Skip to comments.Friedman's 'heresy' hits mainstream Private Social Security accounts were his idea
Posted on 09/12/2005 10:43:18 AM PDT by george76
San Francisco seems an unlikely home for the man who in 1962 first proposed the privatization of Social Security.
Asked why he dwells in liberalism's den, Milton Friedman, 92, the Nobel laureate economist and father of modern conservatism, didn't skip a beat.
"Not much competition here," he quipped.
Friedman is considered perhaps the most influential economist...
It was Friedman who in 1962, with the publication of "Capitalism and Freedom," first proposed the abolition of Social Security, not because it was going bankrupt, but because he considered it immoral.
Friedman calls Social Security, created by President Franklin Roosevelt in 1935, a Ponzi game.
Charles Ponzi was the 1920s Boston swindler who collected money from "investors" to whom he paid out large "profits" from the proceeds of later investors. The scheme inevitably collapses when there are not enough new entrants to pay earlier ones.
That Social Security operates on a similar basis is not really in dispute.
The biggest misconception about the program, he argues, is that workers believe it works like insurance, with the government depositing taxes in a trust fund.
"I've always thought it disgraceful that the government should be essentially lying about what it was doing," he said.
He calls himself an innate optimist, despite the unpopularity of many of his ideas.
When he moved to San Francisco in the 1970s, the city was debating rent control, he recalled. So he wrote a letter to The Chronicle saying, "Anybody who has examined the evidence about the effects of rent control, and still votes for it, is either a knave or a fool."
What happened? "They immediately passed it," he laughed.
(Excerpt) Read more at sfgate.com ...
Freidman is really hit and miss with his logic.
The same reason was given by one of the estimated twenty-five heterosexual male inhabitants of the city.
"Everybody goes around talking about the problems created by the declining number of workers per retiree," he said. "How come life insurance companies aren't in any problem?"
The question is quintessential Friedman: simple, accessible and formidable.
Life insurance companies take premium payments and invest them in factories and buildings and other income-producing assets, Friedman said. These accumulate in a growing fund that can then pay benefits. Social Security, by contrast, operates pay-as-you-go, collecting payroll taxes from workers that immediately go to pay retirees.
Asked why, if Social Security is so terrible, it is the most popular government program in American history, Friedman replied, "Well, because why does a Ponzi game work? It's easy to understand why it's popular. So far, on the average, retirees have gotten more out of the system than they put into it. "
What about the fact that Social Security has reduced poverty among the elderly?
"Well," he replied, "what it has done is transfer a lot of income from the young to the old. It is certainly true it has made the old people of the United States the best treated old people in the world."
But why is that a bad thing? "Oh," he replied. "It's not a bad thing for them, but what about the young?"
It is welfare for the greediest generation...
Where does he miss?
Don't get me wrong, I like the accounts idea. But he was on board with criticising Bush a coupla days ago in the paper.
Milton Friedman ping
"Anybody who has examined the evidence about the effects of rent control, and still votes for it, is either a knave or a fool."
Have you ever see Bay area women?...DOG CITY woof woof!... they all seem to have that hard core femnazi look
The dude is 92 and senile.
His ivory tower rants are out of synch with current economic conditions.
It would be better if he retired and let younger, more agile minds do the hard thinking.
The poor guy just can't keep up anymore.
Do you have some point of objective disagreement with Dr. Friedman, or should we all be compelled by your feeeeelings into not liking him ourselves?
I wish he could live to be 190. He is the brightest human being on earth.
One of the greatest economists of our time. If he'd done nothing besides training Thomas Sowell, he would *still* have been great :-).
Good to see that the dear old gent is still kicking!
Something we can agree on. My college roomate got his PhD under Friedman and is now department chairman at Rutgers.
The first book assigned to me in freshman economics was Capitalism and Freedom.
Do any examples come to m ind?
I dare say that Milton Friedman's powers of logic are about six sigma higher than the mean Freeper's.
He has an unfair advantage - he's not pregnant!
"The dude is 92 and senile."
At 92, he still can out-think and out-debate anyone who is foolish enough to take him on.
You are just mad because he shops at Wal-Mart.
Did you see this?
You are correct.
Milton in 1962 first proposed the privatization of Social Security.
He is still ahead of any Ponzi socialist.
Every day, and they don't have any such look. Women who look like that are at most one in a hundred, even here.
Education vouchers, too. What a mind! I admit he lost me, philosophically, with the negative income tax idea(handouts is handouts), but it was still clever.
One of the explanations for the blind eye Washington turns toward illegal immigration.
I think he was trying to remove the middleman bureaucrats so more of the money would transfer directly.
You are correct that a handout is still a handout...just less expensive without the overhead.
A bad idea, but a less bad idea.
The press is personality driven. The reason the article got published is because it had the name "Friedman" up there and not the name of some grad student. To a large extant this is why someone like Einstein could wield power into the '50s even though his best work had dried up 40 years earlier.
There's hope. IMHO the press has had it's day and we're now getting our news from forums like this one-- just chock full of ideas from 'some grad student'.
The only problem with privatizing social security is that it's too late. Should have been done when Clinton was President. Now it will only accelerate the collapse.
In what context? Some of Bush's economic policies deserve a great deal of criticism.
This was Thomas Friedman and maybe you are talking about Milton. Sorry. Anyway it was about hurricane relief.
Youth leans toward liberalism, Maturity towards conservatism, and after you turn 65, SOCIALISM.
If Friedman ran for president I'd vote for him even if he were 102.
Education vouchers are on the same principle ... but still redistribution, just as the negative income tax is.
Oh, well, one can't agree on everything :-).
LOL..I have seen some younger "minds" here on FR show their lack of synch with current economic conditions...they were never in the same league and could never catch up to Friedman no matter how long they lived.
Stupid ideas don't necessarily come from loss of mental faculties from age, some people never had the faculties and are too ignorant to know it. I wonder what these "younger more agile minds use for their excuse?
Yeah, it's sadly similar to watching a crippled Mickey Mantle try to eke out one more year at first base.
Milton certainly earned his reputation, but it's difficult watching his capacities diminish with age. I sincerely hope that it doesn't tarnish his legacy.
FDR should have privatized it to start.
JFK had the chance in 1962 when Milton proposed it in 1962.
Every year that we wait will be another year wasted...
The Ponzi scam should last until I am dead...so " what me worry..."
It will be my grandkids problem to pay off that debt.
Now lets talk about Medicare's future bills and debt...and who is going to be stuck with those bills?
Capitalism & Freedom is an excellent book, and available on amazon.com
Social Security should be renamed Socialist Security. It's a collectivist program which would fit the former USSR. It should be completely dismantled, first by allowing anyone who wants to bail out to receive a lump sum payment consisting of all employee and employer contributions plus interest. Stop adding new participants.
"Every year that we wait will be another year wasted... "
It's simply too late right now. A key part of the privatization idea is that you could privatize a large portion of the SS trust fund without increasing taxes since social security was running an operating surplus. But now, the operating surplus is dwindling. It's no longer very significant, and by 2016, it will be gone completely. That means that if you want to privatize, then you are also going to have to raise taxes in order to make up for the money diverted out of the trust fund and into private accounts.
Ditto. There's nothing wrong with SF womens looks. I married one after all.
Yea it's funny I work in Telcom In Los Angeles...an when I had to go to the Silicone Valley/Bay Area for training I expecet to see some good looking women...
or at the very least some hippie chick/earth mother types...
but they were all more of an Anti-Earth Mother look ..a hard dry severe Commie Puritan librarian look...(AKA femnazi look)
My first reaction ...Now I know why all the men up there are gay
Yeah, I love it when people who don't live here and probably visited once in their lives make sweeping generalizations about the Bay Area on the Internet so they can sound like "experts". ;)
You are nuts. No a single fact or incident stated in your posts.
Thanks - Now that you pointed it out!
Seems like Friedmann is the "Last Conservative Standing" for fiscal responsibility.
Willie doesn't like Uncle Milty because he is anti-union and pro Wal-Mart.
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