out better. Because it REMOVES investment risk while GUARANTEEING benefits.

Of course, you prefer to take your risk. And when you do, then don't come and complain about that those people who chose differently and then come out better because of it, as you rail now against unions and those with pensions, that you DON'T have.


The Actuaries Game predicts that investing the surplus will reduce the
deficit by 40% at current rates. This is a far better method than
privatization which does NOTHING to reduce the deficit, but only
TRANSFERS it to the individual. IOW, a scam.


The scam is that my "retirement" is your source of deficit spending.
The scam is that social security is a Ponzi scheme. The money paid in
by workers today is gone - long spent - before they retire. The scam
is that regardless of how you do it, be it a private trust or public
trust, you actually have to invest real money to get these real
returns. That ain't happening without borrowing. So the actuaries
solution is no different in its cost. No thanks. YTou want to make
social security a real retirement program and not some bastardized
socvial insurance program, then let me chose how I want to invest my
money.

First of all your 'retirement' is the source of YOUR deficit spending. I remind you that under the Democrats we began having surpluses, and it was under YOUR Republican buddies that we now have massive deficits.

That clarification made, I agree that it is inappropriate to use Social Surpluses to fund general expenditures. That can easily be solved by rescinding the inappropriate Bush tax cuts. That way, Government can spend only what it takes in, as opposed to borrowing.

But of course, you knew that too, didn't you? You're just playing devil's advocate, you rascal.

You are correct in indicating that Social Security is akin to a Ponzi scheme. I have said so myself. but unlike you, I understand WHY it behaves like such a scheme. And the reason is its funding mechanism. The funding mechanism for ANY retirement account must be money growth. Social Security NEVER provided for that, and ASSUMED constant population growth, an assumption which we now see has proven ineffective.

As far as your last comment is concerned, Social Security has a surplus and will continue to run a surplus until around 2018. If that surplus is invested, the deficit which is projected to occur around 2042 will be reduced by 40%, according to the actuaries. Since the investment will come from surplus money, there will be NO borrowing. Remember: We're talking about a legitimate funding mechanism, not Republican borrow and spend nonsense.

As to your final comment, Social Security is a group plan to benefit society as an aggregate. It is NOT, NEVER has been and NEVER will be an individual retirement plan. Government t benefits the citizenry as a group, and as a member of the group, the only way you opt out is to leave the society. So you're stuck with your collective group responsibility. sorry you don't like it. You'll just have to deal with it.

What's wrong with a choice? You can buy into the trust fund if you
want OR you can do it yourself. That was the unbderlying model of the
privatization proposal, by the way.

Government programs are designed as a one size fits all, suitable for EVERYONE. the fact that you want to act as an individual is NOT the way majority rule functions in our society. Perhaps in your libertarian lunacy, that is the way you want it, but if you're going to be a member of this society, you're just stuck with the programs the society finds suitable for everyone.

In short, Government programs are not purchased cafeteria style. The fallacy in that reasoning, is that if we allow individual choice, there's no reason for Government to provide anything; each individual can simply keep their money and purchase all their services themselves. Of course, you know that's not practical, if only from a monetary standpoint, so if we're going to have collective services so that each individual's financial contribution is limited, then each individual gets the group plan.

In short, you can't have it both ways. THAT'S what's wrong with both your plan AND your logic.

But of course, you knew that too, didn't you?

.

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