Gimme, gimme, gimme
November 14, 2004 12:09 PM Subscribe
Tyler Cowen on Social Security Privatization. He links to the opinions of Arnold Kling, Brad DeLong, Jane Galt, Matthew Yglesias, and Ed Prescott.
This post was deleted for the following reason: Poster's Request -- frimble
Shorter opinion:
Privatization = Social Security - Security - Social = 0
Corporate nirvana, more government largesse.
Private retirement plans are already available folks, this is not a "retirement plan" so don't fuck with it.
posted by nofundy at 1:16 PM on November 14, 2004
Privatization = Social Security - Security - Social = 0
Corporate nirvana, more government largesse.
Private retirement plans are already available folks, this is not a "retirement plan" so don't fuck with it.
posted by nofundy at 1:16 PM on November 14, 2004
citing jpoulos corporatized retirement plans are a terrible idea. Why can't 'the greatest country in the world' get an old age pension like everybody else? I'm at a loss.
posted by goneill at 1:25 PM on November 14, 2004
posted by goneill at 1:25 PM on November 14, 2004
Social Security was a brilliant idea. A small retirement for minimum-wage earners who changed jobs a lot and had no other source of retirement.
If they had just KEPT it the way it was supposed to be, it would be in fine shape today. And it would also be in fine shape if they eliminated everybody who earned a salary or otherwise made more than $30k a year.
So here's the question: if you're one of the $30k or up crowd, are you willing to totally kiss off the money you've already paid into the system, if you never have to pay another dime into the system, *and* you never get a dime back?
That is, would you, personally, surrender your SS checks when you are old, assuming you don't need them, so that THOSE WHO DO can have enough to retire on instead of a hundred bucks a month? Assuming, of course, that you NO LONGER (as in right now) have to pay into it?
It sounds to me like a good idea. Both for the people who need it, and for those of us tired of throwing our money down a rat hole, getting an insulting fraction of it back, maybe, someday; while starving those who have to live off of it.
posted by kablam at 1:30 PM on November 14, 2004
If they had just KEPT it the way it was supposed to be, it would be in fine shape today. And it would also be in fine shape if they eliminated everybody who earned a salary or otherwise made more than $30k a year.
So here's the question: if you're one of the $30k or up crowd, are you willing to totally kiss off the money you've already paid into the system, if you never have to pay another dime into the system, *and* you never get a dime back?
That is, would you, personally, surrender your SS checks when you are old, assuming you don't need them, so that THOSE WHO DO can have enough to retire on instead of a hundred bucks a month? Assuming, of course, that you NO LONGER (as in right now) have to pay into it?
It sounds to me like a good idea. Both for the people who need it, and for those of us tired of throwing our money down a rat hole, getting an insulting fraction of it back, maybe, someday; while starving those who have to live off of it.
posted by kablam at 1:30 PM on November 14, 2004
more interesting is his (and a thread a brad delong) post on the dollar ... anyone else have additional recommended links on the dollars slide and what the near and medium term forcasts are?
posted by specialk420 at 1:47 PM on November 14, 2004
posted by specialk420 at 1:47 PM on November 14, 2004
Andrew Samwick's view.
Here is mine: privatizing SS gives the population one extra degree of freedom. People may do a better job or they may not. An average, if one does not have the knowledge, s/he will not do as well as with actual SS. So, I condition this privatization on educating the public.
Since this has a low probability of happening, the next best thing for a person is to use personal finance advisors (the problem is not as simple as investing in an index fund, there are duration issues, risk tolerance issues, etc). Since "everyone is a financial expert," I expect to see a lot of fraud at the beginning. Thus, IMO there is a need for regulating these advisors, for continuous training programs and strong professional organizations.
If the educational issue is not addressed, either have a second safety net in place (as Tyler Cowen mentions) or have the equivalent of a lottery instead of a privatized SS.
On preview, MattD has already address the issue ...
posted by MzB at 1:50 PM on November 14, 2004
Here is mine: privatizing SS gives the population one extra degree of freedom. People may do a better job or they may not. An average, if one does not have the knowledge, s/he will not do as well as with actual SS. So, I condition this privatization on educating the public.
Since this has a low probability of happening, the next best thing for a person is to use personal finance advisors (the problem is not as simple as investing in an index fund, there are duration issues, risk tolerance issues, etc). Since "everyone is a financial expert," I expect to see a lot of fraud at the beginning. Thus, IMO there is a need for regulating these advisors, for continuous training programs and strong professional organizations.
If the educational issue is not addressed, either have a second safety net in place (as Tyler Cowen mentions) or have the equivalent of a lottery instead of a privatized SS.
On preview, MattD has already address the issue ...
posted by MzB at 1:50 PM on November 14, 2004
Thus, IMO there is a need for regulating these advisors, for continuous training programs and strong professional organizations.
Sounds like an increase in the size of government if there ever was one. We go from simple, steady increase to a mish-mash of rules and regulations and people making money off of goverenment largesse.
posted by Space Coyote at 2:36 PM on November 14, 2004
Sounds like an increase in the size of government if there ever was one. We go from simple, steady increase to a mish-mash of rules and regulations and people making money off of goverenment largesse.
posted by Space Coyote at 2:36 PM on November 14, 2004
I just want out. Making it voluntary, or killing it off is fine with me.
posted by thirteen at 3:34 PM on November 14, 2004
posted by thirteen at 3:34 PM on November 14, 2004
Investment/financial advisors are already regulated. Series 7 licenses, for instance. But that doesn't prevent boiler room pump and dumps and other frauds because, as MzB points out "everyone is a financial expert" in their own mind.
posted by billsaysthis at 3:54 PM on November 14, 2004
posted by billsaysthis at 3:54 PM on November 14, 2004
Sounds like an increase in the size of government if there ever was one.
Not necessarily, although it might happen. What I have in mind:
- certification programs for financial advisors, the government would have to agree on what should be teach and exam format and content and let private firms do the training
- continuous education, same as above, minimal interference (if I remember correctly, CFA rejected continuous training, please correct me if I am wrong)
- a quick response team to investigate complains against rogue personal finance advisors; maybe a tough punishment will prevent fraud in the first place and keep the team relatively small.
on preview: since they are already in place (eg NASD), all they have to do is to review the legislation and reorganize the departments.
Ideally, the gov should not intervene here. But with the recent audit and corporate governance scandals, professional organizations lost some of their credibility.
people making money off of goverenment largesse.
If people are to be making their own informed decisions, the education element has to be there, so those firms would be making money from teaching anyway.
There is another ingredient, which indeed will expand the role of government, in particular the role of SEC, but I do not see it happening until the next major financial scandals series: SEC filing of information (not only financial, but all press releases, news, products, marketing etc). You cannot give all the investors the same opportunity if they do not have access to the same information. Right now, the amount of free financial information available is declining (one has to pay for "premium content") and soon only big investment firms will be able to pay for it. Without info, the regular investors will not be able to perform well, so they will buy the firms' services. Government SS becomes corporate SS. (SEC needs to eliminate many forms and cut out a lot of the legalese, but this is other problem.)
[off topic] I see government increase as a failure of people to self-organize. Armed with knowledge, people do not need a big daddy to tell them what to do, as, IMO, the American Revolution proved. As knowledge and information become too cumbersome to use, the need for expert opinion becomes greater. Now, the government is the final “expert”, providing guidance for all matters. Thus, increase the education level to reduce the goverment size. [/off topic]
posted by MzB at 4:08 PM on November 14, 2004
Not necessarily, although it might happen. What I have in mind:
- certification programs for financial advisors, the government would have to agree on what should be teach and exam format and content and let private firms do the training
- continuous education, same as above, minimal interference (if I remember correctly, CFA rejected continuous training, please correct me if I am wrong)
- a quick response team to investigate complains against rogue personal finance advisors; maybe a tough punishment will prevent fraud in the first place and keep the team relatively small.
on preview: since they are already in place (eg NASD), all they have to do is to review the legislation and reorganize the departments.
Ideally, the gov should not intervene here. But with the recent audit and corporate governance scandals, professional organizations lost some of their credibility.
people making money off of goverenment largesse.
If people are to be making their own informed decisions, the education element has to be there, so those firms would be making money from teaching anyway.
There is another ingredient, which indeed will expand the role of government, in particular the role of SEC, but I do not see it happening until the next major financial scandals series: SEC filing of information (not only financial, but all press releases, news, products, marketing etc). You cannot give all the investors the same opportunity if they do not have access to the same information. Right now, the amount of free financial information available is declining (one has to pay for "premium content") and soon only big investment firms will be able to pay for it. Without info, the regular investors will not be able to perform well, so they will buy the firms' services. Government SS becomes corporate SS. (SEC needs to eliminate many forms and cut out a lot of the legalese, but this is other problem.)
[off topic] I see government increase as a failure of people to self-organize. Armed with knowledge, people do not need a big daddy to tell them what to do, as, IMO, the American Revolution proved. As knowledge and information become too cumbersome to use, the need for expert opinion becomes greater. Now, the government is the final “expert”, providing guidance for all matters. Thus, increase the education level to reduce the goverment size. [/off topic]
posted by MzB at 4:08 PM on November 14, 2004
" I stand where I started, namely that social security should evolve into a welfare system for the elderly, but without the forced savings component."
What!
SS has never been promoted as a "welfare system for the elderly". It has always been promoted as "something" for your old age. Emphasis on "your".
If you can't save for your old age, then die early.
I have paid over $200K into SS (not counting all the "investment earnings") and expect to receive (according to actuaries) about a -1% return. If I had dumped the money into the stock & bond market, I would expect a 7% return. Compounded over the last 40 years of my payments, this is a huge difference.
posted by davebarnes at 6:50 PM on November 14, 2004
What!
SS has never been promoted as a "welfare system for the elderly". It has always been promoted as "something" for your old age. Emphasis on "your".
If you can't save for your old age, then die early.
I have paid over $200K into SS (not counting all the "investment earnings") and expect to receive (according to actuaries) about a -1% return. If I had dumped the money into the stock & bond market, I would expect a 7% return. Compounded over the last 40 years of my payments, this is a huge difference.
posted by davebarnes at 6:50 PM on November 14, 2004
Most people would be unable to manage their own portfolio. Many, in fact, would take the "I just want out" option championed by thirteen, above.
So, years pass, and we end up with a lot of elderly bums on the street. For some reason, they've neglected to follow the "die early" advice offered by davebarnes. What do we do then? Is "let 'em starve" a realistic option? And, if it is, what sort of people are we, then?
posted by SPrintF at 7:01 PM on November 14, 2004
So, years pass, and we end up with a lot of elderly bums on the street. For some reason, they've neglected to follow the "die early" advice offered by davebarnes. What do we do then? Is "let 'em starve" a realistic option? And, if it is, what sort of people are we, then?
posted by SPrintF at 7:01 PM on November 14, 2004
I see government increase as a failure of people to self-organize. Armed with knowledge, people do not need a big daddy to tell them what to do, as, IMO, the American Revolution proved. As knowledge and information become too cumbersome to use, the need for expert opinion becomes greater. Now, the government is the final “expert”, providing guidance for all matters. Thus, increase the education level to reduce the goverment size.
Um, isn't that what "government" is . . . people self organizing? i don't understand those who are scared of government. The government in a democracy is what you make it . . . don't like, get organized and change it. The government isn't some outside entitity . . . it is there to be used and molded to your benefit as much as possible (within the law). Corporations understand this, why doesn't everybody else?
posted by Boydrop at 8:35 PM on November 14, 2004
Um, isn't that what "government" is . . . people self organizing? i don't understand those who are scared of government. The government in a democracy is what you make it . . . don't like, get organized and change it. The government isn't some outside entitity . . . it is there to be used and molded to your benefit as much as possible (within the law). Corporations understand this, why doesn't everybody else?
posted by Boydrop at 8:35 PM on November 14, 2004
Two points:
1 - Only fools and the ignorant ever thought that Social Security was a "you get what you paid" deal. It's a tax -- it always was. The original theory (and still one practical result) was that it went toward the old-age maintenance of people who couldn't afford to save for retirement.
2 - The American economy as it currently exists is predicated in part on the existence of Social Security and other social welfare programs. If they all went away, the economy would change, pretty fundamentally. If they all went away quickly, the economy would collapse. That supply-siders by and large don't see this never ceases to amaze me.
posted by lodurr at 9:11 PM on November 14, 2004
1 - Only fools and the ignorant ever thought that Social Security was a "you get what you paid" deal. It's a tax -- it always was. The original theory (and still one practical result) was that it went toward the old-age maintenance of people who couldn't afford to save for retirement.
2 - The American economy as it currently exists is predicated in part on the existence of Social Security and other social welfare programs. If they all went away, the economy would change, pretty fundamentally. If they all went away quickly, the economy would collapse. That supply-siders by and large don't see this never ceases to amaze me.
posted by lodurr at 9:11 PM on November 14, 2004
Um, isn't that what "government" is . . . people self organizing? i don't understand those who are scared of government. The government in a democracy is what you make it . . . don't like, get organized and change it.
Ah, youthful idealism... How quaint. ;)
Once a bureaucracy reaches critical mass, the bureaucracy's primary goal becomes to preserve itself. If you're lucky, it may also perform some other beneficial function. A well-entrenched bureaucracy is the proverbial immovable object, requiring irresistible force to budge it.
posted by kindall at 10:32 PM on November 14, 2004
Ah, youthful idealism... How quaint. ;)
Once a bureaucracy reaches critical mass, the bureaucracy's primary goal becomes to preserve itself. If you're lucky, it may also perform some other beneficial function. A well-entrenched bureaucracy is the proverbial immovable object, requiring irresistible force to budge it.
posted by kindall at 10:32 PM on November 14, 2004
Show me just one private "retirement plan" that has a lower administrative overhead than Social Security.
A model of government efficiency that provides a safety net for our elderly.
It is not a "retirement plan", never was, never will be.
You are, right now, paying your grandparent's their checks. What's a matter?
Hate your grandparents and want to see them on the streets starving to death?
Where's the "compassion" in all the so-called compassionate conservatives today?
Let's be honest here, greed sucks and this "privatization" is all about greed, both personal and corporate.
posted by nofundy at 7:30 AM on November 15, 2004
A model of government efficiency that provides a safety net for our elderly.
It is not a "retirement plan", never was, never will be.
You are, right now, paying your grandparent's their checks. What's a matter?
Hate your grandparents and want to see them on the streets starving to death?
Where's the "compassion" in all the so-called compassionate conservatives today?
Let's be honest here, greed sucks and this "privatization" is all about greed, both personal and corporate.
posted by nofundy at 7:30 AM on November 15, 2004
if you're one of the $30k or up crowd, are you willing to totally kiss off the money you've already paid into the system, if you never have to pay another dime into the system, *and* you never get a dime back?
Now that's a bargain with no downside if I've ever heard one; I "kissed off" the money paid for Social Security tax ages ago. It's just another income tax, as far as I'm concerned. I'm certainly not going to include anything so shaky as a U.S. government welfare program into my retirement plans.
posted by Mars Saxman at 8:44 AM on November 15, 2004
Now that's a bargain with no downside if I've ever heard one; I "kissed off" the money paid for Social Security tax ages ago. It's just another income tax, as far as I'm concerned. I'm certainly not going to include anything so shaky as a U.S. government welfare program into my retirement plans.
posted by Mars Saxman at 8:44 AM on November 15, 2004
It's just another income tax, as far as I'm concerned.
Mostly a payroll tax. Income tax is soon to be a thing of the past.
posted by nofundy at 9:27 AM on November 15, 2004
Mostly a payroll tax. Income tax is soon to be a thing of the past.
posted by nofundy at 9:27 AM on November 15, 2004
Income tax is soon to be a thing of the past.
If income tax goes, so does the U.S. economy; I can barely imagine the scale of the realignment that would occur after eliminating the homeownership subsidy (via the mortgage deduction).
posted by Mars Saxman at 10:19 AM on November 15, 2004
If income tax goes, so does the U.S. economy; I can barely imagine the scale of the realignment that would occur after eliminating the homeownership subsidy (via the mortgage deduction).
posted by Mars Saxman at 10:19 AM on November 15, 2004
You are, right now, paying your grandparent's their checks. What's a matter?
Hate your grandparents and want to see them on the streets starving to death?
Where's the "compassion" in all the so-called compassionate conservatives today?
Let's be honest here, greed sucks and this "privatization" is all about greed, both personal and corporate.
Yeah, if you favor social security privatization, you MUST HATE YOUR GRANDPARENTS!!!
What ever happened to family taking care of each other? When my grandmother had to live in a nursing home, who paid for it? The government? Hell no. My dad, his brother, and his sister all chipped in. If my parents ever need any assistance, you can be sure that my sister and I will be there to offer it. Why must we depend on the government for everything? Do people really prefer the government taking money from them so they don't have to deal with taking care of their own family?
posted by gyc at 3:10 PM on November 15, 2004
Hate your grandparents and want to see them on the streets starving to death?
Where's the "compassion" in all the so-called compassionate conservatives today?
Let's be honest here, greed sucks and this "privatization" is all about greed, both personal and corporate.
Yeah, if you favor social security privatization, you MUST HATE YOUR GRANDPARENTS!!!
What ever happened to family taking care of each other? When my grandmother had to live in a nursing home, who paid for it? The government? Hell no. My dad, his brother, and his sister all chipped in. If my parents ever need any assistance, you can be sure that my sister and I will be there to offer it. Why must we depend on the government for everything? Do people really prefer the government taking money from them so they don't have to deal with taking care of their own family?
posted by gyc at 3:10 PM on November 15, 2004
Not everyone has a family who is able to take care of them.
posted by litlnemo at 6:12 PM on November 15, 2004
posted by litlnemo at 6:12 PM on November 15, 2004
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posted by MattD at 1:11 PM on November 14, 2004