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Friedman's 'heresy' hits mainstream Private Social Security accounts were his idea
San Francisco Chronicle ^ | June 5, 2005 | Carolyn Lochhead

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 ...


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Government; News/Current Events; Philosophy; Politics/Elections; US: California
KEYWORDS: choice; education; freedom; freemarket; freetochoose; friedman; g76; hoover; hooverinstitute; liberty; miltonfriedman; ponzi; privateschools; prochoice; publicschools; school; schoolchoice; schools; schoolvouchers; socialsecurity; taxes; taxreform; vouchers

1 posted on 09/12/2005 10:43:18 AM PDT by george76
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To: george76

Freidman is really hit and miss with his logic.


2 posted on 09/12/2005 10:45:11 AM PDT by yldstrk (My heros have always been cowboys-Reagan and Bush)
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To: 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.

The same reason was given by one of the estimated twenty-five heterosexual male inhabitants of the city.

3 posted on 09/12/2005 10:47:16 AM PDT by steve-b (A desire not to butt into other people's business is eighty percent of all human wisdom)
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To: george76
"The beauty about social insurance is that it is actuarially unsound," Samuelson wrote in an oft-quoted 1967 column. "Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in ... A growing nation is the greatest Ponzi game ever contrived."

"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...

4 posted on 09/12/2005 10:48:13 AM PDT by 2banana (My common ground with terrorists - They want to die for Islam, and we want to kill them.)
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To: yldstrk

Where does he miss?


5 posted on 09/12/2005 10:48:39 AM PDT by Rodney King (No, we can't all just get along.)
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To: Rodney King

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.


6 posted on 09/12/2005 10:50:03 AM PDT by yldstrk (My heros have always been cowboys-Reagan and Bush)
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To: Temple Owl

Milton Friedman ping


7 posted on 09/12/2005 10:50:18 AM PDT by Tribune7
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To: george76
You could say exactly the same thing for gasoline price controls.

"Anybody who has examined the evidence about the effects of rent control, and still votes for it, is either a knave or a fool."

8 posted on 09/12/2005 10:54:26 AM PDT by DManA
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To: steve-b
"Not much competition here," he quipped. The same reason was given by one of the estimated twenty-five heterosexual male inhabitants of the city.

Have you ever see Bay area women?...DOG CITY woof woof!... they all seem to have that hard core femnazi look

9 posted on 09/12/2005 11:01:18 AM PDT by tophat9000 (This bulletin just in:"Chinese's Fire Drill's" will now be known as "New Orleans' Hurricane Drill's")
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To: yldstrk
Freidman is really hit and miss with his logic.

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.

10 posted on 09/12/2005 11:01:52 AM PDT by Willie Green (Go Pat Go!!!)
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To: Willie Green

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?


11 posted on 09/12/2005 11:05:52 AM PDT by Mr. Lucky
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To: Tribune7

I wish he could live to be 190. He is the brightest human being on earth.


12 posted on 09/12/2005 11:07:35 AM PDT by Temple Owl
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To: george76

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!


13 posted on 09/12/2005 11:08:44 AM PDT by Tax-chick (Start the revolution - I'll bring the tea and muffins!)
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To: Tribune7

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.


14 posted on 09/12/2005 11:09:53 AM PDT by js1138 (Great is the power of steady misrepresentation.)
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To: yldstrk
Freidman is really hit and miss with his logic.

Do any examples come to m ind?

15 posted on 09/12/2005 11:10:53 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: yldstrk

I dare say that Milton Friedman's powers of logic are about six sigma higher than the mean Freeper's.


16 posted on 09/12/2005 11:12:12 AM PDT by RBroadfoot
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To: RBroadfoot
Milton Friedman's powers of logic are about six sigma higher

He has an unfair advantage - he's not pregnant!

17 posted on 09/12/2005 11:13:37 AM PDT by Tax-chick (Start the revolution - I'll bring the tea and muffins!)
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To: Willie Green

"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.


18 posted on 09/12/2005 11:14:00 AM PDT by riverdawg
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To: Willie Green

You are just mad because he shops at Wal-Mart.


19 posted on 09/12/2005 11:14:47 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: SteelTrap

Did you see this?


20 posted on 09/12/2005 11:17:11 AM PDT by mathluv (Mercy shown to an evil man is cruelty to the innocent.)
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To: Tax-chick

You are correct.

Milton in 1962 first proposed the privatization of Social Security.

He is still ahead of any Ponzi socialist.


21 posted on 09/12/2005 11:17:35 AM PDT by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: tophat9000
Have you ever see Bay area women?...DOG CITY woof woof!... they all seem to have that hard core femnazi look

Every day, and they don't have any such look. Women who look like that are at most one in a hundred, even here.

22 posted on 09/12/2005 11:18:25 AM PDT by Mr. Jeeves ("Violence never settles anything." Genghis Khan, 1162-1227)
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To: george76

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.


23 posted on 09/12/2005 11:19:21 AM PDT by Tax-chick (Start the revolution - I'll bring the tea and muffins!)
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To: 2banana
"The beauty about social insurance is that it is actuarially unsound," Samuelson wrote in an oft-quoted 1967 column. "Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in ... A growing nation is the greatest Ponzi game ever contrived."

One of the explanations for the blind eye Washington turns toward illegal immigration.

24 posted on 09/12/2005 11:19:55 AM PDT by Mr. Jeeves ("Violence never settles anything." Genghis Khan, 1162-1227)
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To: Tax-chick

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.


25 posted on 09/12/2005 11:24:44 AM PDT by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: Willie Green
It would be better if he retired and let younger, more agile minds do the hard thinking.

I agree.  

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'.

26 posted on 09/12/2005 11:26:07 AM PDT by expat_panama
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To: george76

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.


27 posted on 09/12/2005 11:27:06 AM PDT by Brilliant
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To: yldstrk
But he was on board with criticising Bush a coupla days ago in the paper.

In what context? Some of Bush's economic policies deserve a great deal of criticism.

28 posted on 09/12/2005 11:31:20 AM PDT by ThinkDifferent (That's great. What?)
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To: ThinkDifferent

This was Thomas Friedman and maybe you are talking about Milton. Sorry. Anyway it was about hurricane relief.


29 posted on 09/12/2005 11:33:56 AM PDT by yldstrk (My heros have always been cowboys-Reagan and Bush)
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To: george76

Youth leans toward liberalism, Maturity towards conservatism, and after you turn 65, SOCIALISM.


30 posted on 09/12/2005 11:35:33 AM PDT by griswold3 (Ken Blackwell, Ohio Governor in 2006 - George Allen, POTUS 2008)
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To: js1138

If Friedman ran for president I'd vote for him even if he were 102.


31 posted on 09/12/2005 11:38:51 AM PDT by Tribune7
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To: george76
remove the middleman bureaucrats so more of the money would transfer directly

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 :-).

32 posted on 09/12/2005 11:41:03 AM PDT by Tax-chick (Start the revolution - I'll bring the tea and muffins!)
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To: Willie Green
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.

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?

33 posted on 09/12/2005 11:47:29 AM PDT by rolling_stone (Question Authority!)
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To: expat_panama
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.

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.

34 posted on 09/12/2005 11:48:03 AM PDT by Willie Green (Go Pat Go!!!)
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To: Brilliant

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?


35 posted on 09/12/2005 11:55:09 AM PDT by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: js1138

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.


36 posted on 09/12/2005 11:58:33 AM PDT by foofoopowder
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To: tophat9000
"Have you ever see Bay area women?...DOG CITY woof woof!... they all seem to have that hard core femnazi look"

Wow! I noticed the same thing when I visited SF one summer. I lived in NYC for one year, and there are a lot of very beautiful women there, so I thought SF would be the same. I was very disappointed in SF.
37 posted on 09/12/2005 11:59:46 AM PDT by Hendrix
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To: george76

"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.


38 posted on 09/12/2005 12:03:54 PM PDT by Brilliant
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To: Mr. Jeeves

Ditto. There's nothing wrong with SF womens looks. I married one after all.


39 posted on 09/12/2005 12:26:33 PM PDT by buwaya
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To: Hendrix
Wow! I noticed the same thing when I visited SF one summer. I lived in NYC for one year, and there are a lot of very beautiful women there, so I thought SF would be the same. I was very disappointed in SF.

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

40 posted on 09/12/2005 12:48:51 PM PDT by tophat9000 (This bulletin just in:"Chinese's Fire Drill's" will now be known as "New Orleans' Hurricane Drill's")
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To: buwaya
Ditto. There's nothing wrong with SF womens looks. I married one after all.

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". ;)

41 posted on 09/12/2005 1:06:39 PM PDT by Mr. Jeeves ("Violence never settles anything." Genghis Khan, 1162-1227)
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To: Willie Green

You are nuts. No a single fact or incident stated in your posts.


42 posted on 09/12/2005 1:18:02 PM PDT by em2vn
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To: mathluv

Thanks - Now that you pointed it out!


43 posted on 09/13/2005 8:48:58 PM PDT by SteelTrap
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To: george76

Seems like Friedmann is the "Last Conservative Standing" for fiscal responsibility.


44 posted on 09/13/2005 8:52:08 PM PDT by Doctor Stochastic (Vegetabilisch = chaotisch ist der Charakter der Modernen. - Friedrich Schlegel)
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To: em2vn
"You are nuts. No a single fact or incident stated in your posts."

Willie doesn't like Uncle Milty because he is anti-union and pro Wal-Mart.

45 posted on 09/13/2005 9:01:00 PM PDT by Mad Dawgg ("`Eddies,' said Ford, `in the space-time continuum.' `Ah,' nodded Arthur, `is he? Is he?'")
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