Re: Privatizing SS will destroy SS


Alan Lichtenstein wrote:
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.

It plain doesn't work.

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 those would be????????

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.

Two things I don't want - your acumen and your guarantees. Moreover,
the risk and guarantees cost money - there is no free lunch. What I
want is my name on the money, not yours, not anyone elses.

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

That is what I am willing to do. Now, if you think YOU can create an
investment vehicle and call it a trust that I can't create for myself,
or have others create as a commercial product, then you go right ahead
and believe it.

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.

Nope - not mine - I pay my fair share - I have paid my 47K of the
deficit - the deficit is YOURS, not mine.

I remind you that under the Democrats we began having surpluses, and it
was under YOUR Republican buddies that we now have massive deficits.

They aren't my Republican buddies.

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.

And stall the economy? But that is a diversion and I am not going to
argue tax cuts.

That way, Government can
spend only what it takes in, as opposed to borrowing.

I am all far a balanced budget ammendment - you?

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.

I understand exactly why it behaves like a Ponzi scheme - it's because
it is one.

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.

It is not a retirement account - it is a social welfare entitlement
program - both in its funding and payments.

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.

Legitimate? It runs out in 2042. The surplus money is invested in
government bonds. You just don't like the interest rate - but it does
meet your second criterion - guaranteed returns.

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.

Then we agree.

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.

If it is a tax, call it that. And then don't pay out for anyone but
the poor. Cut the benefits to anyone over the poverty level. Period.
No questions, no recourse.

But no, the key to getting everyone to pay in is this empty promise
they'll get it back when they retire. That's bull. Had I invested
what I paid in over the years in T-bills, I'd have a bigger monthly
annuity than I do now.

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.

Then call it what it is - a poverty insurance program, and pay out
accordingly.


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.

You are arguing with yourself. You say the actuaries have a fix to the
retirement program called SS and then go on about the collective nature
of funding poverty insurance for the elderly.

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

You can't have it both ways. I don't want it two ways. I want it for
what it is - insurance. I don't want anyone over the poverty line to
get social security. I don't want to pay in any more than necessary to
fund poverty insurance.

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

Is it an insurance program against poverty or a retirement program for
the elderly?

js

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