Wednesday, April 20, 2005

Back to Social Security Privatization

There's a lot of anti-x going around.

I'm still seeing bumper stickers that tell me that war is not the answer. Mind you, I don't see bumper stickers telling me what the answer is - except of course for the self-nuking of the United States of America since we're obviously the root of all evil.

But back to social security... reflecting on what the use of the government to coerce to your advantage really means (I know, don't sugar-coat it, Phil)...

Basically, all I'm hearing from the left is "Privatization is not the answer". Now everyone agrees that eventually -- and it won't be long until this happens -- there won't be enough money to pay out what has been promised. Which means one of two things: 1) we will have to charge more money (tax) OR 2) pay out less than has been promised. Or 3) -- both.

Nobody ever mentions 3).

Let's assume that the people who want to "do nothing" are really advocating 1) since they are probably loath to advocate 2).

If they are not advocating one or the other, then clearly they are in severe denial.

Everyone knows what we have here is a huge pyramid scheme. But the pyramid is getting flatter & flatter. In the beginning, when population was expanding and the economy was expanding with it (the combination being somewhat of an exponential factor) we had, I think, 25 people paying in for every 1 taking out. So it was easy to get more than you put in. Over time, as people have voted themselves more money from the treasury (entirely predicitable -- read previous posts) and had less incentive to work hard, compounded by having fewer kids and an economy approaching some sort of limit -- we have something on the order of 1.5 people paying in for every person taking out.

Not hard to see that we're approaching 1:1 -- which means you get out what you put in. (there's no guarantee of that, either, because Congress gets to decide how much, if ANY of it, you get).

At this point you might as well be investing. Long-term investments in diversified funds ALWAYS make money. And they make it faster than what you'd put in to a conservative government fund especially after subtracting out typical government waste overhead. Plus, if enough people vote tomorrow that they should get the money you're paying in NOW and you'll just have to come up with your own solution in the future when you retire or become disabled.... basically, you have NO control over your investment.

Granted, this privatization would only allow limited control over your money, but it would allow way more than you have right now.

So what it really boils down to is proponents of the Status Quo are counting on the Government to live up to its promises to pay, and "somehow" it will do this. That "somehow" is that it has the power to force someone else, at some future date, pay for it.

And they don't want any real people to make any real money off of it (you know, by contributing to the economy or anything). No, faith in the Government (what religion are you again?) is sacrosanct.

In other words -- they want something for nothing. Government is the easiest way to get it ... er... rob future Peters to pay today's Pauls.

1 comment:

Anonymous said...

"Plus, if enough people vote tomorrow that they should get the money you're paying in NOW and you'll just have to come up with your own solution in the future when you retire or become disabled.... basically, you have NO control over your investment."

It's a little worse than that. 'They' can vote to take even more from you now, and remove your tax benefits for investing privately, and even limit the amount you are legally able to invest.

If I were to write off all of what I've paid into social security and expect nothing back, then take the money my employer and I are forced to pay and invest it expecting oh, 8% return, I would be far better off. Really.