Fell asleep before sundown, but…
On the “So who you voting for Prez?” thread, in IMHO, John Corrado offered to debate the idea of the privatization of Social Security.
Well, I’m interested in the opinions of the learned folks of the SDMB. To be honest, I’m not very well informed about the subject. But I tend to be against it. Reasons will follow. I’ve not been much impressed by the effect of privatization of other programs (medical care, for example).
I thought about posting in GQ, but John is right. This will become a debate by the 2nd reply.
Peace,
mangeorge
No it won’t!
Heh…
You bastard, Gadarene, you bastard.
The reason why I support the privatization of health care is so that the money you put into social security is no longer essentially charging one credit card to pay off another, but where one actually has an individual account. You could do stuff with this account like a regular IRA or any other type of account such as invest it or at least make money off of a money market or whatever. Currently, the anual return of the money you “put in” to social security will have an anual appreciation of about -2% instead of the possible at least ~5% return.
I am going to assume here that you have an example of a fucked privatized health-care system? You will get better care from an HMO than Medicaid or Medicare, especially if that healthcare is not federally mandated.
Seperate rant: Health care will improve if people are given a choice with their health care. This means that employers should not have to pay for health care, simply give their employees the money spent on healthcare directly currently. This way people can shop around, spend different amounts of money, etc. on what they want to spend it on. This includes the choice of choosing the most basic health insurance or full fledged health care.
On the IMHO thread, John said this:
As far as I know, John, you’re right and you’re wrong. The return on investments expected by privatization proponents is far more dependent on a continued bull market than Social Security currently is on economic growth. The actuaries who derive the 2030 date as the first in which benefits will not be able to be fully disbursed project a 1.4 percent annual economic growth rate over the next 75 years–less than half the average of the last 75, and below the average of the 1930s.
Here’s a passage by Doug Henwood, the author of Wall Street, in which he uses that projection–one which is clearly pessimistic–to examine the possibility of sufficient return from privatization:
In other words, it’s impossible for the stock market to grow fast enough relative to national economic growth for privatization to work in the long-term, even given the gloomy projections of the Trustees of the Social Security System.
Something needs to be done about our current Social Security system, but the answer does not lie in whole-sale privatization. A two-tiered system such as was recommended by the Advisory Council on Social Security in 1996, wherein the first tier provides a flat retirement benefit for full-career workers, and the second tier allows for fully funded, individually owned, defined contribution retirement accounts (personal security accounts, or PSAs), is vastly preferable, IMHO.
I thought Social Security was never meant to be a permanent program? Why should I trust the government to take care of MY money? It’s not like they have such a great track record with their own.
I would much rather see a total phase out of Social Security. Let me handle my money the way I want. If I squandor it, so be it. If I become a shrewd investor and have a nice nest egg to retire early on, so be it. If I decide to stuff it all in my mattress and then role around naked in it once a week . . .
Anyway, since that won’t ever happen (at least while the baby boomers are still alive), let the people handle their own finances, all be it supervised to go into IRAs or some other type of private retirement fund. But give the people a choice. I’ve got 40 more years of working (my retirement age is 68 thanks to our wonderful system) and have a great fear I will never see a dime of what I was froced to hand over to the government.
Well, there’s the first reply.
threemae posted the second. Seems konda debatish to me 
Peace,
mangeorge
Damn you, mangeorge. Damn you and your damnable acuity. Damn. 
Ok, let us suppose you invest your ‘social security" in hog bellies, and the bottom drops out. Or the investments you go for, are fraudulent, and are embezzeled, or whatever. So, do you think we should allow you to starve to death because you were unlucky, stupid or naive? Do you think the american public will go for that? NO. So you will have to get some sort of “aid” that will barely pay for room & board- ie SOCIAL SECURITY. So, if the investments suceed, you are better off, if they fail, you are no worse off. How will that save the "system’? There will still have to be massive aid, that the workers are funding, except that there is not even the excuse that you put something in. If there are massive “failures”, the gov’t, with no fica to fund the aid, will go belly up.
See, Social security is not supposed to be your retirement plan. It is supposed to be the “safety net”. There are plenty of nice tax-free plans for you to invest for your retirement.
Finally, how about those who have already retired? they have not had the chance to put their fica into private plans. BUT— YOUR Fica is paying for their Social security. So do we cut them off? Or, perhaps you want to continue paying fica AND and additional amount for a private plan?
It’s funny, Daniel…I’ve come to think that you and I agree on about as many topics as do we disagree (coughsecondamendmentcough). Nice post; thanks for giving us the benefit of your tax knowledge.
Gad, wall street is a good book isn’t it. I’m with you and daniel on this one. Good argument btw Daniel.
Here is a quote from a FAIR article on SS, (cause I just know someone will bring up Chile before too long)
Ignoring the other two, you don’t think people should have to suffer the consequences of their own stupidity?
Daniel,
Well, there are many other instances of fraud, and we have measures to deal with those. Why not this instance? Why not insure retirement accounts (similar to FDIC) to be a bit more secure, and then get on with it, instead of creating more scare tactics and excuses for Government control.
This here portion of the public says YES.
Tell that to the retired persons who have nothing BUT their Social Security checks. They did not have any private investment accounts 'cause the piece of their pay check taken by our Government was all they ‘put away’ for retirement. IF that same amount was invested into anything, even a savings account, they would have done better, and still be getting interest on the sum they have not withdrawn.
Finally, lets not keep this sharade going about ‘people who are in the system now will be dropped’, rather the system can be phased over to private accounts, allowing those who have already paid in to continue receiving benefits, while transferring the balance of their benefits to private accounts.
Daniel, I can’t say I approach this issue with the same solid background as you (after all, you’re a professional 
), but as someone who pays in to it I think we can do better.
Sili
Sili: I think you and I are in agreement here; the gist of the proposal set forth in your post is similar to the two-tiered plan I describe in mine. However, this isn’t what most privatizers are propounding: the PSA structure isn’t acceptable to free-marketeers like the Heritage Foundation or the Cato Institute, who favor a more comprehensive dismantling of the current system. Methinks the profit motive might have a little something to do with their zeal for privatization…
Exactly. The idea of billions being dumped into the market gives most brokers wet dreams.
Gadarene, Oldscratch,
Exactly. The idea of billions being dumped into the market gives most brokers wet dreams. **
[/QUOTE]
Absolutely agreed. The people (organizations) who are looking to throw billions into private retirement plans, and let the chips land where they may are no friends of mine. The whole idea behind Social Security should be security, but I just happen to think a bank account will do better than a Government bureaucracy, all things being equal. Now a good role for the Government is to protect these accounts from fraud and mishandling, but why give the Gvmt our money now so we can have it back later in small payments and a chunk taken out for overhead?
Sili
Well, I’m glad to see that your still mostly sensible sili.
Here is the problem I have. Many of the privitization schemes are gateways to larger ones.
Also I’d like to not see a cap on what they take out for social security. Have it keep going up the more you make.
pldennison replied to DITWD: “So, do you think we should allow you to starve to death because you were unlucky, stupid or naive?” *Ignoring the other two, you don’t think people should have to suffer the consequences of their own stupidity? *
Well, not to the point of starvation. I wouldn’t argue that the government should provide unlucky or stupid investors with the catamarans and beachfront villas that lucky and/or smart ones will obtain for their retirement. But letting old people starve in the streets is quite another thing.
tradesilicon: “Ok, let us suppose you invest your 'social security” in hog bellies, and the bottom drops out. Or the investments you go for, are fraudulent, and are embezzeled, or whatever." *Well, there are many other instances of fraud, and we have measures to deal with those. Why not this instance? Why not insure retirement accounts (similar to FDIC) to be a bit more secure, and then get on with it, instead of creating more scare tactics and excuses for Government control. *
Hmm, insurance for the entire population’s retirement accounts? Capped (as FDIC insurance currently is at $100,000) or unlimited? That’s quite a financial security burden the gummint would be carrying there. Won’t that encourage banks to take greater investment risks because they know Uncle Sam will bail them out? Remember the last round of S&L recklessness and consequent bank failures about 10 years ago? No fun. (This Cato Institute report agrees that deposit insurance can encourage financial recklessness: “Why should banks absorb the cost of maintaining higher capital levels if they face no consequent penalty in gathering or retaining deposits?” Naturally, I disagree with the author’s conclusion, though: she thinks that the solution is to remove the federal safety net and regulation and I think that the solution is to improve them.) How will you counter that incentive except by more “Government control”?
“So, do you think we should allow you to starve to death because you were unlucky, stupid or naive? Do you think the american public will go for that? NO.” *This here portion of the public says YES. *
Well, as long as we’re voting, this portion says NO. And I think Daniel’s quite right that the “Ayes” will be a very small minority of the general population.
"See, Social security is not supposed to be your retirement plan. It is supposed to be the `safety net’. There are plenty of nice tax-free plans for you to invest for your retirement. *Tell that to the retired persons who have nothing BUT their Social Security checks. They did not have any private investment accounts 'cause the piece of their pay check taken by our Government was all they ‘put away’ for retirement. IF that same amount was invested into anything, even a savings account, they would have done better, and still be getting interest on the sum they have not withdrawn. *
Well, that sounds like a good argument, not for privatizing the whole shebang, but for instituting a two-tiered scheme of the sort Gadarene was talking about. Part of your retirement funds are thus devoted to solidly guaranteed basic benefits but don’t make any money, and part are used for more volatile but potentially more profitable investment. Sounds like just the sort of diversified approach that financial counselors are always recommending.
Well… whatever you do the goverment will screw it up for corrupted people if it can.
Well, good heavens, if there are no consequences for stupidity, what’s to deter people from acting stupidly? I mean, honestly, I’m asking a genuine question here?
Incidentally, I have no trust in nor no need for the government to nanny me, which is why I take a big portion of my pay every two weeks and put it into a nice, juicy 401(k). With employer matching and profit sharing, it’s grown significantly since I started contributing (it doubled last year thanks to profit sharing).
It’s nice to know that you are for old people starving in the streets pldennison. Makes me understand why we disagree so much.