How do private businesses work? Do they run on *prior *revenues? No. They spend the money first on factories and materials and worker salaries. Then they sell the product and hope to make enough money from *future *revenues to stay afloat. Over the long term they strive to make the cash flow, i.e. *current *revenues, equal or greater to expenses, otherwise they have problems with their creditors. And as we all have been saying, the government works on the same principles. The taxes collected over the course of a year pay back the costs of providing programs.
In fact, there’s really only one sort of business model that runs on prior revenues.
You’re going to laugh when you hear it, although by you I mean everybody but sear.
A Ponzi scheme.
The definition of a Ponzi scheme is that it takes prior revenues and hands them out as investment returns rather than the returns of real investments. So the one thing that works the way sear wants Social Security to work… is a Ponzi scheme.
This is almost too beautiful to be true, except, well, you know, the Internet. If I tried to create a character in a book who thought this way, every critic would berate me. That can’t be real, they would say. His argument is beyond fiction.
All of this nonsense has already been refuted by others, but I have to add a few more words.
Yes, Social Security is compulsory. Guess what? So is growing old. That’s why the two compulsory things work rather well together.
The entitlement being predetermined is the very nature of any defined benefit pension plan. The “whatever Congress says it is” line is just typical libertarian bumper-sticker sloganeering because they hate government.
Those are good questions, if you mean that everyone should be required by law to set aside a designated percentage of income in retirement savings that would presumably be tax-exempt and restricted from arbitrary withdrawal.
This does address the matter of the irresponsible types who’d rather buy beer than put the money in a retirement fund, but I thought you were against the evil gubbermint “forcing” you – at “gunpoint”, yet" – to do anything?
However, even if you accept such a mandate, there is still the huge problem of whether such a form of de facto privatized social security would be responsibly managed, and even if it was, it’s unlikely that it could match the performance and economies of scale of a highly capitalized professionally managed pension fund like the one I cited before and cite again below.
One further difficulty compounds the problem of self-managed private funds, and that’s the concept that since it’s “your money”, absolutely and indisputably, you not only have the “freedom” to mismanage it or take undue risks, but depending on how it’s regulated you may also have the ability to withdraw all or part prematurely, claiming poverty, a personal emergency, etc. When it’s gone, it’s gone. You can’t do that with a defined benefit plan like SS because the capital isn’t yours, you only “own” a predefined entitlement to be paid out of it. That’s actually an advantage. It’s only a problem if you hate and distrust government.
Repeating “pyramid scam” over and over again doesn’t make it true. And ISTM that creating systems of social security in the broadest sense of the word to ensure that the elderly who can no longer work can actually afford to retire, and can be provided with at least a subsistence income and nominal health care, is what strengthens a nation and a people.
My main comment on this mishmash of nonsense, besides the matters that have already been addressed by myself and others, is that you never answered the main questions except with snark:
If you don’t have some form of mandatory social security, what do you propose to do with those who have never saved for retirement (or have tried and have squandered or otherwise lost it) and now can’t afford to survive in their old age? Is the destitution of the elderly really the mark of a strong society, or is it more the result of libertarian bullshit?
It’s fine to quote Einstein about the wonders of compound interest, but it’s a good deal less wonderful when the highest return you can get on a five-year CD is an annualized rate of 0.75% and very much less on shorter terms. Meanwhile the CPP I cited achieved a 10.6% five-year annualized rate of return. True, this doesn’t directly benefit the payees who are on a defined-benefit system, but it does speak to the long-term sustainability of this (according to you) “pyramid scam”. The income is guaranteed for life with annual cost-of-living increases, and that is a very powerful financial resource. I know it offends libertarian sensibilities to be shown that government can do something right and benefit the citizens that it serves. Too bad for libertarians.
Finally, the answer to the question about how much should be deducted for SS (the use of the word “confiscated” suggests an interesting antisocial perspective) is that it should be sufficient to provide for at least a minimal subsistence income at retirement. Many believe that the CPP plan I mentioned should be deducting more and providing higher payouts to future retirees. There is certainly no sane group or person I’ve ever heard suggesting that it should be deducting less or be dismantled in favor of, basically, nothing. Private tax-deductible retirement savings plans already exist and people are free to use those, too.
Heh. Going by the figures provided by NDP, my wife and I are both Baby Boomers (as is one of her sisters). My brother and sisters, however, were from the Silent Generation, and her other sister is a late Generation X. That’s a forty-year spread…