Well said, Teresa.

It's an aspect of calls on generosity, but the nature of a litigenous society means that I'm nervous about speaking to children [that aren't associated with me], assisting with first aid/responder situations, and a whole host of other things that one might think of as part of the community glue...

Teresa: I agree with everything above.

But I wanted to highlight this:

THN> We’re set up to be a cooperative society. We THN> believe that by working together, we can as a THN> people be richer, safer, smarter, and
THN> happier.

It is that whole fact (and I'm preaching to the choir, but humor me) that is under attack. And it a observed property of the world, not a hope or an slogan or a choice, that we are all in this together. There is no long term benifit to anyone in denying that fact, but there is tremendous short term gain for some in shattering our society by spreading the lie that individuals can go it alone, and that hostility to the needs of other subsets of our society is not ultimately self-destructive.

The hysteria about FICA is one component of that attack; the odius "Taxes are theft" meme is another, and they are both part of the same project of looting.

You know, I was really sure I had figured out a way of marking quotes that didn't require using html.

There's been some interesting work done regarding social cheaters and the facility we've developed as a species in detecting it. One reason proposed for the development of our big brains and self-awareness is the darwinian struggle between the benefits of cooperative vs competitive social behavior in primate groups.

It's a curious thing: I was born, I think, to feel that I wasn't doing -enough.- I pay my taxes, not exactly with a song in my heart, but in the sure and certain belief that that's where the roads and schools and police and army and help for people who are not as fortunate as I am, come from. My brother--same lefty-liberal school, same parents, same upbringing, a bright, funny guy in many ways--falls into that "taxes are theft" camp. He doubtless believes the cant about Social Security too. (There's a point after which I don't know his views, since in the interests of preserving the relationship we don't talk politics or religion.) He is not a cheater--he pays his way, and would likely dig into his pocket for a quarter to help a homeless man. But he is utterly opposed to the idea of a government-organized form of cooperation; he has swallowed the notion of rugged individualism and social survival of the fittest...and I don't understand it. All I can think is that there's a genetic component to this part of his character.

The Social Security trust funds won't have anything in them by the time I retire mostly because they don't have anything in them now.

That is, they invest in federal government bonds. Which is one part of the federal government "investing" by lending money to another part. It's as though I saved for my retirement by writing myself an IOU each month.

The money that those bonds yield is from current tax revenue or borrowing. So what's being paid out now comes from what's being taken in now. The idea that there's a meaningful fund is mistaken.

That's a separate question from the question of whether Social Security will continue to be paid. I rather think it will, to one extent or another.

It’s not the kind of idea that turns you into a monster overnight. I’m inclined to believe that the commonest reaction to it is dull, low-level grief: you thought life in America would be better than this. Still, if that’s what you have to look forward to, you’d better get while the getting’s good. You’re going to need that money.

This isn't my reaction at all. Yes, I expect to be screwed out of Social Security. It seems economically inevitable. And that's why my wife and I are maxing out our Roth IRAs and our 401(k)s. We'll have plenty of money, thanks, we won't need our grandkids' money.

I'm all in favor of providing for other people if they can't provide for themselves. But to expect that other people will provide for me? When I have the ability to provide for myself? That's not just unwise, it's arrogant.

I'm opposed to Social Security in its present form, and if I could get rid of it in a gradual manner I would. But it's not just because I don't expect to get anything from it. It's because what I give to it is handled very badly.

It does seem to me to be true that By the time you retire, there’ll be nothing left in the Social Security retirement fund is true for some fuzzy logic value of true.

The burden is increasing and the value in relative life style of the payout is declining. When I first noticed Social Security taxes my Dad's deductions ended about the time the Christmas bills were paid. When I started working myself despite not making much FICA was a small deduction and quickly paid for the whole year - as the years have passed it has taken longer and longer and longer to go away for the year and now it never goes away at all.

I knew when the Brits demonetized their coins the U.S. would follow and I look at takebacks in Europe, especially Germany, and in the United States (creeping age for equivalent benefits) and see some elements of truth in the allegation.

Some say We’re set up to be a cooperative society We may have been built that way we may have been that way but we aren't that way - see e.g. Karl Polanyi - The Great Transformation. You'll have to persuade me that working for the state is working for the community.

Certainly it is not inevitable in the long run - the long run by definition allows all changes. In the long run we are all dead. It is inevitable in that the age pyramid for workers during my retirement is what it is - not subject to change - the short run.

By the time you retire, there’ll be nothing left in the Social Security retirement fund.

It’s untrue, of course; but for those who aren’t aware that it’s untrue, it’s profoundly frightening.

Is there a source you can toss my way for the "of course"? So far as I'm aware, the Social Security Trust Fund is nothing but government bonds that will have to be redeemed with my tax money down the line when they come due. Thus, all having the trust fund does is cause the money to come from my income tax instead of my FICA. With the boomers retiring and driving the wage-earner-to-retiree ratio down to something like 2.5 to 1 over the next few decades, I don't see how the system won't implode.

Raising the retirement age or cutting benefits might do it, but that would take a major shift in voter demographics. Of course, this might happen. Millennials/Gen Y seem to be more politically aware and active, and from my own admittedly limited observation, they don't believe in the survival of Social Security. (I'm involved with a social group of about 40 more-or-less fannish folks, ranging in age from 17 to 35 and going across the political spectrum from a Naderite to some Dean supporters all the way to a few folks who think Bush is doing a good job. Social Security came up a few months ago, and not a single one of us expects to see a dime from Social Security. Not one. We're resigned to paying into it because the older folks bought into it in good faith, but as a group, we want out.)

The rest of your article, I agree with. Whether the reason for it is real or not, the breach of trust is real, and yeah, it's a problem.

Dav2.718

Steve, Matthew: It's our government. It's our tax money. It's allocated by our legislators. They can raid it, and they can top it up again. If there's a budgetary shortfall, it's not because earlier retirees have taken more than their share; it's because George has repeatedly cut the taxes of his friends and campaign contributors.

Being afraid that the Feds are going to turn you out to starve in your old age is like being a little kid who's afraid that his well-to-do parents are going to stop feeding him. It's something that'll only happen if the people in power decide to make it happen.

Steve, Matthew: It's our government. It's our tax money. It's allocated by our legislators.
[. . .]
Being afraid that the Feds are going to turn you out to starve in your old age is like being a little kid who's afraid that his well-to-do parents are going to stop feeding him.

Indeed. That's what I meant when I said that the absence of a meaningful fund is a separate question from the question of whether Social Security will continue to be paid.

I live on the point of a wedge. I'm the only child of an only child. I have several healthy great-aunts and -uncles to whom I'm quite close, people with no grandchildren or even no children. I have grown up expecting to be in charge of the care of at least eleven people from the generation before mine or the generation before that in their old age. I recognize that this is the best case scenario, that I am very, very lucky to have these people in my life. I hope they all stick around to make me clutch my hair and wonder how I can take care of them all at once. But there are so damn many of them. When I was 14, I rejoiced when one of my dad's cousins had a child, because she reduced the number of my future old people from eighteen to thirteen. Another born the next year knocked another two off the tally. I still love all eighteen of my original count, but having another pair of hands and another brain whose responsibility it could be was such a colossal relief. Forming my own family unit as an adult gave me more pairs of hands to help out but also more future old people to take care of.

The care of elderly Boomers is going to have to come from somewhere. I believe that the government will continue to make sure most elderly are not starving in a gutter, but even now poverty among the elderly is much higher than it is among working-age people. I expect that the pittance will get smaller and smaller and that it will take a larger percentage of my taxes to do it, or that the people in charge will hand us all a choice and say, "Your old folks can have more money, or you can have functional schools. Your old folks can have more money, or you can have decent veteran's services. Your old folks can have more money, or your highways can be decently navigable. Choose." And I believe that some of that choice, a large part of it even, will be necessary. We already have tough economic choices to make. An aging population will not make those choices disappear.

So no, I don't expect to starve in the gutter. I also don't really expect to fully retire. I don't expect to have that choice. I don't expect that the government will continue to make my life as easy as it is now in caring for those old people. I don't expect that it will be able, at least not without cutting some other things I also value. In an ideal world, we would cut graft and corruption and use that money to care for the vulnerable in our society. I will continue to try to work towards that world. But don't ask me to feel too very optimistic about it coming to pass, especially not in this administration.

Teresa:
Steve, Matthew: It's our government. It's our tax money. It's allocated by our legislators. They can raid it, and they can top it up again.

Top it up with what? Sure, they could raise the mandated tithe to 20% instead of 15%, but I'd rather they didn't. It'd cut into my United Way contributions.

Being afraid that the Feds are going to turn you out to starve in your old age is like being a little kid who's afraid that his well-to-do parents are going to stop feeding him.

The analogy fails when you consider it's the little kids in that house who do all the farming to make the food.

Anyway, I'm not afraid of it at all. I expect it to happen; but I'm not afraid. I'm building a nice big pantry with my own food. When the other kids are wailing because they only got two tablespoons of Cheerios this morning, I'll be cooking whatever I like. In Europe, if I feel like it. Because I saved.

Steve, the Social Security "crisis" is essentially manufactured; Googling will educate you (and also miseducate you, because as Teresa notes, there is much intentional disinformation out there), but this CBPP article is a good place to start: http://www.cbpp.org/6-14-04bud.htm

It notes that the 75-year shortfall for Social Security is either 0.7% or 0.4% of GDP (depending on whether you take the Trustees' estimate, or the CBO's). Meanwhile, the cost of Bush's tax cuts, if extended for 75 years, is 2% of GDP. Just raising the taxes to where they were in the horrible, oppressive Clinton years would give us 2-4x what we need to sustain Social Security.

I take a look at the yearly "this is what you have to look forward to" note from the Social Security office, and I think, "That won't even buy cereal." And it's true. Being self-employed means I've been contributing 100% to my FICA (no employer to help me) and at this rate, I will never, ever be able to stop working, no matter how sick or how old I become. I will literally have to work until I die in my desk chair, slumped over some stinky bluelines.

There is no family, no aunts, no brothers, no one to "help."

There is no savings -- all my earnings are going towards living expenses and paying taxes -- as a self-employed person, I'm paying almost 40% of everything I earn towards taxes and SS.

Cooperative society is all very well and good, but if my social security payments won't even begin to help me pay for me to cut back on working when I'm, say, 75 years old, who will help? What good is the 40% of every penny I earn if it doesn't even pay for a box of cereal?

You mean, "In Europe, where it won't be so horrible to live because they didn't kill off their social security system"?

Your assertations, Teresa, are things I agree with. The budget of a big government just doesn't work the same way as an individual's. My favorite economics professor taught this, and I believe it.

The problem comes when you want to convince someone who is skeptical. Like some of the posters in this thread. And you haven't got anything there to convince them with. Neither has the Democratic Party Platform 2004. Go read it and see; I did. If Kerry has anything on this topic, I can't find it and I have searched his web site twice now.

The Republican platform on Social Security (go read it, I did) contains such stupid ideas as the "privatization" sell. It's a dumb idea designed to appeal to anybody who thinks they're going to make better investments than the government, and who thinks that, if some of those self-investing folks go broke, well, that can't possibly happen to him. But it's something pleasant to daydream over. The idea provides the illusion of control. Imagine the appeal. That's just a better currency right now than the warm and fuzzy "the government will take care of you" stuff you're handing out.

Which is too bad, because I truly believe that it is among the government's jobs to keep the most needy above water. Not doing so is immoral.

Kind regards.

Nancy, 40% is a large tax burden, to be sure. Surprisingly large, in fact. You live in New Hampshire, yeah? Unless I'm mis-reading things, they don't have a state income tax, so if you're paying out 40% of your income in taxes, then you must be paying a 25% average tax rate, after the 15.3% self-employed FICA/Medicare taxes.

Only, well, according to Yahoo's average tax rate calculator, in order to be paying a 25% average tax rate, you need to be making in excess of $150K per year (with no deductions at all). Of course, you stop paying Social Security after $87K, so that still wouldn't put you over the 40% mark, but never mind that -- If you're making $150K a year and are worried about future cereal consumption, Steve Eley there can probably give you some tips on saving.

If not, is it possible that you're perhaps paying less in taxes than you thought?

David, read Krugman on the basics.

Steve, no investment--not equities (stocks), debt securities (bonds), not cash, not gemstones, not precious metal--is certain. Your IRAs and 401(k) may turn into so much worthless paper. And they all depend on policy to maintain their values. When the SEC stopped doing its job, fraud in the securities markets (Enron!) made many stocks into so much worthless paper. Debt securities depend on the rate of inflation--the inflation that is likely if W. Bush is reelected will devalue them dramatically. Investments in any currency depend on international trade policies; it is likely that the dollar will not be the world standard of value in 20 years and there will be many losers in the resultant capital shifts. Metal and gemstones are only valuable as long as most people hold them; in hard times, many people will try to sell and the value will drop.

It all depends on policy--every penny of it. And, since it does, I think it makes good sense to make policy that protects everyone, rather than the minority of lucky investors.

The odd thing is, I'm sure that you--and just about any savvy investor--is aware of the facts I mentioned above. But, somehow, when it comes time to make policy, many of us forget.

Prosperity and civilization *do* manage to obscure some basic truths, the learning of a hard life.

One of the most basic of those truths is this -- you cannot kill fear with an ax.

You cannot kill fear at all; fear is a thing in your heart, and if you cut your heart out, you are dead, and the shape of fear is dead with you.

I have said before the that American Radical Christian Right isn't, that they're fundamentally atheistic. One of the great teachings of Christianity is that you do not need to fear. With faith, all things are possible; in the love of God, the just and the pious are sure of their reward.

For people who ought -- in the certainty of their faith, and the power of their conviction -- to have no fear at all, they're creatures chained to terror, a terror of losing money, place, and material power.

None of those are of themselves bad things; like all things else, what matters about them is what you do with them.

If you need, to build a cage for fear, to brick up the broken knowledge that money is not the same thing as goodness, to not believe that wealth is neither virtue nor the reward of virtue, that the wonder and the glory that is the material world can be understood and used to change all things for the better, to keep all those things away from the certainties of a distant childhood and the fear of surrendered power -- because, God knows, no one would any sense would trust and surrender power to *them*, and there are none better than them in all the world -- then you will, in whatever haze of deception, come to prefer to destroy your civilization, rather than endure the change that comes from peace and prosperity and letting everybody get at opportunity.

One of the ways you do this is break the machinery of government; treat the public sphere as a mechanism for mass theft, as a machine for *making* wealth equivalent to virtue, as a device for oppression -- price supports backed up with military power, that ancient doom of empires.

So you remember that repetition creates belief -- it does; the insides of our heads are the lands of magic -- and repeat what you want to be true, because if it isn't, then, well, you're a liar and a coward and a skinflint son-of-a-bitch, a stranger to generosity and hope and courage.

All courage isn't found in the service of arms -- ask anyone who has been honest with their children about something they're not proud of, or who has done the right thing at personal cost -- but, well, look at the Right.

Not the followers -- it's a ghastly set of certainties, but people will follow any certainty in which they come to believe -- but the folks out front, burning down the house?

Social Security -- rather like the Canada Pension Plan -- is a promise, not an investment.

If what you really want is to live in a world where no one tells you what to do, and virtue is measured with money because money is a nice, simple abstraction and really easy to understand, unlike the beyond-any-one-mind complexity that's actually there in the world and society.

Well, OK -- everything possible is measured with money because they've got money, that too. I doubt that much honesty gets into their change-fearing souls, but sometimes it might.

But, hey, they're old, too, mostly; this is not their comfortable time. There's a billion people in India and another billion people in China who aren't going to be poor all that much longer; there's strangers to their knowledge all over the place.

Embrace this with courage, and it's the biggest opportunity anyone has ever had -- more geniuses; more scope of choice; more solvable problems; more peace, and more prosperity.

Fear this, fear change and honesty and the judgement of your peers -- fear the idea of *having* peers -- and you get, well. You get religious war and disenfranchisement and people actually *enacting* the idea that money and virtue are the same thing, which translates out of sterile phrases into keeping people poor by threats of death and direct death and indirect deaths by starvation and disease and just plain writing the rules so debt is a chain unto the seventh generation.

And yeah, this does have something to do with social security -- both kinds -- when any idiot can recognize that there's a lot of people out there who really can't be trusted to chip in, help out, or give a damn about their neighbours, not when real wages have been dropping for twenty years.

Is society a machine for maximizing general access to choice, or maintaining existing wealth?

Do you prefer maximizing the number of people who have the opportunity to accumulate capital, even at the expense of the efficiency with which capital can be accumulated, or do you prefer protecting existing capital, to put this question (incompletely) into money terms?

The folks who voted for Social Security, way back when, were pretty solidly on the side of the former; the folks who are insisting it's broke and useless and ought to be abolished now are on the side of the latter.

Either way, everbody lives just as long as they live, and not any longer, and no fearfullness nor caution will keep death from finding anybody.

It is the time before that, which there is the possibility of doing something about.

We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. "Necessitous men are not freemen." People who are hungry and out of a job are the stuff of which dictatorships are made. FDR

Nancy Cooper:
The Republican platform on Social Security (go read it, I did) contains such stupid ideas as the "privatization" sell. It's a dumb idea designed to appeal to anybody who thinks they're going to make better investments than the government, and who thinks that, if some of those self-investing folks go broke, well, that can't possibly happen to him.

Investments? My Roth and 401(k) are invested in index funds. The S&P 500 has a historical return of about 11% a year. What's the return on the "government investment" in Social Security -- if such a term even applies?

FWIW, I'm not in favor of the Bush privatization proposals either. They're a lame halfass measure that won't do anything substantive to improve a broken system, and they're contrary to the point of Social Security as it exists now -- not as a savings plan, but as a wealth redistribution plan.

I'm not intrinsically against wealth redistribution so long as it's limited and goes to people who really need it. But Social Security doesn't. It goes piecemeal to everyone, whether they need it or not, on an arbitrary formula that once made sense as a working incentive but now makes no sense at all.

Bad idea? No. Bad implementation.

Randolph Fritz:
Steve, no investment--not equities (stocks), debt securities (bonds), not cash, not gemstones, not precious metal--is certain. Your IRAs and 401(k) may turn into so much worthless paper. And they all depend on policy to maintain their values.

Very true. But there are degrees of confidence. My retirement savings are in four index funds: the S&P 500, a small-cap growth index, a Pacific stock index, and a European stock index. (There's also a bit of my company's stock due to matching funds, but it's less than 10% of my total holdings.)

These are very large index funds with top brokers. If the bottom falls out of the S&P 500, the top European stocks, and the top Pacific stocks all at once, it probably means civilization has collapsed, and Social Security isn't going to be much use at that point either.

Anyway, where are you going with this? Are you trying to convince me that I shouldn't save? That there's no benefit in people making their own plans, and that everyone's best off if they treat Social Security as their sole provider in retirement? Because if you are, I really think the math is against you there.

I was fortunate enough to have money set aside that I can't touch until after I'm 55 in a TIAA-CREF account. Most of my other investment is in books. I'm set to get something from Social Security.

I don't believe the nation is my community. I contribute lots of work to my several communities, and always have -- I tend not to contribute money because I use that for living on. And I dislike the way most current politicians are playing on fear to destroy a sense of community -- it's been going on far too long.

Fascinating discussion here.

Many people seem to hear that they're certain not to get anything from Social Security from financial advisors. The advisors' vested interest in that belief is obvious.

...And, though I can't speak for Teresa, no, I don't think you should rely on Social Security as your sole source of retirement income, if you can avoid it. But neither should you particularly resent the people who are getting it now for getting a benefit from you that you will certainly never enjoy.

Matt McIrvin:
But neither should you particularly resent the people who are getting it now for getting a benefit from you that you will certainly never enjoy.

Never said I did. I do hold some resentment against the system, for being so bloody inefficient when there are better ways of helping people. If it worked as Roosevelt intended that'd be one thing; but it doesn't now, and it gets a little worse with each new stopgap.

But resent the recipients? For what?

I don't resent Social Security for my mom even though she almost never worked, because she was so happy to get it, and various viccisitudes made her life seem so precarious at times (about a year before my father died, he bet a mortgage against Microsoft stock. It died in worth about a month before he passed. And caused him agonies, but way less than it did my mom. She had to sell a huge chunk of land to just pay off the mortgage and not have to pay monthly payments which were larger than her annuity from his pension.

And he set up his military benefits so that his wife had nothing. What's up with that? i so don't understand that. But he had a streak of paranioia from living in the Depression and in a disadvantaged community so much so that I do not understand it.
Mom's okay now, but there are other things hanging (dad was a Gold Bug, there is a lot of metal in safe deposit boxes) that I totally dread her passing because there is a lot of stuff that should have been declared as assets that were not. And my sister and I are going to have to deal. My older brother is a flake who can't be trusted (he got broken in Viet Nam and, because of a college psychiatry degree, does not wish to be fixed -- he has a happy life but while disturbed he stole a lot of things from my folks and was cut out of the family trust).

I saw a claim in a British newspaper this week that half of British earnings were taken in taxes.

It's not just income taxation. There's VAT, which is a form of sales tax as far as the end use ris concerned. There's a hefty tax of road fuels. There's the property tax which goes to the local governments -- counties and such. I think they're counting the taxes on companies, which we all pay as part of the prices of goods and services.

But if we're paying 50% and somebody in the US is paying 40%, remember that our medical care is included in that. We can still buy insurance and pay for private medicine, if we wish. We don't need to.

I assume there's some bias in the reports, and I sometimes see people on the net who go beyond bias into either wilful ignorance or outright untruths, but if I was living this life in the USA, I'd be one of those people squeezed between bankruptcy and death by the system of medical care.

It might not be as tight a squeeze as I fear, but that fear is, to me, more real than any fear I might have for my freedom, or of terrorists, or even for the insane foreign policies of a nuclear-armed superpower with pretensions of democracy.

"Anyway, where are you going with this?"

Simply that both Social Security and private investments depend on government policy and that, in the clinch, Social Security is more reliable. I hope you do save. I hope more people do. But don't throw away the safety net, hunh? And don't try to take mine, or my mother's.

I've been arguing with my conservative, heretically Mormon father, who thinks that taxes should be cut, because the money that the "leftist" programs go to, goes towards people who aren't contributing to the tax flow. His point is that those people, if they paid taxes too, would have a higher stake in how their money was spent. This is his justification for why the rich shouldn't bear the brunt of the tax burden. (I agree with it--but only to a minor point. I think investing your money in society makes you more concious of the value of that money, but I don't think that logically leads to "Let the poor shoulder their own responsibilities by themselves," as my father seems to.)

I don't get it--he's not rich currently, although once we had quite a few assets in stocks, so why he doesn't see the value of the government programs that help him out, or his five children, all of whom had to get government grants to finish their schooling after high school. He wasn't born nor did he grow up and raise his kids in a completely self-sufficient society. Nor has holding the status quo financially speaking helped our family. My grandparents on my mother's side weren't rich by today's standards, but in their time, they were frugal, saved money, bought a modest house, saved more money, bought a nicer house, went to Europe, raised all their kids, and slid into their declining years with a healthy nest egg. My parents followed this pattern, and for a short time, we were able to mimic the life arc of my grandparents. But the economy and jobs weren't the same as for my grandfather's time. My dad didn't have The Career Path--he had a series of jobs, from which he would periodically be laid off or forced out of by lowered wages--these periods eventually drained the saving he had accrued. He couldn't afford to send all of his kids to college--we went partially on the money my grandparents had saved, and partially on government grants. It's not like any of this was something we could have produced on our own through simple hard work and diligence. It's not laziness--at least, I don't think it is. Times are changing, and the more we cooperate, the more able we are to weather it.

I have to run to the bank, so I can't clarify this more or state it better, but I find all these comments fascinating.

I'm one of the skeptics. I don't believe that it's inevitable, in the sense that legislators could 'top it up.' But I do believe it's inevitable, in the sense that those legislators will be at the beck and call of elderly Baby Boomers. I have no illusions that the previous generation (as a group) is going to be the first generation to say, in its old age, "Let's not just be in this for ourselves."

What I am afraid of is that the powers-that-be are "redefining retirement". When I was recently unemployed, and going to a bunch of Workforce Center workshops, I heard some startling "news". Retirement isn't was it used to be. Plan on working during your retirement; retirement is switching from a high stress job (read higher paid) to a lower stress job (read lower paid, without benefits.) As someone who has always had a "low stress", i.e. low paid job, this means working until I drop. I'm lucky, not only am I not in debt, but I do have savings, and some possibility of inheritance, if my mother's nursing home doesn't get it all. But there are millions of my contemporaries who are in middle age with debt instead of savings. I already have to wait until 66 to get full Social Security. I probably will be able to retire sometime. Many won't be able to.

I have no offspring to help me in my old age. Never wanted kids, neither did my brothers. I hope to have enough younger friends that I will at least have people to talk to when I'm 80.

We probably need to redefine retirement, and coping with aging. But I don't want the govenment to do it for me. I don't want to EVER live in a nursing home. My mom's is pretty good, as such places go. But it's a lousy model of care, except for the short term. I want to live out my life surrounded by my own books, and cooking my own meals, or at least helping to. I don't want to live with a bunch of strangers that I am forced to socialize with. I'm not worried about living on the street as an old person as being put in a home and left to rot.

Clark said: "You'll have to persuade me that working for the state is working for the community." Indeed.

Of course some here have already been persuaded. (I first wrote, and deleted, the statements that it was "an article of faith" or "a given" -- but both of those imply, unfairly, a lack of considered judgment.)

"Taxation is theft" is only an odious idea if all (100%) of the fruits of taxation are actually applied to community benefit. If you believe, as I do, that the vast majority of the fruits of taxation are skimmed off for the benefit of various thugs, pork ranchers, and looters, then the idea becomes merely a truism, the odiousness of which derives from its truth.

I am often offended by people who equate rejection of a government role in promoting civil society with the rejection of civil society itself. I love civilization and want to live in a civilized society. I don't see myself as a rugged individualist rising to the top of a melee red of tooth and claw -- I wouldn't be the first meal, but I wouldn't be the last, either.

It's just that in my experience, government is a combination of predator and parasite, more dangerous in the long run than any freelance predators could hope to be. Goverment-as-predator/parasite sucks away so much of the blood of society that we are left with a pale shadow of the civilization we could build if we were not being daily robbed of a rough third of our produce.

I expect to receive nothing from Social Security, because I believe that the looters will have devoured the program before I am of age to get any of my money back. That creates no fear for me, because I've understood it since I was a child. For me, Social Security has always been just another tax, which is to say, protection money paid because, if not paid, men with guns would come to collect.

If it worked as Roosevelt intended that'd be one thing; but it doesn't now, and it gets a little worse with each new stopgap. Steve Eley

Seems to me it's pretty hard to say what Roosevelt intended and harder to say Social Security doesn't work that way now. All I know for sure that Roosevelt intended is that when asked why he didn't push for a straight transfer payment system from the general fund to the needy elderly Roosevelt answered in effect that he made Social Security a screwed up mess quite deliberately so that it could not be easily undone.

folks who voted for Social Security, way back when, were pretty solidly on the side of... [maximizing the number of people who have the opportunity to accumulate capital]Graydon

Maybe so. I always thought folks who voted for Social Security were pretty solidly on the side of increasing consumption - Keynes style - nothing to do with capital accumulation. To the extent that Social Security is a safety net it encourages risk taking which can include speculative investment

(redundancy alert - investment is speculative but obs SF as Heinlein observed you've got to play the game - so is saving)

rather than saving and so have an uncertain effect on capital formation. That is up in some cases down in others.

read Krugman on the basics Randolph Fritz

Apart from Krugman's being being a most notorious partisan on this issue - perhaps no more or less opinionated than others but certainly most notoriously partisan - I'd say the citation is not dealing with the basics but arguing for certain conclusions on the basis of facts not in evidence.

As others have noted we, almost each and every one of us, have in front of us, as we ramble on at each other, analytical powers beyond imagining or understanding.

Why don't we argue with models and data so much as we argue with opinions - be they our own opinions or expert chosen to agree with our own feelings.

Finally, of course, obsSF Toynbee Convector, we could build a golden future. I don't count on it being built as Government project.

I was born in 1965. I don't know *anyone* my age who expects to collect dime one in social security--and we're mostly a bunch of lefty-liberals.

I have always considered Social Security a flawed system. I've been self-employed since 1990, so I've been paying full-freight all that time. People with regular jobs aren't aware what a bite it's taking.

Adam - you're observation that "People with regular jobs aren't aware what a bite it's taking." is quite correct. But they are paying just as much. Furthermore, you do get to write off half of what you put in, so you're whole as any employee, if more aware of the cost of the system.

Personally, I'd like to see the FICA rate lowered, it's scope increased to include non-wage income and the cap removed. Either that or a reasonable needs test for receiving benefits.

And yes, it is an income distribution scheme. And it's one I fully support.

My experience is colored by my recently deceased Grandmother, who thought she had a substantial guaranteed-benefit pension, but the company she worked for failed (this was in the 70's), and the funds evaporated, leaving her with equity in a house, some savings and Social Security.

Of her seven grandchildren, I was the only one with a reasonable career, and I am very grateful that resources were there for her to live independently. In her final years, she had gone through her savings and the proceeds from the sale of the house, and left with only Social Security, which, even in Florida, paying sweetheart rent to her great-niece, wasn't enough to make ends meet, and I had to send her a substantial amount of money each month to pay for her medicines.

She lived a long and productive life, and was screwed by a PRIVATE retirement system, but the public one was always there for her. As were her family and her friends.

[soapbox]
Me, I plan as if it won't be there for me, largely because civic life in the US is well on it's way to that of Brazil. It doesn't have to be that way, and we must do whatever we can to restore a sense of common purpose and civic responsibility to an increasingly self-absorbed nation.
[/soapbox]

Please correct me if I'm wrong.

"Baby Boomer" in U.S.A. means born from 1946 through 1964.

Retirement age is now defaulted to 65.

1946 + 65 = 2011

1964 + 65 = 2029

Something will happen with Social Security benefits and/or retirement age between 2011 and 2029.

It is not necessarily the de facto bankruptcy of the USA.

It is not necessarily revolution.

I don't know what it is.

I, personally, am not afraid, even though my retirement fund was wiped out by the dotcom crash.

I have no retirement benefits from the 20+ years that I worked in the aerospace industry, because the two companies in which I collectively worked 11 years are considered 2 seperate retirement entities, and I fall a couple of months short bof vesting in each.

I ask my college students if they believe that, on retirement, the US Gov't will send them checks every month. Not one ever raises their hands. I ask if they believe in UFOs. Several raise their hands. I ask if the CIA killed JFK. Several raise their hands. I ask if the Moon landings were faked. Several raise their hands.

Generation Y and Generation Wha? seem to believe that Social Security is an urban myth.

That's my $0.02, before devaluation.

JVP - Just because people believe a story doesn't mean it has to come true. Sure, deomgraphics are against the continuation of Social Security in its current form, but it doesn't mean that we should abandon the idea entirely. And that we can't sell the idea of the continuation of a humane, public old-age pension.

By the way, I was recently interviewed by the WSJ in an article on Baby Boomers - a label I reject, despite having been born on 12/31/64. (By the way, since it was in the paper, I'm not letting any new identity theft genies out of the bottle by mentioning my DOB here.) The last Boomer... not me! That was somebody born on 12/31/60 or so. I see myself as more of an X-er, also a label I don't like, but one that fits better.

For a pretty astute, if non-academic discussion of the characteristics of those of us born between 1961 and 1981, check out 13th Gen: Abort, Retry, Ignore, Fail? by Neil Howe and William Strauss.

Most people already know these things, but given some of the comments I'm going to go through a few basics. First, federal budget, here's a link for far more info than you want...

http://www.whitehouse.gov/omb/budget/fy2005/pdf/hist.pdf

But to summarize, for 2003 the federal government spent 21.8 percent on social security, 14.2 percent on means tested mandated payment(which includes Medicaid, food stamps, AFDC, SSI, EITC, child nutrition, and a half dozen other bits), 21.2 on other mandated payments (mostly medicare), 6.7 percent on interest, 18.8 percent on defense, and 19.5 percent on everything else.

All the corporate welfare, and agricultural subsidies, and rampant pork, that is what most people mean by waste and fraud, in buried in that 19.5 percent, along with road building, and running the federal court system, and Pell grants, and NIH, and CDC, and so on and so forth. Sure, there are a lot of loathsome tics sucking on the body politic, but what they are taking is peanuts compared to the money that is going to people to solve real problems.

Second, social security is amazingly efficient.
Here's another link ...

http://www.ssa.gov/pubs/10035.html

The administrative costs are less than one percent, you won't find a private pension fund that does better.

Finally, social security is not an investment, the money you get back is not the money you put in plus what the government managed to make for you, and, while it does have this effect, social security is not an income transfer program. That's why it's not means tested. Social security is a risk pooling program, like any other sort of insurance.

Risk pooling works best for society when everyone can and must to participate. If you let people decide whether to join the low risk groups opt out and the cost for everyone goes up. If you let the entity paying the benefit exclude people, it will exclude the highest risk group, those who most need the program.

Sure there is some correlation between qualities society wants to encourage, like industry, prudence and delayed gratification, and membership in the low risk group here. But there are plenty of ways that society rewards those qualities. It doesn't have to be part of every program. Perhaps it comes down to, do you not only believe in eternal torment if you screw up in this life, but do you think that was one of God's better ideas?

The retirement age is going up to 67 for guys like me.

The anti-tax folks try to paint it as if all our taxes were going to preverted art, snail studies, welfare for lazy slobs, and aid to ungrateful foreigners. In fact, ¾ of the federal budget goes to the military, Social Security, and Medicare. To make significant cuts to government spending, big cuts would have to be made to some or all of them. Good luck running on that platform.

Alan, that's why the Bushies racking up so much debt--they want to set up a situation where they can claim that cutting social programs is necessary. Exactly what they're going to do when unexpected expenses hit, I have no idea--leave it to the Democrats to fix, I expect.

Steve, I suppose what I'm getting at is that a government that's willing to let elders fall into poverty, starving many of them, is also not going to care a fig about your savings. Think! Did the Bushies make any effort to replenish the savings stolen by the Enron top management? In fact, if this lot can figure out a way to give your money to one of their cronies, be sure they will. It's not either Social Security or private savings; it's either Social Security and private savings, or nothing.

The concept that "By the time you retire, there’ll be nothing left in the Social Security retirement fund" is actually two separate arguments, I believe.

One is from the people who favor Social Security reform. For them the sentence ends "if nothing changes." Plug the numbers into a spreadsheet and the demographics and finance trends show the fund coming down to zero. They are arguing against the no-changes complacency of people on both sides of the political spectrum, the ones who think it's easier to worry about the problem until after the next election (always the next election, not the current legislative session). Obviously it would be a political non-starter for the social security system to go bankrupt while people are paying into it, so the problem is going to have to be addressed. They're just saying the pain of change will be less the sooner it starts. Increasing the age of mandatory retirement and/or increasing the proportion of payroll that goes into social security are the obvious solutions.

The other flavor of this argument is government-can't-do-anything social darwinism that the Republicans use in every economic debate. Since government isn't going to accomplish anything, why pay for it? This also relieves them of responsibility for the poor and elderly: if the government can't possibly do anything, then there's no reason for it to try. Extended families can take care of each other, and devil take the hindmost.

But it's not just about economics. Social Security is a social contract. People are paying into the system, and they expect to get paid back, and that means that if the system goes bankrupt, it's not going to end, it's just going to go into deficit and the general budget will have to make up the shortfall. The trouble is that too many politicians have no awareness of the future beyond the event horizon of their next election. As science fiction fans, it's our duty to remind them.

But just to be on the safe side, we need to look to our personal futures as well. People should be saving as much as they can for retirement. One has to put the better part of a million dollars aside to have a reasonable lifestyle after one's career.

It's just that in my experience, government is a combination of predator and parasite

All that stuff about making sure you have running water, guaranteed mail delivery, inspected meat, regularly-policed communities, an operational justice system, air-traffic control, etc. etc. is just a lure to get you to hand over your paycheck to the predators, eh?

johnathan, don't even get me started about the underfunding of pensions. I'm not sure if anyone has actually uncovered a corporate document saying "Who cares? By the time they sue us they'll all be old and dead," but it wouldn't surprise me.

I'm not afraid of losing Social Security, because I never expected to receive a dime from it and thus never have and never will rely on it for retirement.

Randolph Fritz:
Steve, I suppose what I'm getting at is that a government that's willing to let elders fall into poverty, starving many of them, is also not going to care a fig about your savings. Think! Did the Bushies make any effort to replenish the savings stolen by the Enron top management?

You've got everything backwards, Mr. Fritz. The Enron bastards committed a lot of criminal acts, but they didn't steal anyone's savings -- what they did was jack the price of the stock up artificially, and rig the 401(k)s so they were topheavy on the company stock, leaving nothing behind when it collapsed. I'm not sure what you think "the Bushies" were obliged to do about it -- it wasn't the government's money.

I'm not sure you understood my earlier point about my own savings. I'm not resting my future on one precarious stock or one precarious government instrument. My index funds represent the bulk of the economy of the entire world. And I have them at multiple brokers. It'll have ups and downs, of course. But the historical trend is up, and I have 30 years before I expect to use any of the money.

Could the government take this away? Yes, it's possible that they could. They could shut down Vanguard, or they could announce that no one gets to buy foreign stock anymore, or a new 50% tax on all IRAs, thank you, here's your receipt. They could do this any morning they choose -- and the nation's economy would be plunged into chaos before lunch. There's a certain level of trust in the rule of law that allows finance to occur, and breaking that trust breaks finance. Break finance, and you break the modern world.

Is it possible that the government could commit spectacular suicide in this fashion? Sure. Does it worry me? Not really. Given the odds that a President will destroy the private equities market and the banking industry, or that a President will slowly suck the life out of Social Security by screwing with it for the umpteenth time -- well, I wouldn't put all my money against either one, but if I had to hedge my bets I know which one I'd be more worried about.

All that stuff about making sure you have running water, guaranteed mail delivery, inspected meat, regularly-policed communities, an operational justice system, air-traffic control, etc. etc. is just a lure to get you to hand over your paycheck to the predators, eh?

Hmmm. I grew up, and my father still lives, in an American place that doesn't have the first four items on that list, but it's still a civil and pleasant community. We don't have the fifth anywhere in the United States, and I can't use the sixth without submitting to a search so intrusive as to destroy basic human dignity.

So, more a lie than a lure, actually.

But your point is, nonetheless, a good one. Ploughing a tiny percentage of the loot back into a looted community does tend to grease the skids and make continued looting easier. Even Mafia dons, I am told, were known to donate generously to local charities.

Steve, the exective has the job, given by Congress, of preventing fraud in the securities and energy markets, via the SEC and the FERC. They abandoned both these responsibilities, to allow their cronies at Enron (and many other firms) to line their pockets.

You talk about your mutual funds. Now, if you go to your annual reports, you will find, at the end of those reports, a statement that the report is accurate according to generally accepted accounting practices. A similar statement was at the end of Enron's report. It was false, of course; Arthur Anderson had been suborned by Enron managment. And the SEC, whose job it was to make sure that major securities fraud did not occur, had been taken off the job by a series of neo-conservative administrations.

Libertarians often say that the market will prevent collapses like that of Enron, that savvy investors will know better. In fact, most investors, even the most knowlegeable, were taken in. This is typical in securities markets. It has happenned over and over again over the years; it's why the SEC exists, in fact. Nor was it just Enron. The collapse of Enron was followed by a series of even larger collapses. "Bad money drives out good"--when fraud is allowed in securities markets, it quickly becomes rife and the stocks of honest companies are undervalued--sometimes honest companies even fail for lack of capital. It isn't the failure of the failure of the world economy you need be concerned with--it's the failure of the auditors. How far do you trust your funds's management? And why?

One small point - Steve has said that he's in index funds, which are not really managed funds at all, and are therefore subject (at least theoretically) only to the systematic risk of the market. Therefore, he should be buffered against individual corporate frauds, but not against systematic fraud in the marketplace. And there's no real fund manager - trading is based on changes in the components of the underlying index, and on the number of fund shares purchased or redeemed on any given day. The current fraud scandal in mutual funds has more to do with honoring buy/sell orders generated after the markets have closed and the new NAV is struck.

But, remember that the market price of a security is determined by a buyer and a seller. To the extent that a company has created a false picture of its business conditions, they are perpetrating a fraud against anyone with a long position in their stock. So, while Enron may not have directly stolen from their investors, they certainly did defraud them. They're only stealing if they sell shares or engage in other trading activities that are like, but not quite, a sale.

It's the role of the SEC to make sure that such things don't happen, and, when the system fails, to take precautions against such things happening again. Under the current administration, we've gotten Sarbanes-Oxley, which seems mostly to have been a device to generate revenue for the very same group of companies (the Big now-fewer-than-5 accounting firms) that were complicit in the fraud to start with.

The overseers are, basically, on holiday, clearing the brush on the ranch while corporate terrorists are targeting our nest eggs. I don't have any secrets for safe investing. I just want some grown-ups running the regulatory agencies. Our future prosperity depends on it.

and I can't use the sixth without submitting to a search

And this is why so many people see taxes as theft: like children, they believe things just work as if by magic unless they, personally, are involved enough to see those workings.

So air-traffic control only exists when one gets on a plane; there's no awareness of an entire system devoted to keeping planes from crashing into one another, making orderly arrangements for when they are flying and where they will land, and so on. The planes just go magically where they're supposed to go and nobody has to pay a dime.

And if any of those invisible systems turn out to be imperfect--well, that's clear evidence that they don't work at all, and should be abolished, and in any event we shouldn't have to pay for them. (Why, I'm sure that Enron Postal Co. would deliver mail everywhere for half the price!)

I often wonder why the Goverment Fails folks live in the U.S., with all its bureaucracy and terrible laws. Surely there are plenty of places in the world where you don't pay taxes, because there are no oppressive laws requiring that "Prime Beef" in the store actually come from a cow, or prohibiting you from driving after you've downed a fifth of good Scotch. Utopia awaits, tax-loathers!

"Apart from Krugman's being being a most notorious partisan on this issue - perhaps no more or less opinionated than others but certainly most notoriously partisan - I'd say the citation is not dealing with the basics but arguing for certain conclusions on the basis of facts not in evidence."

Is 'notorious partisan' anything like 'shrill'?
I find this an interesting phrase.

Larry, I've owned an index fund that was quietly converted to a managed fund (I got out). Also, index funds can be looted--just cause it says "index fund" on the label doesn't mean it is one, or is trading honestly. If it comes to that, sufficiently bad accounting can lead to firms like S&P putting the wrong stocks in their indicies.

I am amazed I need to say that I was using "stolen" loosely for directness, rather than the more awkward "taken through securities fraud".

Clark, though that Krugman article has a position, a lot of basics are in there. Krugman writes polemics like an economics professor teaching Econ 101--it amazes me that anyone calls him shrill.

The San Francisco Chronicle's online edition has an article directly related to the Social Security issue: http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/09/12/MNG2S8NOI21.DTL

It is quite horrifying, even though I'm another person who never expected to see a dime after my "retirement". Between the material in that article, the NY Times piece on Donald Trump, and various recent considerations of the Jihad Age we have now entered, I can only think we're near the end of the latest version of Imperial Rome, with a very strange high tech-cum-fundamentalism Dark Age to follow. (The featured piece on possible futures in Locus Online didn't cheer me up any, pace Kim Stanley Robinson.)

So that's my mood piece for the day.

Randolph - You're right. Caveat emptor applies to index funds as much as to anything else. Read those prospectuses (prospecti?). Also, If your index fund has a management fee north of 1%, find another fund, or consider buying SPDRs or DIAs. (But watch out for transaction fees.)

As far as the theft vs. fraud thing, that was directed more at Steve. And the answer to "I'm not sure what you think "the Bushies" were obliged to do about it -- it wasn't the government's money, " is that they were supposed to monitor the market for suspicious activities that might indicate fraud and investigate appropriately. Not have their hand-picked regulators at FERC and the SEC willfully deny that there was any fraud taking place until all the money to be stolen had been stolen.

One of the things that makes a society work is a system of laws that protect property rights. (And personal freedoms, but thats' a different discussion.) These guys are incompetent, even at the things they should care about, and should be good at.

Randolph says:

I am amazed I need to say that I was using "stolen" loosely for directness, rather than the more awkward "taken through securities fraud".

How can it be theft when the securities industry does it? Isn't that a contradiction in terms?

By the way, what happens to an index fund when one company is dropped from, say, the Dow, and another brought in? The value of the index is readjusted, I know that, but what happens in the funds?

By the way, what happens to an index fund when one company is dropped from, say, the Dow, and another brought in? The value of the index is readjusted, I know that, but what happens in the funds?

Funds have to sell their shares of the company removed from the index and replace them with shares of the new company. This is a fairly difficult process, as all of the block trades hitting the markets at roughly the same time causes the old security to drop in price, while th new one has a spike. I don't know the details, like how long they have to complete the transition - finance classes were too long ago. Anybody on the buy-side out there?

"Read those prospectuses."

Larry, you are not being, ah, market-savvy enough. The prospectuses are only as good as the SEC requires them to be.

Faren, I do think our current political situation is an abberation, rather than a permanent disaster. The article you've linked is a scare story--try Krugman instead. But it's going to be a rough century.

Randolph - A fund that invests more than 1/5th of its funds outside of its stated goal is out of compliance, and it needs to amend its prospectus to reflect its new goals. You'll get a notice in the mail if this happens. If not, the fund manager is in risk of becoming a guest of the Federal Bureau of Prisons.

SPDRs and such are the best way to "buy the market." You're making a trade-off between transaction fees and the exposure to capital gains that is peculiar to mutual funds. (Not an issue for 401ks and other pre-tax accounts.)

By the way, I am not an investment advisor, and this is not intended in any way to be investment advice. If you run out and buy a bunch of SPDRs, and it turns out that the market tanks or that the issuer has committed massive fraud and you wind up losing money - don't blame me.

The other thing about index funds is that, if stock market prices reflect the actual value of underlying stocks, they're said to do so because of the attention to that underlying value paid (if indirectly) by all the buyers and sellers. As far as I can tell investing in index funds is therefore free-riding on active traders, which doesn't strike me as particularly immoral, just imprudent; insofar as it's better than trading, more and more people will pile into it, stock prices will become less accurate as measures of the value of the company, and more stocks will fail and have to be sold in a hurry.

I'm sure there's some way to profit by encouraging index investment and shorting.

clew - Security prices are determined by the marginal trader - meaning the last person or institution to make a trade. There's no free riding happening here, and index fund investing has no impact on the value of the underlying securities, except to the extent that the index fund becomes the marginal trader and sets the price. (Think supply and demand.)

Mutual funds actually need to own the securites that set their NAV. They're among the most active traders on Wall Street. If people pile in to index funds, their money gets invested in underlying shares. All that a mutual fund does is outsource trading from the individual investor to the fund manager.

Clever idea, though.

Larry Brennan wrote:
As far as the theft vs. fraud thing, that was directed more at Steve. And the answer to "I'm not sure what you think "the Bushies" were obliged to do about it -- it wasn't the government's money, " is that they were supposed to monitor the market for suspicious activities that might indicate fraud and investigate appropriately. Not have their hand-picked regulators at FERC and the SEC willfully deny that there was any fraud taking place until all the money to be stolen had been stolen.

You're absolutely right. The government screwed up immensely on Enron. Whether it was Bush being complicit, or simple incompetence (I lean toward Hanlon's Razor on this one), several government agencies should have done their jobs and didn't. In fact the last time I posted in this blog before this thread was in the Enron topic, arguing with the folks who were sure that Ken Lay would never be arrested as long as Bush was in office. (He was. QED.)

This is all irrelevant to the point I was responding to, from Randolph Fritz: "Think! Did the Bushies make any effort to replenish the savings stolen by the Enron top management?" His question was groundless because:

A.) Savings weren't stolen; and

B.) There is no government agency responsible for putting money back into 401(k) accounts when those 401(k) accounts lose value. Government has a lot of functions related to securities and investment, but that's not one of them.

I think you and I are both on the same page here. Yes, shit happens in the financial sector. Yes, government regulation of the financial markets is, on the whole, a Good Thing. No, I'm not putting 100% of my trust into Vanguard or Citistreet or TIAA-CREF. Just most of my trust. If they do collectively turn out to fail, the extent to which we're screwed will extent far beyond my own savings.

I think the only point on which I fundamentally disagree with anyone here is the notion that it makes less sense to put much of my trust for my own future into the market than it makes to put all of my trust into the federal government. And this from many of the same people who carry deep, soul-moving despite for the current executive branch.

Oh, and one other point, back on Social Security for a change:

The idea that's being disputed here isn't just coming from the shallow end of the meme pool. Greenspan has also been saying Social Security is in deep trouble, and that its days in its present incarnation are numbered, and he's presented evidence to that effect. Since Greenspan's probably the one high-profile figure in government who can say unpopular things without getting fired or losing elections, there's no telling how many other folks in charge may be thinking it.

It's something that'll only happen if the people in power decide to make it happen.
This is where the fear tries to come in, for me: I believe that if we don't change course, this is exactly what will happen. I haven't given up on a change of course, though. Then I'd have to stop getting out of bed in the morning.

Steve, you seem to be mistaking the scale of advice being offered here. You are wise to act as if you believe Social Security will not exist -- when I do my planning, I use that assumption, too. But you are being played if you actually believe that it will not exist, because there's no particular reason for that to be true. Plan for the worst, sure, but don't let people convince you that the worst is inevitable.

As for Greenspan, well, even supposedly non-political figures in government have political views, and it's no secret that Greenspan is/was a devotee of Ayn Rand. I mean, look, he said that Bush's tax cuts were affordable and fiscally responsible, and then not much later said that Social Security was in dire straits. These are essentially irreconcilable statements.

Mike Kozlowski wrote:
As for Greenspan, well, even supposedly non-political figures in government have political views, and it's no secret that Greenspan is/was a devotee of Ayn Rand.

That's a political view? What office did Ayn Rand hold? I thought it was a philosophical view. (And a pretty ironic one, considering what Greenspan does.)

I mean, look, he said that Bush's tax cuts were affordable and fiscally responsible, and then not much later said that Social Security was in dire straits. These are essentially irreconcilable statements.

How so? Serious question here. Bush didn't cut FICA, did he? I know the dividing line between Social Security and the general budget has become more and more fictional (which is one of its biggest problems, IMO) but I was not aware that Bush's cuts have resulted in any less money going to Social Security. I do think that Bush is extremely fiscally irresponsible, but not for that reason.

Oh, and I didn't mean to skip the earlier part:
Steve, you seem to be mistaking the scale of advice being offered here. You are wise to act as if you believe Social Security will not exist -- when I do my planning, I use that assumption, too. But you are being played if you actually believe that it will not exist, because there's no particular reason for that to be true. Plan for the worst, sure, but don't let people convince you that the worst is inevitable.

Hey, if I'm wrong and I can benefit from Social Security, I'm thrilled. Getting money I won't need just leaves me free to do better things with it, such as supporting causes I care about.

But if I'm wise to act as if Social Security won't exist, what difference does it make what I actually believe? Do my thoughts put me at some practical disadvantage? It's not a significant source of stress in my life; in fact I rarely think about it except when arguing in people's blogs. So how am I "being played?"

Steve - the point is that taking away Social Security is something that requires the consent of the public. The more people who believe the story that any form of public pension is a bad idea, the more likely we are to face a very sad future for a substantial proportion of the population.

Please note that I'm not saying that anyone should rely completely on Social Security for their retirement. But, there are people who will not have that choice, especially those who lose their medical benefits and have the misfortune of getting sick. Or people with physical or mental handicaps. Or people who have simply been on the receiving end of a run of bad luck.

Our safety net is already weak. By accepting the inevitability of its destruction, we become complicit in the decay of our society. A society without some form of Social Security is not one that I'd care to live in. You're free to disagree, of course. Just be aware of the consequences.

That's a political view? What office did Ayn Rand hold? I thought it was a philosophical view.

Hmmm. I wasn't aware the politics and philosophy were completely disjoint. I'll have to bear that in mind.

/snark

Larry, there is a difference between planning one's own life as though Social Security will not exist, and shrugging off the specter of its non-existence for others.

Do I believe its doom is inevitable? No. Do I believe it will be looted and killed by the generation before mine? Yes. Does that mean I will let it go quietly? Hell no.

Mythago - agreed, 100%

I, too, plan as if there will be no Social Security when I retire. And I will do whatever I can to preserve it, not so much for myself, but for the overall benefit of society.

One other thing about St. Alan that's often forgotten: he was the guy who persuaded everybody that FICA needed to be increased back in the 80s in order to cover all us boomers, and now he's been complicit in the Bush tax cuts to the point where the SocSec fund is depleting faster than expected. So now he says "cut the benefits; raise the age." He doesn't say "oops. Those cuts were a mistake and should be reversed; then my initial predictions will go back to being accurate."

He's not the benign guru Woodward and the markets made him out to be back in the 90s, is what I'm sayin'.

By the time I retire, I believe that there'll be plenty of funds flowing into the Social Security retirement fund. I'm in the "last of the boomers" category—with a few decades of work remaining before retirement. A lot can happen in 20 years.

First, when any system (biological, social, economic, etc.) fails, and is no longer stable, external pressures or fluctuations tend to throw the system out of balance until there is a complete breakdown in the internal structure of the system. A new simplicity emerges from within the old system, marking an evolutionary jump in the "progressive" structure of the system.

So what might that possibly mean… Well, the two-party political system we now enjoy is totally broken and quite unstable. Diminished resources are wasted on pork, popular legislation never reaches the floor (assault weapons will be available again in a few hours), and power resides not on the left or right, but on Wall street. It can't continue, as we are rapidly running out of resources. The extreme polarity in the political structure is out of balance, and a new political system will unfold from within the old.

People are living longer, while younger people are having less children. The future Gray-haired boomers will have a substantial voting block. By then, the complexities of the two-party system will have given way to a simple plural-party system with the Greens and the Grays having as much power as the Donkeys and the Elephants. Personally, I will have a foot in the Green party and a foot in the Gray party—and all my boomer friends will also have a foot in the Gray party—and all my artist friends will have a foot in the Green party. Perhaps the Greens and the Grays will form an alliance and we will rule America. They will call us the "G's."

With our old age will come wisdom, and the G's will tax the hell out of the corporations because we want a nice planet for our grandchildren. We will have the power, and power begets power, and we will take care of ourselves. So I am not really worried about Social Security.

"A fund that invests more than 1/5th of its funds outside of its stated goal is out of compliance, and it needs to amend its prospectus to reflect its new goals. You'll get a notice in the mail if this happens. If not, the fund manager is in risk of becoming a guest of the Federal Bureau of Prisons."

Assuming there is enforcement of that law. Which is exactly the point, not so?

Steve, through securities fraud, Enron management enriched itself and impoverished its employees who had been--fraudulently--encouraged to over-invest in Enron's stock. While that is not technically theft--I wonder what the proper name for that crime is--I do think that a fair punishment would be to return the ill-gotten gains to the employees. But I think we both know that the W. Bush administration would never so directly rebuke wealth.

"I think the only point on which I fundamentally disagree with anyone here is the notion that it makes less sense to put much of my trust for my own future into the market than it makes to put all of my trust into the federal government."

I do not understand why you seem to believe that you have any "future in the market" without the support of the federal government. Or am I misreading you?

Brett Matthews: "Perhaps the Greens and the Grays will form an alliance and we will rule America. They will call us the "G's."

With our old age will come wisdom, and the G's will tax the hell out of the corporations because we want a nice planet for our grandchildren."

Hmmm. Are you familiar with the view that corporations are largely collectors of taxes, rather than payers of taxes? Their increased costs are, whenever possible, passed along to their customers. . .

Randolph Fritz:
I do not understand why you seem to believe that you have any "future in the market" without the support of the federal government. Or am I misreading you?

Okay, I'll rephrase: I think the only point on which I fundamentally disagree with anyone here is the notion that it makes less sense for me to manage my own financial future through moderately conservative private investment than to allow a federal program of wealth redistribution to manage my future for me.

Is that clearer?

Brett Matthews wrote:
Hmmm. Are you familiar with the view that corporations are largely collectors of taxes, rather than payers of taxes? Their increased costs are, whenever possible, passed along to their customers. . .

Exactly. Corporations don't pay taxes. For that matter, corporations don't own wealth.

I'm very simple minded, but here's how I understand it.
Social Security really seems like a government pyramid scheme, on some level. Money is paid out to eligible members by the currently employed. The viability of the scheme depends on the ability to collect enough money now to cover what is being paid out now. If they cannot collect enough money there is a problem. Reasons they cannot collect enough meonye include one or all of the following:
- number of eligible members rises sharply (exhibit A: Baby Boomers)
- number of employed decreases sharply due to economic downturn (cough*offshoring*cough)
- number of employed decreases sharply due to population decline (not a problem here so far, although it is in some European countries)
- funds are misappropiated by governement (I have no idea if this happens)

Any other factors?
Glaring errors or ommissions?

Brett Matthews:

I am most interested by your saying:

"First, when any system (biological, social, economic, etc.) fails, and is no longer stable, external pressures or fluctuations tend to throw the system out of balance until there is a complete breakdown in the internal structure of the system. A new simplicity emerges from within the old system, marking an evolutionary jump in the 'progressive' structure of the system."

Based on the past few international conferences on Behavioral & Organizational Sciences which I attended to give papers, what you say is almost universally believed but no one has advanced a Quantitative causal theory which shows HOW an organization evolves new structure in response to internal and/or external "pressure."

Larry Brennan:

Your comment on my first posting of this thread is correct. I switched from arithmetic facts to hearsay from my students, which is merely about their beliefs, not necessarily true.

So far, the Federal Government swindled my family out of 2 generations of Estate Taxes. My father's father, who Horatio Algered himself from penniless immigrant to owning a seat on the NY Stock Exchange, had over 50% of his wealth confiscated when he died, and his wife had another 50% taxed when she died, leaving a much thinner slic