That’s not an accurate way to summarize my answer, which includes, in part:
As I said, it depends on which part Evil Economist was referring to. I’m assuming it was the first part, you’re focusing on the second part.
It is impossible to predict what benefits any one recipient will be eligible for, because it presumes it is only an old age benefit. Social Security Disability can be claimed at a young age for an injury or illness that renders the recipient unable to work, yet they collect the benefit for decades until they die. In that case, Social Security far outperforms private investments, because the recipient didn’t pay into the system very long.
You can’t contrive a question to exclude Social Security benefits with the highest performance and pretend it is a fair comparison. The answer to your question is “unknowable”.
For that matter, answering this question requires thinking about social security as an investment plan, which it’s definitely not. You may as well say, “If a senior citizen invested the portion of their taxes that was otherwise going to go towards funding NASA, they’d be better off when they retire, true or false?”
NASA’s 2011 budget was 18.4 billion, about 61 dollars per person.
Not a great example. 
Something something compound interest something something.
It depends.
Now answer my question: If I took the money I spend on home, auto, and health insurance, and invested it in a conservative mutual fund, wouldn’t I have more money when I retire? True, or false?
(You’ll note that the reasoning process works the same for both questions.)
It depends. IBM used to be a relatively safe investment. Until it wasn’t. And my friend who got laid off from IBM with his 401K in IBM stock suffered.
His comment shows a fundamental misunderstanding of risk versus return. SS is designed to be absolutely safe (or at least until the extreme parts of your party get involved) and so its low return is a feature, not a bug.
No understanding this is why people thought they could buy investments with high returns and also high ratings.
There is also the problem of where to find these investments. Sweden has a set of investments people can put their retirement funds into. Thaler and Sunstein showed that investors invariably pick the worst of these. However they are small enough that they won’t distort the market much, putting SS into any set of private investments will.
In any case I’m guessing that most people who think SS is awful do so because it is mandatory, not because the rate of return is too low. How is the 401K experiment working out? Great for those of us in the top 10%, not so good for the rest of the country.
In theory, one could hypothetically buy and/or invest in disability insurance, life insurance, and annuities on the private market in the right quantities to approximate social security benefits. And one could ask whether the premiums/investments would be greater or less than the amount of social security taxes paid by the typical worker.
My wild-ass guess is that it would be pretty close.
Perhaps EE can clarify.
Almost certainly.
I’ll note no such thing: because, as yet, there is no reasoning process.
I am not an investment expert, but I don’t know any competent advisor who would suggest that a “safe” investment portfolio consists of only one stock, no matter how great the stock.
Hell, let’s just specify a market index fund.
The underlying idea with Social Security is that it’s the responsibility – the moral duty, in a sense – of the top 10% to assist the 90%. If you accept that as true, then the returns issue is totally irrelevant anyway.
It’s the duty of everybody to help everybody, to some extent. True?
You know, if the poor just saved the money they’d otherwise be wasting on rent and food, and clothes, and live in a cave in the forest wearing only animal skins and eating game they’ve killed themselves, and invested that money from birth, then by the time they retire, they’d be millionaires! Too bad those lazy people don’t do that. :dubious:
Really? I’d be interested in hearing just how it’s working out for most people. I suspect that if people followed standard investment advice about diversifying and shifting into safer instruments as retirement approached, then they’re doing just fine. In fact, the top 10% might not be doing so well if they “knew better” than to follow standard investment advice and tried to beat the market.
At any rate, are you just assuming that the 401k experiment was a failure or do you have data indicating it is? I know we all took a hit (on paper) recently, but mine is actually doing pretty well now. I’ve been in very safe index-type funds from the beginning, though.
Generally by reading things from other conservatives. If he didn’t fact check, that’s his problem.
Well, first you’d have to find a like minded derpist employer who would hire someone who wore nothing but rabbit furs and bark shoes, and who smelled like ass from not bathing. Otherwise you don’t have any money to save.
No historian would grade that recession anywhere near the Great Depression.
I guess I just someone anyone to explain to me why we had ten years of economic depression in the 30s with massive govt intervention and 1-2 years of depression in the 20s with virtually zero intervention. Still waiting… but somehow I still get accused of ignoring facts.
What a silly post. You tell me my facts are wrong and don’t even bother to tell me which facts are incorrect. Get real. How can I learn from you wise and learned people if you won’t bother to correct me?
Hmmm… Lets go with a little more recent example since it’d be a little fresher in the memory there Corny, cause I’m willing to bet you don’t retain things for very long.
Remember the Housing Bubble Collapse? All those bad loans the financial industry put out there with lax regulations and no government oversight that we got to eat? Yeah?
And remember the flurry of government activity afterwards, to try and stop the economic nose dive?
So basically what you’re trying to do is conflate government activity with the problem, when the problem begets government activity ie It’s like sticking your hand in an open flame and blaming the resultant burn on the screaming and hopping around you do afterwards.
ps Your worldview’s cool as long as it’s only you sticking your hand in the flame. I’m thinking most other people will wanna take a pass.