The Bear Market Makes The Case for Privatizing Social Security

To: Willie Green

You are of course correct about Soc Sec and I would be happy to see an end to the entire scheme.

Since that is unlikely to happen within our lifetimes it would be an improvement to put as much as possible of our confiscated funds under our own control.

21 posted on 10/03/2002 3:32:48 PM PDT by RJCogburn

God thankyou for not having my social security in the stock market. At least I get this little social security check.

I am certain that it is richly deserved (though, increasingly, far less than it should be). In the future, those expecting to receive a "retirement" from SS will be deeply disappointed!

For those who are interested, research the rhetoric which accompanied the enactment of the SSA. You will find (in many references) the phrase "retirement supplement"! SS was never intended to be a full retirement plan!

Profligate spending by government and a lack of concern (or financial ability) by the majority of our populace has made SS "THE RETIREMENT SUSTEM". However, we may look forward to "TAX BASED AGE WARFARE" when the "Baby-Boomers" reach SS age and "demand" a more generous pay-out!

Those who mindlessly resist a gradual shift to SS privatization will reap higher SS benefit payments in an economic state of hyper-inflation! Remember, your COLA benefits are based upon what the Guv'mint "Says" the inflation rate is! Anyone who is retired care to expound upon how well existing SS COLA increases actually compensate you for what YOUR costs of living truly are?

22 posted on 10/03/2002 3:40:35 PM PDT by ExSES

The conclusion is clear: Social Security is a much worse way to provide for your retirement than private stock-market investments — even during the worst bear market in half a century.

BRAVO!!! Well said! Well said indeed!

Social Security is, and always has been, nothing more than a government run Ponzi Scheme which will, like ALL such schemes, eventually collapse of it's own weight.

23 posted on 10/03/2002 3:54:37 PM PDT by Bigun

To: Willie Green

Of course it is, that's the reality we are forced to deal with.

But the fact is that if 2% of the money pumped into the Social Security Fund would be allowed to be privately invested, the Social Security Fund would still be solvent as of now. What it would do, however, is force Congress to take their greedy hands off the money creating a surplus at the moment and find somewhere else to pull money from to pay for their pork projects. And you know the Democrats don't want that.

Another thing it would do is prove that a minor privitization action did not cause the Fund to collapse like the Democrats scream would happen. This would allow for more and more privitization until it was clear to all but the most ignorant of people that privitization of retirement income was far preferable than Uncle Sam's Piggy Bank. In 20 or 30 years we could be taking a serious look at dismantling this beast without having destroyed our economy trying to fix it.

But that assumes 3 things:

1) You want to see Socialism defeated.
2) You are willing to work at it slowly and steadily, changing peoples minds with success and not rhetoric.
3) You can resist the urge to scream "All now or nothing later" and behave like someone who can work for long goals without a short temper.

Well, what's it going to be Willie Green? Do you want to dismantle Social Security or do you just want to keep yelling it needs to be done. Cut bait or fish, we don't have time to listen to you rant, there is work to do.

24 posted on 10/03/2002 4:10:44 PM PDT by Anitius Severinus Boethius

" It's a foolish policy, because there has never been a better time to argue for privatization."

LOL! Delusional, but funny.

"The worst fears raised by critics have been realized, with Wall Street at the bottom of the longest and possibly deepest bear market in 60 years."

I wonder how much money the author personally has bet on the idea of a bottom having been reached. I ain't taking that bet.

"To put that in perspective, money put into safe, high-quality corporate bonds earns a real return of 3 to 4 percent, while stocks historically average a 7.5 percent real annual return."

Three points:

1) Are annual returns relevant? If it is retirement money we are talking about, a more useful horizon is something like 20 years.

2) For retirement investment horizon lengths, there are a grand total of 3 to 10 statistically independent return samples. Hardly enough upon which to bet the farm.

3) The primary vehicle for the lay investor is a mutual fund. Mutual funds on average do worse than the market. The average mutual fund investor does worse than the average fund. Accounting for that, most people in fact don't do much better than social security, if at all.

"If you own shares in General Electric, for example, the fact that you lost money in the last two years is only half the story. The other half is that you still own a portion of a productive enterprise."

Puh-leeze! GE has morphed over the years from a maker of things to a hedge fund waiting to implode. Its primary activities these days are financial.

" This is what Republicans are afraid to say. They promote privatization, not as an alternative to government handouts, but as a substitute for them, as if private investment accounts are just a different means by which society can assure everyone a guaranteed minimum income, regardless of his choices. So they can't admit that the market sometimes goes down."

No, what they are afraid to say is that -- regardless of whether people are responsible or not -- there is simply no way to safely store the amount of wealth we are talking about for decades.

You cannot make a change like this without significantly altering the behavior of the equity markets. They only function as well as they do because the capital poured into them is largely voluntary. Privatizing social security would be a complete disaster. Social security should instead be eliminated, not tinkered with or "fixed". It can't be fixed.

26 posted on 10/04/2002 7:00:42 AM PDT by Tauzero

To: ThinkDifferent

"They should have simple charts showing that even if a worker who invested in the market over the last 40 years had to sell everything at the lowest point of this bear market, he'd still have a vastly better return than what today's workers can expect from SS."

The first problem with that kind of comparison is that few of the people who are currently in the market actually behave in accordance such comparisons' assumptions.

The second problem is the idea that the market prior to, say, 1987, would have behaved no differently had more people been invested in it.

27 posted on 10/04/2002 7:04:21 AM PDT by Tauzero

To: Anitius Severinus Boethius

"If the Government would just open a 5% bank account and put the Social Security money in there, you would recieve over twice what you do. If they were to put it in a 7% returning Money Market account, you would recieve almost 4 times the amount."

I very much doubt that. It might be true for one, a few, or many people. But if we were to perform the same exercise for everyone paying into social security, the behavior of the targets of their funds would likely change. In my opinion, this talk of privatization is the same kind of rationalist hubris of which socialists are guilty.

28 posted on 10/04/2002 7:08:32 AM PDT by Tauzero

To: Prodigal Son; Pitchfork

"Do with it as you please. Don't make your life my responsibility. If I starve when I'm old- tough sh!t! Freedom's a scary thing. You can't have it both ways. You want to be free? That means nobody else is responsible for you."

On the contrary, it means we must engage in substantial voluntary altruism. If we do not, then sacrifices will be forced upon us.

Is is true -- you can't have it both ways. You cannot be free under forced altruism. But you also cannot be free without engaging in altruism. The responsibility that accompanies freedom includes responsibility for our fellow man.

While it is true that the state promises to help us in the event we become poor, it is also true that it promises -- and IMO this is the more seductive promise -- that we will be relieved of the responsibility and effort involved in helping others, save for a portion of our income. In this way, the state destroys civil society, displacing the voluntary altriusm that would otherwise exist.

29 posted on 10/04/2002 7:20:54 AM PDT by Tauzero

Why do you doubt it? Because of any research you have done concerning how Social Security Money is managed? The example I was making, and I'll speak slowly, is that a simple savings account in a bank pays 5% interest and an average Money Market account pays 7%. The U.S. Government, however, can only pull a lousy 1 to 2%. Thus, the U.S. Government would be better off opening a simple savings account with Chase-Manhatten rather than trying to grow their money on their own.

Obviously not a realistic solution, but it underscores what a crappy job the U.S. Government does as an overseer of monetary growth. What I am for is a slow and methodical procedure for moving Social Security into the private sector and then dismantling it altogether.

Here is my proposal:

People born Dec 31, 1940 and before (Group A) would not have eligibility toward Privitization.

People born Jan 1, 1941 through Dec 31, 1951 (Group B) would have the options to: