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S**t maybe I was wrong all along?

Iriemon

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Diogenes said:
Agreed in principle, except that I don't like the idea of the government investing in anything other than treaury notes. IMO it would be a disaster for the government to invest directly in the stock market.

I don't understand ... it is OK for individuals' future retirement security in private accounts to be invested in the stock market, but for the Govt SS to be invested in the stock market would be a disaster? Why the difference? I might agree with you ... but that is a strong argument why we should not have private accounts.

Part of the problem with social security is how it is indexed. Should it be indexed to prices, or to wages? Wages are a function of worker productivity, which rises about one percentage point faster than prices, and are the way SS is indexed now. I've read that the coming crisis could be postponed for at least a generation, perhaps indefinitely, if SS was indexed to prices rather than wages. I don't know for sure whether that may be true, but it does sound reasonable to re-examine some of the fundamental assumptions of the entire system.
The main problem with SS is that the current benefit system is too expensive for what the people supporting it can reasonably afford. Several things can resolve the problem:

1. Make it means tested. Guys like Warren Buffet do not need to be on the Govt's dole.

2. Make the age of receipt older. When SS started most folks were dead by the time the benefits were scheduled to kick in. We all live longer and healthier lives.

3. Change the method of collecting revenue. Right now, the effective 12.4% SS tax completely stops at $90k of income. Remove that cap, and the rate could be lowered for everybody while still generating extra revenues to pay benefits.
 

Diogenes

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Iriemon said:
I don't understand ... it is OK for individuals' future retirement security in private accounts to be invested in the stock market, but for the Govt SS to be invested in the stock market would be a disaster? Why the difference? I might agree with you ... but that is a strong argument why we should not have private accounts.
If the government owns the stock, it has the right to vote for the directors. Then you have a major stockholder with the police power of the state able to direct the course of company management and deal with competitors. That's socialism through the back door, and has been a disaster for every country that has ever tried it.

One business commentator this weekend pointed out that Delphi's bankruptcy, and the potential bankruptcy of General Motors, comes from a pact that management made with the devil many years ago. Faced with labor unrest and the prospect of strikes, they had to decide whether to run a business or a welfare state for the employees; they chose the welfare state, and are now paying the price for it. About $1500 of the price you pay for a Ford or GM vehicle now goes to pay health benefits for retired workers, while Japanese and Korean cars built here in the US put that $1500 into making the car more attractive to the consumer.

IMO preparing for retirement is an individual responsibility, in much the same way that preparing for a career is an individual responsibility. The role of government is to make it possible, with "free" public schools for the youngsters and IRA-type options (with vastly increased annual limits) for working adults to put away pre-tax earnings.

The main problem with SS is that the current benefit system is too expensive for what the people supporting it can reasonably afford. Several things can resolve the problem:

1. Make it means tested. Guys like Warren Buffet do not need to be on the Govt's dole.
That makes it a welfare program rather than a retirement program. SS was promised as a retirement program to avoid the stigma of the county "poor farm" (a serious objection in days gone by, when being on the dole was socially in poor taste) and most of the problems stem from SS operating as a poorly funded substitute for the poor farm.

2. Make the age of receipt older. When SS started most folks were dead by the time the benefits were scheduled to kick in. We all live longer and healthier lives.
Agreed, absolutely. In fact, there is movement in that direction now. When SS began, it kicked in at the life expectancy age of 65; if we updated SS appropriately, the program outlays would drop dramatically and we could even increase the $255 that SS allows for burial expenses.

3. Change the method of collecting revenue. Right now, the effective 12.4% SS tax completely stops at $90k of income. Remove that cap, and the rate could be lowered for everybody while still generating extra revenues to pay benefits.
Agreed, provided there are appropriate adjustments to benefits and age of receipt. If it is to be a welfare program, let's call it one and treat it like one.
 

Iriemon

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Diogenes said:
If the government owns the stock, it has the right to vote for the directors. Then you have a major stockholder with the police power of the state able to direct the course of company management and deal with competitors. That's socialism through the back door, and has been a disaster for every country that has ever tried it.

I wouldn't propose the Govt would take over companies, but it could invest things like the SS trust fund in broad equity market indexes. That of course is not the only option, I could invest in equities and securities of other countries as well. Just like Japan and China invest in us.

IMO preparing for retirement is an individual responsibility, in much the same way that preparing for a career is an individual responsibility. The role of government is to make it possible, with "free" public schools for the youngsters and IRA-type options (with vastly increased annual limits) for working adults to put away pre-tax earnings.

I generally agree.

That makes it a welfare program rather than a retirement program. SS was promised as a retirement program to avoid the stigma of the county "poor farm" (a serious objection in days gone by, when being on the dole was socially in poor taste) and most of the problems stem from SS operating as a poorly funded substitute for the poor farm.

IMO it should be a welfare program. The Govt should not be in the business of preparing for retirement, as you just pointed out. It cost too much to pay $22000 a year to guys like Warren Buffett, and it is inane, IMO.

One the other hand, people too old to work who are too unlucky, stupid or poor to have saved anything should be eligible for a minimal living support, IMO. I support this not simply because of sympathy (tho that is part of it) but because I don't want to have to deal with hordes of homeless old crones and bent over old men begging for food at stop lights. Do you?

Agreed, provided there are appropriate adjustments to benefits and age of receipt. If it is to be a welfare program, let's call it one and treat it like one.

That is my view. I think we as a nation could afford a basic, minimal welfare program for the aged. We can not afford (particularly since Congress has been and is stealing the SS trust fund) a lucrative national pension system.
 

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Iriemon & Diogenes et al,

Quite an interesting discussion. Good stuff! :cool:
 

Iriemon

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oldreliable67 said:
Iriemon & Diogenes et al,

Quite an interesting discussion. Good stuff! :cool:

Jeez, how can I be my usual smartassed self to a gentleman? LOL :cheers:
 

Diogenes

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I guess we ought to rewrite the kid story about the ant and the grasshopper so that it ends with the ant being taxed to support the grasshopper. I don't have any problem donating relief to those are truly unlucky victims of one disaster or another, but I'm hesitant to guarantee an entitlement to those who simply refuse take responsibility for their own lives.
 

Iriemon

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Diogenes said:
I guess we ought to rewrite the kid story about the ant and the grasshopper so that it ends with the ant being taxed to support the grasshopper. I don't have any problem donating relief to those are truly unlucky victims of one disaster or another, but I'm hesitant to guarantee an entitlement to those who simply refuse take responsibility for their own lives.

Then just roll up your dark tinted window when granny comes hobbling up to your car begging for food at that stoplight.
 

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OK, I'll say it again: I don't have any problem donating relief to those are truly unlucky victims of one disaster or another, but I'm hesitant to guarantee an entitlement to those who simply refuse take responsibility for their own lives.
 

Iriemon

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Diogenes said:
OK, I'll say it again: I don't have any problem donating relief to those are truly unlucky victims of one disaster or another, but I'm hesitant to guarantee an entitlement to those who simply refuse take responsibility for their own lives.

What do we do with all the old grannies who were not truly unlucky victims of a disaster, but didn't take enough responsibility for their own lives?
 

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Iriemon said:
What do we do with all the old grannies who were not truly unlucky victims of a disaster, but didn't take enough responsibility for their own lives?
Privately funded philanthropy. The freedom to succeed must necessarily imply the freedom to fail.
 

Iriemon

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Diogenes said:
Privately funded philanthropy. The freedom to succeed must necessarily imply the freedom to fail.

We have a different view of what we want America to be. I don't have a dark tint on my windows.
 
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