Save Me From Myself: Poor Little Yachtsman Edition

Julian Sanchez | October 24, 2006

After one too many mornings where I failed to get my ass up to turn off the alarm, Kerry finally just unplugged my clock radio, so I haven't caught Marketplace Morning Report in a while. But Don Boudreaux was listening today and caught a doozy of an argument for higher Social Security taxes:

But my total social security tax for four decades was only $63,000. I didn't even miss it. And in 16 of those years my income hit the government ceiling. I wish they'd taken more. But what if Social Security hadn't existed? Would I have set aside hundreds of thousands to provide for myself?

Not likely. I proved that 10 years ago when I cashed an annuity and bought a sailboat. I sailed to Spain and had lots of fun. But as an investment it was worse than Enron.

So this idea of privatizing, of letting me own my retirement, would have been another Katrina.

Parentalism anyone? As Boudreaux points out, maybe buying a boat was the best use of this guy's money at the time. But there's probably a vicious feedback loop here, where if the government acts on the assumption that people aren't competent to take responsibility for their own lives for long enough, you get citizens who really aren't—because they don't have to. I have plenty of sympathy for people who were dealt a bad hand in life and never earn enough to save up money for old age. I can't seem to muster much for folk who just decided it would be more fun to buy a sailboat with the extra cash they had lying around.

I also note, by the by, that the commentator wants government to invest payroll tax revenue in order to "stop passing the buck to our kids." But he also suggests that the money could be invested in T-Bills. Where does he think the money to pay off the interest on T-Bills comes from? The Treasury Fairy? [cross-posted @ NftL.]

Comments

|10.24.06 @ 4:08PM|#

This guy proves that people that aren't smart enough to make their own choices shouldn't be allowed to choose people to make choices for me. Stop voting now.

|10.24.06 @ 4:13PM|#

I think a better use of his annuity would have been to invest in a nice handgun......followed by a nice handgun smoking party!

Tool!

|10.24.06 @ 4:20PM|#

Ahhh - a personal anecdote generalized to public policy. I can do that as well: Social Security has been an unmitigated disaster for my family. My father dying (at 65) without collecting a dime of the 12% he put in his whole life. His surviving widow collecting some benefits (at the forfeiture of hers), while still having to work. To offset the cost of, (among other things) paying taxes.

|10.24.06 @ 4:21PM|#

...if the government acts on the assumption that people aren't competent to take responsibility for their own lives for long enough, you get citizens who really aren't�because they don't have to.

There was a time when we didn't have Social Security or pensions. Lots of people still didn't/couldn't plan for their retirment. Lot's of them wound up living with kids, living in poverty or not living at all.

So for me, here's where a lot of free market arguments that "people should be free to make their own decisions about their investments and the world will be a better place" fall apart. History already shows us that most people are incapable or unwilling to plan for the future.

Social Security may not be great, but I don't buy the largely theoretical rationales for getting rid of it.

|10.24.06 @ 4:29PM|#

The guy doesn't get much sympathy, and hearing that report this morning, doesn't seem to be asking for any either. However I think the story raises a good point. I'm pretty skeptical of the claim that people will somehow be blessed with wisdom if less money is taken from their paychecks.

|10.24.06 @ 4:32PM|#

I'm sorry, Ironchef. 65 is too young. Hope you were in a position to help your mother. That's what I hope I'll be able to do someday.

|10.24.06 @ 4:35PM|#

Agreed, Ironchef...sorry about your father

|10.24.06 @ 4:38PM|#

madpad:

I don't think the argument is that all (or even most) people who currently make no plans for their future suddenly will when they have to. I think the argument - which is not highly theoretical - is that everyone else should not have to pay for those who do not plan for their futures.

It's not as though the govt. is simply holding peoples' money for them and giving it back later (bad as that would be), the program in reality is a transfer payment.

If we did away with SS, some would suffer from the failure to plan for their own retirement, but whose problem is that?

|10.24.06 @ 4:42PM|#

But my total social security tax for four decades was only $63,000

I can't stomach R'ingTFA but my guess is he doesn't understand basic math or he doesn't understand basic OASDI. Part of his compensation over the last 4 decades was the additional $63,000 his employer(s) paid to the exact same Social Security Number.

I don't buy the largely theoretical rationales for getting rid of it.

Madpad there isn't anything largely theoretical about the fact that the present value of what the SSA tells me will be my annuity, survivor and death benefits is less that I have already put in, and I have another 25 years of contributions. And that is before the government increases the age at which I can begin collecting, increases the payroll deduction, increases the income ceiling and reduces the benefit.

|10.24.06 @ 4:44PM|#

But my total social security tax for four decades was only $63,000. I didn't even miss it.

Yes, he DID miss it. He missed it so much he had to cash in an annuity to buy his sailboat. Without Social Security, he'd have had the cash to buy his sailboat AND an annuity that has a higher rate of return than Social Security.

Was this anecdote taken from Jeremy Lott's stupid new book "In Defense of Being A Sucker"?

uncle sam|10.24.06 @ 4:44PM|#

There was a time when we didn't have Social Security or pensions. Lots of people still didn't/couldn't plan for their retirment.

Back when most people would be classified as poor and human productivity was MUCH lower than today.
It is unfair, erroneous, and even incompetent to compare the past to the present. We don't know how people and culture would have developed to address this issue.

|10.24.06 @ 4:51PM|#

So this idea of privatizing, of letting me own my retirement, would have been another Katrina.

And he completely misses the point that without national subsidization, the low points of New Orleans would not have been built to the same extent and Katrina would not have been as disastrous. In other words, public retirement schemes practically ENSURE another Katrina. Does this asshole even know that Social Security taxes have increased 1200% because the program is such a disaster?

|10.24.06 @ 4:55PM|#

"everyone else should not have to pay for those who do not plan for their futures."
You're right, we shouldn't have to, but we do because we are civilized. We don't let people wallow in their own shit unless they want to, and sometimes not even then. Working stiffs don't have enough to put away, so they don't. They'd rather have luxury items like bread. This issue exhibits one of the greater disparities between what is philosophically right and what we are prepared to do, as human beings, in practice.

|10.24.06 @ 5:00PM|#

Lamar

If "we" actually were "civilized" we'd have come up with a better scheme than SS. Like maybe a means tested income supplement funded from general revenues.

Instead what we got was a revenue raising scheme disguised as a pension plan.

|10.24.06 @ 5:03PM|#

Civilized? You call demanding that others pay for your retirement civlized? Ugh.

|10.24.06 @ 5:04PM|#

IsBa:
Fair enough. We are probably more "civilized" than "intelligent."

|10.24.06 @ 5:07PM|#

Lamar:

I am not suggesting that free, civilized people will let the elderly wallow in their own shit. I am saying that the "we" who should do something about it is not the government. In fact, it is the worst, least efficient institution to do something about it. What to replace it? In order: 1) self, 2) family, and 3) private charity.

|10.24.06 @ 5:07PM|#

headfullofhabit:

Yes, that's exactly what I call it. Letting someone starve because they were too stupid to save is akin to the law of the jungle. Perhaps the law of the jungle is a better way, but it is the antithesis of being "civilized."

|10.24.06 @ 5:08PM|#

I like how Julian casually mentions that he's sleeping with Kerry Howley in the first sentence of an otherwise Zzz-tastic post about Social Security...just in case somebody didn't know and all..

|10.24.06 @ 5:15PM|#

Kerry Howley? Cripes, I thought he was talking about John Kerry.

|10.24.06 @ 5:16PM|#

Also, those working stiffs that don't have enough to put away ARE putting quite a bit away - in SS taxes, both hidden and visible.

|10.24.06 @ 5:20PM|#

I heard this little essay on the radio this morning, and went from being somewhat sanguine to absolutely livid.

Utter.
Fucking.
Horseshit.

"Working stiffs don't have enough to put away, so they don't. They'd rather have luxury items like bread."

Lamar, you are cordially invited to suck my taint.

I don't pull down a whole lot of money, but still manage to sock away about 10% of what I make into a ROTH IRA.

The 7% social security tax is utter bullshit. The feds think I'm too goddamned stupid to wisely invest my own fucking money, so in the guise of "taking care of me" they extort that money (plus another 7% from my employer) which is, if the worst case is to be believed, instantly put into the general fund and pissed away on Gods know what idiotic federal programs, or in the best case, locked up in an account where it never accumulates any interest at all.

For fuck's sake, even a CD at a bank accumulates some modicum of interest.

But Social Security? Nada. Zip. Nothing. And the system is projected to be pretty much bankrupt by the time my retirement age rolls around.

Yeah, some security.

GRRRR.

|10.24.06 @ 5:20PM|#

mobile,

How could you miss that? Poor Kerry was getting virtually pawed by half of the commenters hereabouts for a bit, then there were howls of protest and much gnashing of the teeth when the same discovered that she and Julian were an item.

Fortunately for me, I have my own hottie at home (note alpha male behavior paralleling Julian's), so I eschewed the whole nonsense. Say, I don't recall Julian doing anything to protect Kerry in this venue. Tsk, tsk, chivalry really is dead.

|10.24.06 @ 5:21PM|#

Todd,

Careful, you make it sound like Lamar was wallowing in his own shit.

|10.24.06 @ 5:22PM|#

jaybird:

Yeah, Halle and Gwynneth and I were just discussing that after our recent three-way. Then we had a nice lunch and debated the social security system

|10.24.06 @ 5:23PM|#

Parentalism? Fine with me. His point is that absent social secuity he, and many others would come up short, and it's true.

He didn't PROPOSE investing in T-bills, he noted that what he paid in would have increased to somewhere near a half million dollars if invested in an index fund, or, oh, $150,000 or something in T-bills. Where does the money to pay interest on t_bills come from? Does it matter? As long as we're borrowing by issuing T-bills, we have to pay the interest.

A some folks are weak and instead of buying sailboats, they buy shoes for the kids or pay apartment rents.


Get off the moral high horse. Social security works. Keep it!

uncle sam|10.24.06 @ 5:24PM|#

You're right, we shouldn't have to, but we do because we are civilized.

But we aren't civilized. "The government" is institutionalized brutality. What does the government threaten to do to people who refuse to pay into that retirement "Ponzi scheme" for "their own good"?
That's not civilization, SS is actually about buying people's support with their own money.
"Civilized" my butt.

Timothy|10.24.06 @ 5:25PM|#

The 7% social security tax is utter bullshit. The feds think I'm too goddamned stupid to wisely invest my own fucking money, so in the guise of "taking care of me" they extort that money (plus another 7% from my employer) which is, if the worst case is to be believed, instantly put into the general fund and pissed away on Gods know what idiotic federal programs, or in the best case, locked up in an account where it never accumulates any interest at all.

Minor quibble, mediageek. The only case is that the social security taxes are instantly pissed away. Congress writes debts to the Treasury in the form of government bonds for the amount of SS revenue, Congress then takes possession of the income dollars from Social Security, pays out the benefits, and uses the rest to shore up some of the holes in the general budget.

The SS "trust fund" consists entirely of these bonds issued by Congress to the Treasury, you can see how this is problematic. For those of you who can't, try writing yourself a check for a hojillion dollars and see if you get richer.

|10.24.06 @ 5:27PM|#

"Get off the moral high horse. Social security works. Keep it!"

You have got to be kidding me.

|10.24.06 @ 5:30PM|#

Timothy-

Thank you for the clarification.

Paul|10.24.06 @ 5:33PM|#

I am so done with arguments about creating social welfare nets (read social security) so 'our kids don't have to pay the bills'. Social Security's very structure assumes our kids are going to pay for it. It's in the design. Why do you think European nations with dropping birthrates are getting sweaty under the collar?

It's a pyramid scheme that must... must have a larger base and a smaller top. Once it flips, you're in big trouble.

|10.24.06 @ 5:33PM|#

Unless you want to argue that no one who would otherwise go without is benefitting from Social Security, you are admitting that it serves a collective responsibility purpose.

Rugged individualist chest-beating aside, virtually all Americans believe in the lesson of the Cain and Abel story - we are our brother's keeper. Oh, boo hoo, I shouldn't have to ever think about anyone but myself - get over it.

People are willing to think about changes in the system - "If "we" actually were "civilized" we'd have come up with a better scheme than SS." - but not if they perceive this system as undermining the ethic of collective responsibility.

Running down the idea that people should take care of each other, that no one should be left out in the cold, isn't going to get you anywhere, whatever lofty terms you choose to describe your selfishness.

|10.24.06 @ 5:34PM|#

Working stiffs don't have enough to put away, so they don't. They'd rather have luxury items like bread.

Lamar, working stiffs are already forced to put 12% toward Social Security. They don't get to even choose a luxury item like bread with it.

If you are so worried about working stiffs, consider that:

1) Social Security is the highest tax most people pay.

2) Social Security is the most regressive tax most people pay.

It is a transfer scheme taking money from the poorest class of people, young workers, and giving it to the riches class of people, old retirees. If helping the poor is what you really want to do, Social Security is pretty much the worst way you could imagine doing it.

|10.24.06 @ 5:34PM|#

Kerry Howley? Cripes, I thought he was talking about John Kerry.

Me too. It's too bad really, it woulda made joe sooo jealous.

|10.24.06 @ 5:36PM|#

"1) Social Security is the highest tax most people pay.

2) Social Security is the most regressive tax most people pay."

Yes, dropping the rate and eliminating the income cap would be a good idea.

Who says Democrats aren't willing to consider Social Security reform?

|10.24.06 @ 5:38PM|#

all Americans believe in the lesson of the Cain and Abel story

Where exactly does the federal government get involved in the Cain and Abel story? Do ardent advocates of Social Security even remotely understand the concept of charity?

|10.24.06 @ 5:40PM|#

Okay, fine. Rather than letting us manage our own money--cuz we little peoples can'ts be trusted to does it our own selves--how about compelling us to save the money? In CDs, bonds, stocks, whatever. Heck, why not just get rid of Social Security and make us contribute the exact same thing to IRAs (modified to handle the increased dollar amounts)? Remember, even the dirt poor are forced to pay the FICA tax, which means that it is a regressive tax on their incomes with no deductions and no exemptions (and, because there is no investment or even holding aside of this money, it is, most assuredly, a tax).

With a 12.4% investment rate, which is already being paid today in the form of the worker and employer contributions to the SS portion of the FICA tax, even the poorer workers would be socking aside a decent amount of money. And if they are allowed to invest it in the many, many instruments allowed in an IRA program (like an S&P 500 index, for example), they'll do much better than they would dumping the money into the general revenues of the government. The feds could even require a certain amount of diversity and impose some risk intolerance if they just had to meddle.

|10.24.06 @ 5:41PM|#

It is unfair, erroneous, and even incompetent to compare the past to the present.

No it's not...it's stupid as hell NOT to at least look to the past as an indicator of how systems of people will/would have developed.

But if you wish, there are plenty of current examples - with the benefits of higher productivity and leveraging of technology - that do not provide much or anything in the way of retirement or social security-like programs.

They're shitholes with large portions of the population living in poverty while working long hours at low-paying jobs.

As Lamar said, we're civilized.

|10.24.06 @ 5:41PM|#

yoda: Social Security may work for you if you're, say, over 50 at the moment, but I'm 24 and I've more or less internalized the fact while I'll pay for the entire generation of solidly well-off baby boomers to wear cashmere socks and buy sailboats, I'll see pennies on the dollar for my "investment" when I retire. For all of the bitching we libertarian types do about other kinds of blatant welfare, it's Social Security that really screws us on payday, not food stamps. The obvious intermediate answer to the problem is to means test Social Security: We won't leave widows and their cats rotting in their own filth and we won't bankrupt my generation to pay for a group of people with more than enough for a comfortable retirement. Of course, the baby boomers won't hear of it, as Social Security is somehow their God-given right (after life, liberty, and yachts), but that's what needs to be done.

|10.24.06 @ 5:46PM|#

"Running down the idea that people should take care of each other, that no one should be left out in the cold, isn't going to get you anywhere, whatever lofty terms you choose to describe your selfishness."

And the only way to take care of people is via a giant ponzi scheme that harms my ability to take care of myself?

Cain and Abel?

Hardly.

Seems more like you're talking about robbing Peter to pay Paul.

|10.24.06 @ 5:46PM|#

The obvious intermediate answer to the problem is to means test Social Security

That is not the obvious answer, Social Security is not welfare. The obvious answer is to scrap the program, pay the current liabilities and transition to a fully-funded plan.

|10.24.06 @ 5:47PM|#

Seems more like you're talking about robbing Peter to pay Paul.

...with the added touch that Peter is working as a deckhand on Paul's yacht.

|10.24.06 @ 5:50PM|#

Where exactly does the federal government get involved in the Cain and Abel story?

The same place where religious nincompoops get to ram creationism down the throat of public schoolkids and moronic zealots get to interefere in the peaceful passing of a brain dead woman over.

I'm making an ironic point, of course. The conservatives who want to legislate Christian morality by proclaiming America as a "Christian Nation" can't forget that a cornerstone of Christanity is charity...and as such a Christian nation should probably practice it.

I don't necessarily buy that, mind you...but it makes for an interesting religio-philosphical discussion.

|10.24.06 @ 5:51PM|#

Rugged individualist chest-beating aside...

First of all can everyone stop saying "rugged individualist?" It's embarrassing. I'm not "rugged." I wear shirts with buttons. My belt matches my shoes. The shoes are suede for God's sake.

... damn I look good. Sorry, what was this thread about again?

thoreau|10.24.06 @ 5:52PM|#

Can I just mention that my wife will be coming with me to the Reason Happy Hour tonight?

uncle sam|10.24.06 @ 5:57PM|#

It is unfair, erroneous, and even incompetent to compare the past to the present.

>>No it's not...it's stupid as hell NOT to at least look to the past as an indicator of how systems of people will/would have developed.

But if you wish, there are plenty of current examples - with the benefits of higher productivity and leveraging of technology - that do not provide much or anything in the way of retirement or social security-like programs

|10.24.06 @ 6:02PM|#

madpad, you bring up an interesting point. By mandating ______ (teaching creationism, social security taxes, etc.), you remove the element of choice. Removing choice also by necessity removes any ethical/moral element. It's no longer the "right" thing to do, but the REQUIRED thing to do. No choice, no charity.

|10.24.06 @ 6:03PM|#

I also love joe's notion that the best way to take care of poor people is to forcibly extort money from them and then put it in a place where it doesn't accumulate any interest.

Lincoln|10.24.06 @ 6:06PM|#

Running down the idea that people should take care of each other, that no one should be left out in the cold, isn't going to get you anywhere, whatever lofty terms you choose to describe your selfishness.

Pithy Joe but nobody on this thread actually said anything to provoke this. You're arguing with the libertarian in your head again. The fact is that most here (and most on the planet earth for that matter) already agree that people should take care of each other. It's hardwired into us - you know group selection and all that. The point where we differ is on how to take of each other. You advocate using force to change society and libertarians do not. A libertarian spends time thinking about what he or she can do to fix the problem while the democrat spends the same time thinking about what other people are not doing to fix the problem.

|10.24.06 @ 6:06PM|#

"...with the added touch that Peter is working as a deckhand on Paul's yacht."

Yeah, because I'm a real yacht captain.

|10.24.06 @ 6:07PM|#

Shannon,

We may find some common ground, here.

I'm FOR means testing. I'm also for
raising the income cap.

Even if you're only 24 (enjoy life, guy!),
Social Security can be there for you. Part
of the problem is that our government has been
"borrowing" that trust fund for years, spending
like it really had the money, without
really reckoning the true cost of the borrowing.

Get the trust fund back with interest, and
you get a period in the out years where some
amount of money might have to be added, and
then, demographically, you're probably OK.

Look, take 100 guys like you -- I'll assume
you're productive, intellegent and responsible.
5 of you will do great. another 70 or 80 will
do OK. And 5 or 10 will just get wiped out.
Bad luck, illness, industry you worked in goes
down the tubes -- something. That's why it's
called social SECURITY. Intellegent and
responsible is fine, but it doesn't do the
the security part.

Oh yeah, the radio guy's point was that his
return on what he paid in, is actually
pretty good.

Further Oh yeah--SS is a transfer program --
I paid in to pay for people already retired
(plus some for the trust fund). I'll get paid
from payment from guys like you. You'll get
paid (no reason why not) by someone else.
It's a social contract.

Sure means test it. I can't see any reason
not too.

uncle sam|10.24.06 @ 6:12PM|#

People are convinced that we are civilized, because this is always referred to as "civilization". Which I believe originally referred to the practice of "living in cities".
But in the sense that humans are not savage, we are not yet civilized, because we live in a system based upon fear, that is, the power government yields to threaten those who do not abide by "the rules".

|10.24.06 @ 6:14PM|#

"Oh yeah, the radio guy's point was that his
return on what he paid in, is actually
pretty good."

Really? Perhaps you'd care to point out where that return is coming from. Pray tell, what's the annual rate of growth?

|10.24.06 @ 6:19PM|#

Hmm, a quick Google search for "Certificate of Deposit" yields programs with return rates of around 5%.

Does Social Security have a return rate like that?

God knows it doesn't have a return rate of even a basic set of mutual funds.

|10.24.06 @ 6:29PM|#

I used to be hopping mad about the government extorting 14% of my income (self-employed, so I pay the tax twice) in order to give it to a bunch of rich retirees. I pay more in social security taxes than I do for rent or my car payment, and I pay well more in SS than I can afford to sock away for my actual retirement. But now that I realize this process is "civilized" (thanks, Lamar!) I feel much better about it.

|10.24.06 @ 6:31PM|#

Mediageek

Commenter was 62. Life tables give him an
expectation of 18.31 years of remaining
life. At $17,000 a year that totals $311,270.
Better than T-bills but worse than an
index fund.

But then, that's the point of those who are
saying invest it, isn't it?

|10.24.06 @ 6:32PM|#

Yoda:

I win.

|10.24.06 @ 6:36PM|#

swillfredo,

"Where exactly does the federal government get involved in the Cain and Abel story?"

As the mechanism that puts the principle into practice on a society-wide level.

"Do ardent advocates of Social Security even remotely understand the concept of charity?" Yes, we understands its benefits, as well as unevenness and limited scope.

Pro Libertate,

That's an interesting idea for people entering the workforce tomorrow - no Social Security taxes, no Social Security checks, but how do you handle the transition - all those people who have been paying into Social Security for years? They've paid for olders people's Social Security, and they don't get their turn?

mediageek, "I also love joe's notion that the best way to take care of poor people is to forcibly extort money from them and then put it in a place where it doesn't accumulate any interest." Did you miss the part where I wrote "I also love joe's notion that the best way to take care of poor people is to forcibly extort money from them and then put it in a place where it doesn't accumulate any interest?" Would you like me to put it in all caps?


Lincoln, Does "If we did away with SS, some would suffer from the failure to plan for their own retirement, but whose problem is that?" suggest a hard-wired commitment to taking care of other people?

"A libertarian spends time thinking about what he or she can do to fix the problem..." It always makes me a little sad to see a libertarian who so poorly understands his fellows. Why don't you go into the archives, read the threads about Hurricaine Katrina, and then get back to me about the universality of libertarian compassion.

|10.24.06 @ 6:36PM|#

Mad Scientist:

How civilized do you think the process would be if one decided not to pay into Social Security?

Just, ya know, asking because I'm all curious and stuff.

;-)

|10.24.06 @ 6:39PM|#

"Would you like me to put it in all caps?"

Nah. I don't think re-stating what I already typed in all caps would make a substantive difference to the point that I made.

;-)

|10.24.06 @ 6:41PM|#

mediageek

Not if you're one of the 5 or 15 unlucky ones.

|10.24.06 @ 6:43PM|#

BTW, if you haven't seen Kerry Hawley's staff photo yet at http://www.reason.com/howley/howleybio.shtml , you really should, because I think it's awesome.

PS: Can anyone comment on the rumor that the photo of the midriff that appears on Reason's cover for the "ovas for sale" cover story belongs to Kerry Howley?

PPS: You horndogs disgust me.

|10.24.06 @ 6:44PM|#

And you have hard numbers that 5-15% of people would fail?

Really?

Especially if they were, say, just putting the money into an index fund?

I find this peculiar, especially in light of the fact that the market has, on average grown by 10% annually.

|10.24.06 @ 6:49PM|#

mediageek

Nope, I'm guessing, but I think it's a
pretty good guess. SOME people are
going to get wiped out. How many
people are you willing to watch pick
dog food cans out of the trash? 5%?
2%? You're inhabiting a fantasy paradise
that doesn't match the real world.
Leave SS in place and add all you want
to it.

|10.24.06 @ 6:49PM|#

Mediageek, considering the lengths the government will go to in order to get that money, I imagine I'd have to be one of those batshit insane moonbats not to voluntarily surrender it. So long as I remember that I'm grossly out-gunned, the exchange can remain civilized. Ah, motivation by fear, the sine qua non of civilization.

|10.24.06 @ 6:50PM|#

BTW, I'm thinking of starting my own blog now, just so I can post this entry:

I was lounging around this afternoon, not doing much of anything, when Salma said to me, "Hab you seeb Hulia Zanchuss waydess pozee eh Hiwwun, dowwee?"

"I'm sorry, you'll have to take that out of your mouth," I replied.

"Have you seen Julian Sanchez' latest posting at Hit and Run, darling?" she repeated.

"No, I haven't."

"Weh, cheb id ow."

|10.24.06 @ 7:05PM|#

Yoda, then why not allow people to opt out of SS?

That way, those who don't want to have a so-called safety net don't have to have one.

And the fact that you're pulling the numbers so awesomely out of your ass just goes to show you don't know what you're yammering on about.

|10.24.06 @ 7:14PM|#

mediageek doesn't have an answer. I suspect he realizes that "As many as it takes for me to have my money" wouldn't go over very well.

FYI, there are expected to be 70 million retirees in twenty years. One half of one percent of that figure is 350,000 people.

|10.24.06 @ 7:55PM|#

"And you have hard numbers that 5-15% of people would fail?

Really?"

I have some irony for you, Mediageek. It might be right that 5-15% of people would end up with returns similar to what we all will get out of the current SS system. And, they will be so much more worse off than the mass of people who reasonably invest 12% of their incomes over their lifetimes, that the "civilized" people will be demanding that we all pay for social programs to lift them up.

And, I have an easy solution. Since SS pays nothing if you die before your 65 & leaves nothing for your heirs, lets just make 100% estate tax on retirement savings for anybody who dies before they turn 65. There would be more than enough there to get yachts for the entire 5-15%, and everyone living past 65 could probably still pass their leftovers to their heirs.

Kebko

Paul|10.24.06 @ 7:59PM|#

Rugged individualist chest-beating aside, virtually all Americans believe in the lesson of the Cain and Abel story - we are our brother's keeper.

I don't. I do believe in the separation of church and state, however.

Seems more like you're talking about robbing Peter to pay Paul.

Which from my perspective, would be great. However, Peter's gettin' robbed, but I can assure you Paul's not getting paid. I haven't seen dime one.

|10.24.06 @ 8:33PM|#

Time out for a little game!

Let's notice how prefixing almost any word by the modifier social reverses the term's accepted meaning!

For example:

Justice is normally understood to be the assignment, especially at law, of rewards and punishments according to an impartial assessment of individual merit. Social justice, however...

Science normally means investigating phenomena to yield a connected body of demonstrated truths, by systematically classifying observed facts under universally valid and reliable general laws. Whereas social science...

Democracy is government by the people, exercised either directly or through their elected representatives; any social democracy, on the other hand...

Service means activity that benefits someone else...

...security...

...worker...

Who can think of more?

|10.24.06 @ 9:07PM|#

joe,

Set a cut-off birth date, then establish the Pro Libertate Retirement Protection Racket, um, Scheme. For everyone born before the cut-off date, they get the Social Security benefits to which they are currently entitled. The payment for their benefits will simply have to come out of the general treasury of the federal government. Which means, of course, either more taxes or less spending or both.

We could, I suppose, allow people to opt out of annual contributions if they have $X in their Super IRA, but I'll leave the details to the quibbling class. I'm also toying with the idea of suggesting that the states could manage something like this, since the money isn't going to or coming from the government.

|10.24.06 @ 9:14PM|#

I believe it's possible legally to opt out of SS; I don't know about subsequently opting back in. Does anyone know what's involved in either of these? I believe you forfeit more than just retirement income.

Paul|10.24.06 @ 9:33PM|#

I believe it's possible legally to opt out of SS; I don't know about subsequently opting back in.

I too, have heard this rumour, when consorting with unsavory characters in smokey back rooms. I have never seen a confirmation of if, or how it can be done.

|10.24.06 @ 9:46PM|#

Heh M, Alan Charles Kors made just that point in a taped lecture of his I once listened to.

Social consciousness ...

Social studies (at least where I went to high school) ...

uncle sam|10.24.06 @ 9:48PM|#

Ah, the difference between libertarians and statists. Statists believe the ends justifies the means, while libertarians hold that the means produces the ends. So for the statist, bad means are acceptable as long as their intentions are toward good ends, but the libertarian critique is that bad means will produce bad ends...sooner,...or later.

|10.24.06 @ 10:04PM|#

How many people are you willing to watch pick dog food cans out of the trash? 5%? 2%? You're inhabiting a fantasy paradise that doesn't match the real world. Leave SS in place and add all you want to it.

Are you reading what people are writing? It is likely that people who currently pay in to Social Security are picking dog food cans out of the trash today.

If you want to take care of the poor, take care of the poor. The poor Social Security takes care of are merely collateral beneficiaries to an unnecessary wealth transfer scheme from working poor to nonworking rich.

|10.24.06 @ 10:07PM|#

I estimate that I've paid roughly $100,000 into FICA in my working lifetime and I'm not even close to being finished.

They, the federalistas, could keep every retched dime they've swindled me out of if I could opt out of the system now. I don't have to send them another red cent and they don't have to pay me a thing when I retire.

I can then take that 12% and sock it away somewhere where it will have a rate of return above Social Security's of ZERO. The underside of my mattress almost has that return. Whatever is left over when I kick off the coil can then go to my kids. Unlike me, they can have something to build on for their future.

I'll take care of me and mine and I won't force you to chip in at all with that.

That's choice. THAT's civilized.

|10.24.06 @ 10:57PM|#

There's always Carousel.

David Nieporent|10.24.06 @ 11:27PM|#

How many people are you willing to watch pick dog food cans out of the trash? 5%? 2%?

"Willing" to watch? I'll put up stands and sell tickets. Let people pay me to watch the spectacle.

Then I'll cackle madly and roll over in my pile of money.

|10.24.06 @ 11:31PM|#

I think this has a very interesting parallel with the article (can't find it now, it may have been posted here) about how, since we (people, in general) are so dependant on technology, that we will eventually cease to evolve or de-evolve. It looks like the same thing is true about a dependency on big, parental government.

|10.25.06 @ 12:30AM|#

madpad

History already shows us that most people are incapable or unwilling to plan for the future.

And you think these people should be able to vote on what affects your future? Where is our benevolent dictator?

uncle sam|10.25.06 @ 1:26AM|#

I think this has a very interesting parallel with the article (can't find it now, it may have been posted here) about how, since we (people, in general) are so dependant on technology, that we will eventually cease to evolve or de-evolve. It looks like the same thing is true about a dependency on big, parental government.

The Marching Morons by Cyril Kornbluth

uncle sam|10.25.06 @ 1:38AM|#

Why it's unfair to compare the past to the present:
We don't have to go all that far back in U.S. history (or just visit some other countries) to find that most people had to work most of their waking hours just to survive...children included.
We should not expect the past to compare favorably to the present in most regards. What has made the difference is not action by government, but the development of technology which has allowed us to produce a whole lot more with our labors than ever before. Having government manage our lives, including retirement, is the placing of all our eggs in one gigantic basket. Everything seems just ducky until the eventual collapse.

|10.25.06 @ 5:25AM|#

Thanks Julian for reminding all of us you sleep with the hottest libertarian on the planet.

|10.25.06 @ 5:59AM|#

I believe it's possible legally to opt out of SS

Oh, you can opt out of the getting benefits part.

Its the paying taxes part you can't get out of.

|10.25.06 @ 8:36AM|#

JW:
You, and many others, are confusing (1) civility with good policy, (2) courteous behavior with fiscal responsibilty, and by extension (3) primitive thinking with government programs. If anything, Social Security is an example of thinking so advanced (and civil) that we have no idea what the hell we're doing. Perhaps you should ask the question, "can we afford to be civil?" rather than focusing on your own finances and calling that civility.

|10.25.06 @ 9:05AM|#

Shorter joe:

This is a Big Government program that punishes the successful, encourages the lazy and incompetent, deprives the economy of capital goods, and contributes to inflation. What's not to love?

As somone under 30 who makes near the wage cap, let me tell you things can get worse than the "no-interest" scenario some of you mention. Negative CAGR - currently estimated at about -2% for me. And that assumes taxes and benefits remain at the current level, which even joe will admnit they can't. Higher taxes and/or lower benefits are all the same: lower ROI.

Of course for me, it doesn't really matter, as I'm morally enjoined from claiming any beneifts under this abortion of a program. -100% ROI, baby. So SS will rip me off to the tune of ~$1.5M (yes, joe, that's just "my half" and real 2006 dollars). Some security.

|10.25.06 @ 9:44AM|#

If anything, Social Security is an example of thinking so advanced (and civil) that we have no idea what the hell we're doing.

Now there's a basis for a civilised approach: complete, total and utter ignorance.

If nothing else, it's bong-hit philosophizing, "It's, like, so BIG, that, you know, you could never wrap your head around it. If you try...BANG! Your head would explode dude."

You, and many others, are confusing (1) civility with good policy, (2) courteous behavior with fiscal responsibilty, and by extension (3) primitive thinking with government programs.

Funny that. Here I thought civility IS the basis for a civilization. Can't call it much of a civilization if all you have is a bunch of do-gooder folks running around and robbing one another for their own gain.

Silly me, and here it was that all along that the basis for civilization is condescending and paternalistic authoritarianism.

Jennifer|10.25.06 @ 9:58AM|#

Raise the retirement age by three months, every year, indefinitely. Those that are collecting or are about to collect benefits will see no change. Those that are further from retirement will have to bridge the gap themselves (that "planning and responsibilty" thing).

And do those of us in the younger generation get a smaller percentage of our paychecks surrendered to FICA in exchange for having our official "retirement" pushed back year after year after year? Under your plan, I'd have to keep paying in to a plan where I wouldn't see a dime until/unless I turned 77. I'm already trying to bridge the gap myself, but building that bridge would be a hell of a lot easier if I didn't have such a huge chunk of FICA money removed from my paycheck every two weeks.

|10.25.06 @ 10:20AM|#

If a society that takes money away from me and places it in a system where I will never see a dime can be called civilized, I'd hate to see savagery.

Jennifer|10.25.06 @ 10:24AM|#

I forgot to mention that under Sage's "extend retirement three months every year" plan, Thoreau will have the honor of paying FICA taxes every month but won't get a penny back until he turns 80. Assuming he lives long enough to do so.

|10.25.06 @ 10:39AM|#

The mathematics of Social Security are that it is a pyramid scheme. Tweaking the numbers doesn't change that fact.

Everything else is just squabbling about the marketing terms.

|10.25.06 @ 10:42AM|#

"Now there's a basis for a civilised approach: complete, total and utter ignorance."
Are you confusing the BASIS for a civilized approach (i.e., the policy as implemented) with our country's impulse to be civil (the political impetus to deciding some type of policy is needed)? My guess is that you don't even know the definition of the words you are using. I'll point it out again.

"If nothing else, it's bong-hit philosophizing, "It's, like, so BIG, that, you know, you could never wrap your head around it. If you try...BANG! Your head would explode dude."
I'm glad you have Social Security figured out, JW. That is a result that has eluded pretty much everybody who has ever been involved with Social Security. But, since you've figured it out, I guess you have a right to call everybody who sees Social Security as a giant government bureacracy run amok as a stoner. Tell me this though: What is the standard for determining whether a 56-year old widower iron worker with 25 years on the job, moderate back pain, anemia and multiple chemical sensitivities is entitled to disability benefits? If you don't know, then lay off the reefer, man.

"Funny that. Here I thought civility IS the basis for a civilization."
Uhh, too stoned to look up the definition of civility? Hint: civility and civilization are distinct words. But hey, what's a little accuracy or knowledge between friends?

"Silly me, and here it was that all along that the basis for civilization is condescending and paternalistic authoritarianism."
Nothing silly about not knowing what a word means before you attack someone for using it.

"Can't call it much of a civilization if all you have is a bunch of do-gooder folks running around and robbing one another for their own gain."
Hi, my name is JW, and I don't know what the word civilization means. See, my parents traumatized me with a dictionary when I was young......

|10.25.06 @ 10:46AM|#

As somone under 30 who makes near the wage cap, let me tell you things can get worse than the "no-interest" scenario some of you mention. Negative CAGR - currently estimated at about -2% for me. And that assumes taxes and benefits remain at the current level

Just to put some hard numbers on the actually civilized solution...

A person who works from age 18 to age 65 and puts 12% of his earnings into accounts yielding a mere 4% real return can draw down his savings over a 30-year retirement to earn a pension equal to 108% of his net paycheck.

|10.25.06 @ 10:51AM|#

AC,
Thanks for the exaggeration. I was thinking El Salvador during the 1980's, or Rwanda, or currently Darfur, but now I realize, our tax system is the pinnacle of savagery.

uncle sam|10.25.06 @ 11:00AM|#

our tax system is the pinnacle of savagery.

Who said anything about pinnacles?
Taxation is institutionalized tribute which is born of conquest...the history of nations.

|10.25.06 @ 11:01AM|#

virtually all Americans believe in the lesson of the Cain and Abel story - we are our brother's keeper.

Wow, it's just like the Foundation For New Era Philanthropy.

Timothy|10.25.06 @ 11:01AM|#

INDEX FUND you fucking idiots. Jesus Jumped-up Motherfucking Christ On Toast. FINE you want to force me to pay for some other guy's retirement at the expense of my own (well, in my case because I have an IRA and a profit sharing plan, and a 401k already, more like at the expense of $5000 disposable income/liquid savings), at least have the good motherfucking sense to put the goddamn money you stole from me in an index fund. One tied to the S&P 500 is pretty reasonable, pretty inexpensive, and not terribly risky.

That way you'll earn some interest on it and won't have to tax me TWICE (once now in the form of FICA, once in the future in the form in Income Tax) to pay for the SAME GODDAMN THING. Because that's what you're doing now fuckers, with this ponzi scheme of Social Security: you're taxing me, then you're writing liabilities to yourself and counting those as assets, then spending the money, then saying you have a "surplus" because the value of bonds you've written to yourself exceeds the projected expenditure for the next few decades. Except, you know what, fuckers? You're going to have to tax me AGAIN to pay off those "bonds" that you so graciously put into the "trust fund".

Excuse that outburst, but this bullshit really, really pisses me off.

|10.25.06 @ 11:10AM|#

I believe it's possible legally to opt out of SS

The only way I am aware of opting out -- actually you aren't even given the choice of opting in -- is if you work for a state, as in the State of Illinois, that provides a pension plan. I have a hole in my Social Security contribution report from just such a stint.

It is a rockingly amusing that the only way to get out of being in a system that will soak future federal taxpayers is to be in a system that will soak future state taxpayers.

Did I say amusing? I meant sad.

Xmas|10.25.06 @ 11:10AM|#

You guys all know that the retirement age for Social Security is currently creeping up 2 months every year, right?

http://www.ssa.gov/retire2/agereduction.htm

|10.25.06 @ 11:20AM|#

I've seen people posit the belief that the SR-71 Blackbird and the Stealthbomber are representative of technology so advanced that its not possible for people to comprehend them.

But this is the first time I've seen anyone make that claim about Social Security.

I truly look forward to Lamar's next post, as he's quite hi-larious.

|10.25.06 @ 11:23AM|#

Ha Ha, I meant we bit off a little more than we can chew...a common problem with government idealism.

|10.25.06 @ 11:25AM|#

Q: But what will become of the poor?
A: No one will prevent you from helping them.

|10.25.06 @ 11:26AM|#

"Uhh, too stoned to look up the definition of civility? Hint: civility and civilization are distinct words. But hey, what's a little accuracy or knowledge between friends?"

From Webster's:

One entry found for civilization.
Main Entry: civ�i�li�za�tion
Pronunciation: "si-v&-l&-'zA-sh&n
Function: noun
1 a : a relatively high level of cultural and technological development; specifically : the stage of cultural development at which writing and the keeping of written records is attained b : the culture characteristic of a particular time or place
2 : the process of becoming civilized
3 a : refinement of thought, manners, or taste b : a situation of urban comfort
- civ�i�li�za�tion�al /-shn&l, -sh&-n&l/ adjective



The only way that I see Social Security being a part of the definition of "Civilization" is if Lamar is playing a variant of that Chinese fortune cookie game where you read the fortune aloud and add "in bed" at the end.

*cracks fortune cookie*
"Your ability to juggle many tasks will take you far. in bed."

See, Lamar cracks a dictionary, looks up civilization, and reads out the following:

"3 a : refinement of thought, manners, or taste b : a situation of urban comfort where wealth is redistributed under threat of force to take care of people who the government deems cannot take care of themselves, ie, everybody."

|10.25.06 @ 11:32AM|#

"mediageek doesn't have an answer. I suspect he realizes that "As many as it takes for me to have my money" wouldn't go over very well."

Joe, just so you know, when I sit on top of my bags full of money, twirling my waxed-up moustache the only things I wear are my top hat and monocle.

"FYI, there are expected to be 70 million retirees in twenty years. One half of one percent of that figure is 350,000 people."

Which has what to do with any of this? Again, I will point out that Certificates of Deposit are a historically even more stable than the S&P 500, and still yields a 5% return whereas Social Security yields a 0%.

By denying these people the ability to reap a return on the money it takes, it is not only stealing the money directly out of their pockets, it is also stealing the income that would have been generated had that money been invested.

For those who don't know much about investing, and find the task daunting, I'll just stop to point out that there is an entire industry of financial advisors whose sole goal is to help you to invest your money in such a way that you will reap a return on the investment.

The notion that some group of poor people will lose their ass is idiotic when examined in light of the fact that Social Security is a sure-fire economic loser.

|10.25.06 @ 11:38AM|#

"Ha Ha, I meant we bit off a little more than we can chew...a common problem with government idealism."

"Anyone who thinks he has a better idea of what's good for people than people do is a swine."

-P.J. O'Rourke

Dan T.|10.25.06 @ 12:14PM|#

"Anyone who thinks he has a better idea of what's good for people than people do is a swine."


Even if he's right?

|10.25.06 @ 12:21PM|#

Mediageek:
I did not use "civilization." I said we do Soc Sec because we are civilized. Perhaps misguided and even stupid, but civilized. It was the rest of the sloppy poppies who conflated civility with civilization. Different words, different etymologies, different meanings with only a very slight overlap.

|10.25.06 @ 12:24PM|#

Jennifer,

The idea, as I said, was to phase out SS taxes. I'm no economist, so I don't really even know if it would work. But if we can cut SS taxes by a set amount each year, we can wean ourselves from a system that is set up for collapse. Unless, of course, birth control is made illegal and we suddenly get 16 workers supporting each retiree again.

|10.25.06 @ 1:58PM|#

Especially if he's right, Dan. Nothing is more annoying than a smug know-it-all who actually, you know, knows it all.

|10.25.06 @ 2:08PM|#

I don't know how many times I have to repeat this.

Social Security is NOT a pension scheme even though it pays some pension benefits.

Social Security is NOT a welfare scheme even though it pays some welfare benefits.

Social Security is a TAXATION scheme.

A long time ago some smart feller figured out that there just weren't enough rich people to tax to get enough revenue to pay for all the vote buying that politicians want to do. And if you tried to tax the poor they'd bitch to loud and not vote for you anyway.

So this fart smeller figured out that if you just imposed a tax and said you'd pay people a pension when they were old in return it got their attention, even though the retirement age was beyond normal life expectancies and the scheme didn't pay anything significant in the way of death benefits. But the tax isn't just big enough to pay today's beneficiaries you collect extra to create a TRUST FUND to pay future beneficiaries, don't you know? Now you don't put the money where it might earn interest or anything though, of course, NO, you put it in this year's GENERAL FUND and spend it. And then you make these special treasury bonds that aren't even marketable or anything just so you can actually pretend your "pension scheme" has some assets.

So, joe, the FICA tax can't be reformed or made more progressive, because SS taxes are too important a source of today's vote buying. And the SS surplus can't be put in a "lock box" because it doesn't exist (neither the surplus nor the lock box, that is).

But don't for a moment think that if the politicians who promised their scheme will keep Aunt Maude from being thrown out in the snow ever thought it was in their interests and they could get away with it politically, they wouldn't cut the whole thing off and throw Aunt Maude out in the snow with the wolves and all.

And, of course, anyone who tried to set a scheme like this up in the private sector would end up with a long term in Federal Prison.

So here I am like Charlton Heston shouting "Social Security is a TAAAAXAAAAATION scheeeeeme."

And you people wonder why I'm such a cynical old bastard.

|10.25.06 @ 2:31PM|#

"the FICA tax can't be reformed or made more progressive, because SS taxes are too important a source of today's vote buying."

It reminds me how in Florida, years ago, there was a voter iniative on the ballot about starting the lottery. The promise was that all of the lottery money would go to education. Well, wouldn't you know it? They kept their promise!! All the lottery money goes to education. All the money that USED to go to education got spent on other stuff. The net effect? No extra money for education, but plenty of free money to buy votes! At least with a lottery you have a choice.

|10.25.06 @ 3:13PM|#

Lamar,

We're probably only a few weeks away from that exact scenario being used as a reason to ban internet gambling. But perhaps I'm not being cynical enough and some public servant has already done so.

|10.25.06 @ 4:04PM|#

Lamar--Wow, I'm not sure where to start...Are you sure I'm the confused one?

Are you confusing the BASIS for a civilized approach (i.e., the policy as implemented) with our country's impulse to be civil (the political impetus to deciding some type of policy is needed)? My guess is that you don't even know the definition of the words you are using. I'll point it out again.

No, civilised as in:

From Webster:

Main Entry: civilized
Function: adjective
: characteristic of a state of civilization ; especially : characterized by taste, refinement, or restraint>

and civil

Main Entry: civ·il
Function: adjective
2 a : CIVILIZED b : adequate in courtesy and politeness : MANNERLY

So, I'm not confusing anything, my boy; you've been going on and on about it being the "civilized," or refined thing to do, erect a giant, confiscatory Ponzi scheme and call it a retirement/disability fund, when I see it as nothing of the sort. I see it as vulgar, devolved and downright criminal. Not exactly what you would call "civil," the polite sense, nor "civilized."

Now, if you want to try and be "civil" (in either the polite or political sense) or "civilized" without a civilization, go nuts.

|10.25.06 @ 4:16PM|#

Oh, and from Webster again:

Main Entry: civility
Function: noun
2 a : civilized conduct; especially : COURTESY, POLITENESS b : a polite act or expression.

Really, are you sure it's me whose unclear on the meaning of the words? More condescension, please.

|10.25.06 @ 5:25PM|#

JW:
Get over it, man. I'll say it one more time. We do Social Security because we are civilized. The way that we do Social Security isn't very civilized. Sorry for the condescension, but when one confuses words merely because they have a similar latin root, I have to take a stand, and I hope you'd do the same for me. A "state of civilization" is not the same as the noun "civilization." It just isn't, but I digress.

In my opinion, having a bunch of starving, withering old people who can't afford soup is bad, regardless of fault. Those who say "fuck them" aren't very refined. They want to do something about it. They pass the buck to their elected Kennedys who invariably put together crazy Ponzi schemes. The REASON we have Soc Sec is our civility, the RESULTING program is a mess.

|10.25.06 @ 8:50PM|#

"Civilized people don't confiscate 1/8 of my income under some penalty if I don't comply (just what is the penalty if I don't comply?), to give to someone else to whom it does not belong."

Taxes are a certainty in every country. By your logic, there are no civilized people anywhere on Earth.

|10.25.06 @ 10:19PM|#

Taxes are a certainty in every country. By your logic, there are no civilized people anywhere on Earth.

I'll buy that. Though it's fair to say, by that measure, there are plenty of civilized folks around these parts.

With taxes, the money just gone dwon the rathole. No promises of anything, except fewer potholes next year.

With Social Security, vague promises galore of how it's for you, even though nothing could be further from the truth. Consider it the Fed's version of the 72 Virgins Awaiting You in The Afterlife.

See you on the other side of the collapse.