An alternative approach to solving the Social Security mess

[LiveAndLetLive]

Social Security has never REALLY worked. It was a Ponzi scheme from Day One. Still, we have to deal with it. It seems to me that we really should be doing two things with Social Security:

1) First, letting people -- to the extent possible -- prepare for their own retirements. Why not re-open IRAs to all, and up the deductible amount to, say, $10,000 per year? This would not only allow people to build substantial nest eggs, but allow for increased capital formation, which, in the long run, is how wealth is created in a nation?

2) Start funding SS with a penalty on polluting. In the long run, pollution from burning fossil fuels needs to be dissuaded more. Up the gas tax 25 cents for starters. Over time, keep upping the gas tax, and at the same time, lower SS tax rates.

comments most welcome.

[Scribbler1]

The only thing that works with SS is the fact that most people don't save squat, and if left to their own devices they would be the grasshopper more often than the ant. The only unfair thing is that it penalizes the people who CAN intelligently manage their finances to a degree that their return would exceed SS bennies.
I'd love to have the ability to see an alternate reality where SS didn't exist and see how many people who were NOT forced to contribute ended up on welfare, or on the street. For an effective alternate to Social Security to become a reality we need to work NOT on privatization, IRAs and all the other schemes, but on the way people think. Unfortunately, it looks like we need another depression, one every few generations actually. Most of the people who lived through the great depression are dead and successive generations have gotten more and more spoiled. I know I have gotten spoiled as a lot of my generation who were born in the 50's.

[donkrabbit]

Quote by: Scribbler1 The only thing that works with SS is the fact that most people don't save squat, and if left to their own devices they would be the grasshopper more often than the ant.

The first half of this statement doesn't make sense to me, but I can't determine if that is a result of poor logic or merely poor sentence structure.

You also have to consider the current situation in its proper context. Workers have no choice but to pay into the system all of their lives, while being promised that they will eventually be repaid an adequate amount of money to retire on. Since they must give up this portion of their paycheck, they might as well depend on its returns. If this system did not exist, and if everybody were responsible for their own financial security, people would have the necessary incentive to save for a time when they are no longer able to work (because they can't depend on getting a chunk my paycheck)

Quote by: Scribbler1 I'd love to have the ability to see an alternate reality where SS didn't exist and see how many people who were NOT forced to contribute ended up on welfare, or on the street.

Since this is a discussion of normative political theory- welfare wouldn't exist. It contradicts with the "ownership society" idea that is being pushed. This makes a moot point out of the claim that abolishing Social Security would result in higher net taxes due to increases in welfare payments.

Quote by: Scribbler1 For an effective alternate to Social Security to become a reality we need to work NOT on privatization, IRAs and all the other schemes, but on the way people think.

You and I apparently have drastically different ideas on what the role of government is. I, for one, do not list "thought alteration" as one of its proper duties.

Quote by: Scribbler1 Unfortunately, it looks like we need another depression, one every few generations actually.

Benefiting-through-destruction-type claims are always a sign of bad economic reasoning. It's similar to the people who said that the tsunami would result in an overall benefit for Southern Asia's economy.

[Scribbler1]

Quote by: donkrabbit The first half of this statement doesn't make sense to me, but I can't determine if that is a result of poor logic or merely poor sentence structure.

My point is that, if nothing else changed and only SS was eliminated you would have a massive increase in welfare payments. Even with the government allowing for voluntary savings, many people wouldn't save anything.

You also have to consider the current situation in its proper context. Workers have no choice but to pay into the system all of their lives, while being promised that they will eventually be repaid an adequate amount of money to retire on. Since they must give up this portion of their paycheck, they might as well depend on its returns. If this system did not exist, and if everybody were responsible for their own financial security, people would have the necessary incentive to save for a time when they are no longer able to work (because they can't depend on getting a chunk my paycheck)

I agree that in a perfest world. if there was still a SS program you would be able to collect dividends (or something like that). But I'm just talking about SS as it exists or the typical politician plan to eliminate it.
People may have a necessary incentive but it would require a more gradual approach to keep from hurting a lot of people. Like it or not, the people apout to collect SS have been promised ALL of their lives "pay into this and we WILL allow you to collect" and now they are seeing "oh well, too bad you lose".

Since this is a discussion of normative political theory- welfare wouldn't exist. It contradicts with the "ownership society" idea that is being pushed. This makes a moot point out of the claim that abolishing Social Security would result in higher net taxes due to increases in welfare payments.

For the sake of discussion you are correct, but it is difficult to single out a big part of a much bigger whole and not include the other parts affected by changing it. If you focus on removing SS welfare WILL increase, people WILL have been told one thing and handed another and so on. It's too easy to say "we should eliminate this" and ignore the ripples from that decision. If you want to change X how will you address Y and Z, which are also affected by this change?

Benefiting-through-destruction-type claims are always a sign of bad economic reasoning. It's similar to the people who said that the tsunami would result in an overall benefit for Southern Asia's economy.

Apples and oranges. Pick an example that doesn't include so much death, OK? I don't advocate a depression but note that when people DID live through that time they were a LOT more frugal and self-reliant than now. A change in SS may work for that generation (too late now) but the current generations have LIVED through what we have in place now and a drastic change right now would be more of a blow.
Besides, I don't trust ANY grand plans from George Bush. I would not appreciate being the scapegoat for this and have lived all my working life paying for something I will never get. Also, I just don't like being lied to.

[Gorgo]

There is no social security "mess." http://www.zmag.org/content/showarti...10&ItemID=6823

[Mr.Vicchio]

Gorgo, busting out the lies with Zmag. You crack me up.

For the last 20 years Social Security has been the target of Dems saying it was in trouble. Now all the sudden it's fine.

ROFL

[Gorgo]

It is a New York Times article, 'V', and again, if you have something wrong with any of the facts at Z Magazine, show us. You are used to people like Horowitz who can simply make things up and shout "ANTI-AMERICAN" at those that try to make some sense out of what he says. You are fashioning your life after him.

As the article says, if you could read it, social security has problems.

[tivodan1116]

And therein lies the mess.

Gorgo and others think that "Fixing Social Security" means ensuring that future generations can continue to be leeches on the rest of society by sitting on their rear ends and doing nothing while collecting a handout merely due to their age.

I think "Fixing Social Security" means ending the taking by force of money from my pocket to service a system that is inherently unfair.

The solution is simple. Make a law. "If you were born after 1975, you may never collect Social Security payments and you may opt out of 100% of payments to the system at your discretion." The program will wean itself dead by 2080 or so. Towards the end it may need to be propped up from other areas of government but that would only be until everyone born before 1975 dies.

This ensures that anyone who has not adequately prepared for retirement can still collect, and that anyone who cannot collect (people younger then 30 currently) has at least 35 or so years to prepare for retirement.

[Gorgo]

Tivodan, you think you are alone in the world and create your great wealth by yourself. You are not and do not.

Society provides a great deal so that you can have whatever it is that you have and look down on those that work harder than you ever could for nothing.

[Mr.Vicchio]

Gorgo you feel you have the right to others money.

I say earn your own damn money.

That's the difference between the Pro-SS crowd and the Priavte accounts crowd.

[Gorgo]

What I think, Vicchio, is that you don't think you take other people's money. You think are all alone in the world.

[Mr.Vicchio]

I am not all alone, I just don't think handing people someone elses money is solving anything. It's not.

[Gorgo]

Well, stop taking it then.

[Gorgo]

http://www.fair.org/index.php?page=2011

http://www.cepr.net/publications/fac...l_security.htm

[Catch 22]

Gorgo and others think that "Fixing Social Security" means ensuring that future generations can continue to be leeches on the rest of society by sitting on their rear ends and doing nothing while collecting a handout merely due to their age.

Tivo what’s the matter with providing a general basic income to those of us who biult this society but are now too old to continue working. I don’t see why you think grandma and grandpa should be forced to live on cardboard just because they didn’t have investing smarts or were put in an economic position in which they couldn’t save up great deals of money. Last I checked we as a society valued the welfare of others, especially that of the elderly.

[Scribbler1]

Quote by: tivodan1116 And therein lies the mess. Gorgo and others think that "Fixing Social Security" means ensuring that future generations can continue to be leeches on the rest of society by sitting on their rear ends and doing nothing while collecting a handout merely due to their age.

What makes you think these people are "leeches"? The way SS is set up your generation pays for the one before and the next generation pays for YOU. There is no free ride the conservatives are babbling about. They PAID it, but they didn't GET it. That's for the following generation.
Don't deliberately try to paint Social Security as welfare. It is not.

This ensures that anyone who has not adequately prepared for retirement can still collect, and that anyone who cannot collect (people younger then 30 currently) has at least 35 or so years to prepare for retirement.

And what if they DID prepare for retirement, but they prepared for it by having a portfolio stuffed with Enron stock? What happens then?
Say what you want against SS, but you have to admit it is secure.

[fushigi]

Quote by: Scribbler1 And what if they DID prepare for retirement, but they prepared for it by having a portfolio stuffed with Enron stock? What happens then? Say what you want against SS, but you have to admit it is secure.

This is a point that is often unexplored. With private accounts come private decisions about how to invest that can turn out badly. In a world with private accounts, what happens to the sucker who invests in the most aggressive plan and loses his shirt at age 65? Maybe he can turn to his family for support. But what if he has no family support? Do we simply let him suffer?

[Scribbler1]

One side will say he should have known better or some such thing. The other side will say "I told you so" and the guy goes on welfare either way.
But fear not, fushigi, if the U.S. government holds true to form, they will be meddling in just HOW you run it. In fact (and I need to research this) I heard on The Daily Show (where EVERYONE gets their news :) ) the government will administer your funds when you retire anyway.
I really have to read up on that one, as it is pretty unbelievable.

BTW, welcome to Volconvo. Good post.

[Richard 23]

Quote by: Gorgo ...if you have something wrong with any of the facts at Z Magazine, show us. You are used to people like Horowitz who can simply make things up and shout "ANTI-AMERICAN" at those that try to make some sense out of what he says. You are fashioning your life after him. As the article says, if you could read it, social security has problems.

Isn't Z Magazine a non-corporate alternate magazine started and run by two people?
If so, do they still run it?

I am unfamiliar with the content but when an upstart is ridiculed or completely ignored
it may be a sign that they're doing something right. Or it might be that it's crap.
That's what critical thinking is for. If Horowitz is the far-left convert who is now far-right, that's one guy I'm skeptical about. I've seen him interviewed a couple of times and he seem unnecessarily rude. I'm suspicious of "turncoats" (Zell?) in general, recovered smokers, drug addicts.... But that's just me.

That a media source is "mainstream" doesn't mean that it won't report distortions. Right slant, left slant.... Even if it seems to slant your way, stay critical. Otherwise they'll lie.
And don't forget there is also a corporate slant. Not that corporations are evil, but they do put their own interests before yours, even before the government's as necessary. Corporations may also exhibit sociopathic behavior, so always use your head.

As if you didn't know. I'll get the hang of this one day.

BTW, what is your opinion of Z Mag? Their site was atypical (no slick PR look) last time I checked. If it looks unprofessional one might dismiss it as wacko conspiracy stuff. My attitude might say more about the effectiveness of mainstream media influence than the value of Z Mag. I'll check them out.

[Gorgo]

Compare the tone at http://www.Frontpagemag.com with http://www.zmag.org/znet.htm and you tell me.