Sunday, August 21, 2011

Political - Social Security and other entitlements...

So, I'm going to spawn off into a non-Oracle direction. I was reading this article today. In the article is indicates that social security disability will be out of money pretty soon (2017) and the general Social Security fund will run out of money in about 20 more years (I suspect sooner). I know that there is a lot of finger pointing going on with Social Security and who is to blame. I want to point a finger that might be unpopular but I think it's the truth. Who is to blame for all of these problems? Seniors that's who. I also blame anyone over 18 of course, but I think the seniors deserve a special place in the Social Security Hall of Shame.

Why do I say that? First, it was their generation that started this whole really bad idea. It was their generation that figured the government could do the job better than the individual. It was their idea to start funneling money to a big federal government and not demand accountability, not demand that the money be protected or reasonably invested. Instead, they allowed politicians to control this large amount of money. They played Russian roulette with the future generations for their own benefit. They started a huge, largely uncontrolled social experiment and just plowed into it.

Over time the program just snowballed into so many things it was not originally. Everyone got on the bandwaggon of course, from the liberals to the so-called conservatives adding more and more burden to a program that was already going in the wrong direction. We all like freebies, don't we? Free drugs, free medicine and health care (free is a relitive term of course). It turns out that this stuff really isn't that free. Also things like social security and medicare start to interfere with the market and in the end result in higher prices, not lower. One of the reasons health-care is so expensive, I believe, is because it is abstracted from us to a large degree. We pay our co-payments, we see hospital discount the total costs due to insurance agreements and we are happy.... we don't have to do much except write a small check and we don't have to consider the cost/benefit of the services.

That's not to say that I don't think that providing health care is important. I'll even agree that lower income folks need some assistance in keeping healthy because part of how we keep this society working is making sure that those who do not have continue to have opportunity. In my mind, we always need to provide opportunity. I just think there are better ways of doing it.

As with so many other personal liberties we give up to our government, they will willing to give up their money for a promise. Now it seems that as time progresses, they might get their promises fulfilled, but the future generations will instead end up working harder, Saving less, being taxed more, and having far less in the end to show for what they have done. All of this in the name of Social Security benefits that the ancients gave to themselves, mortgaging the futures of generations. This to me was selfish, thoughtless but not surprising. We humans often have grand ideas and want to help people (and ourselves). When it comes to the implementation of those grand ideas we get petty, selfish, bicker, steal, and we see the truth, money corrupts and corrupts completely.

Of course now, those same people who setup this pitiful system, this house of cards, are on the front lines of making sure they get their share. The great ponzi scheme that is Social Security is starting to fall. We see the likes of the AARP and other groups supporting the ancients fighting for their "rights" and their "entitlements". Why won't the ancients stand-up, and accept that they have made a huge mistake and that something needs to be done. Why can't they accept that they have had a major part in a failed program, and that since they took the lead in building it, they should take the lead in taking it down? These people often are ones who have fought for our freedom, fought for the future of the United States and what we are. Where is there resolve now, where is there willingness to sacrifice for the good by supporting the deconstruction of this failed program.

I am not suggesting that we need to just pull the support from the ancients or even those a generation removed from the ancients. Clearly we have this program in place, people depend on it and we need to make sure that those who can't survive any other way are protected (and even perhaps have their services improved). Still, it's clear, this program can not survive as it's currently constituted. If you are an ancient who is sitting with several million dollars in the bank, healthy and really have no need for social security, perhaps you might be willing to step up to the mark and just let your benefits go away. I'm sure there are a number of ways we can reduce the outlays over time that will preserve the benefits for the ancients who need them, while phasing out the program for later generations.

So what do we do about those later generations? We teach them to save. We teach them the process of diversification of assets. I know my five kids have all graduated from High School and in doing so had little knowledge about assets, asset management, or how to prepare for your future. We need to educate the people. We need to ensure that people to save, but not by sending money to the government, this is the more inefficient method of saving that there ever was.

As for the political types who see the money coming into Washington as power, for those who see it as an opportunity to redistribute income or an opportunity to gain political clout or any other number of really scummy and immoral reasons, you need to stand up and realize the destruction your kind of thinking has wrought on this economy and our society.

I know that on both sides there is a polarization that will never end. There are also a large number of those who don't care and won't take the time to understand because they are happy to have someone watching their back (even if it is the government who is poised to stab you at the same time if your not careful). There are those who are too lazy to really understand what is really going on, who are willing to look past the TMZ's, Comedy Channels and Extra's of the world.

That leaves those of us in the middle, who are rational, non-polarized and who actually care about both people, basic morality (and I'm not talking about religion here) and fiscal responsibility of the individual and the government to stand up and take the lead. We need someone who can work the media, who can communicate to the people, who can remain humble through the process and yet make the case clear. I wish we could find an ancient to do this, someone who was part of the generation that started this disaster, for that voice would be the most powerful of voices. What we need is a leader.... one that will stand up and say in his ancient voice (I'm thinking a Charleston Heston type here).... "You will not take my freedom from my cold dead hands."

What will it take to turn this around? What will it take to actually strengthen our society so it is more self sufficient and more people actually are actively interested in their futures? I don't know.

Ok... enough politics for now. More later...


Joel Garry said...

Social Security is a good idea. Replacing defined benefit programs with 401K's is a bad idea. Volatility bones people.

All the problems stem directly from the "tax revolt" starting in 1979, with it's subsequent voodoo economics and playing on people's biases about the government.

Yes, the government is inefficient. The mistake is in thinking that efficiency is always good. It always need to be tempered with wisdom. "The Market" is both heartless and doesn't actually allocate resources fairly, as it never fulfills the basic requirements to do so.

Robert Freeman said...

I have to laugh hard at the URL here. I know how much I pay in taxes... I think I pay my share. Personally, I don't think anyone who makes $1 or $1 billion should pay a higher percentage of taxes. I think we all need to pay our part and quit expecting the rich to just waltz in and save us. There is only so much money, even in the hands of the rich. I like the idea of a flat tax. No deductions, just taken out of your check, no returns to file. Why is it that a gang of robbers think that it's OK to pile on a small minority and force them to do what the gang of robbers is not willing to do?

>>Social Security is a good idea.
Social security is a disaster. How can you look at it's current state and think any thing different? I don't need the government to hold my hand and help me save for retirement. The solution to Social Security is financial education which is sorely lacking.

>>Replacing defined benefit
>> programs with 401K's is a bad
>> idea. Volatility bones people.

Did I use the word 401k in my post?
Not all investments are highly volatile and one could easily provide for a retirement program that offers diversification and an appropriate measure of risk/volatility while still being managed by the private sector.

People properly educated with respect to investment options will make better choices.


Robert Freeman said...

It is a truth that a stable society will always require some method of taking care of the sick and the very poor. It's also true that there will also be short sighted people who won't plan for the future. These people do represent a risk and a solution is required.

as such, I'm also not opposed to some mandate for savings for retirement and requiring that a certain amount of those funds be put into safer investments. Of course, no investment is "safe" and it's becoming clear that Social Security is to be added to that statement.

What about Social Security? What is the truth? The Cato institute published a paper indicating that a study of social security returns were "real internal rates of return on social security contributions ranging from negative numbers to 6.3 percent" ( pretty dismal. I can beat 6.3 percent pretty easily over the long run... just about anyone can.

Fairly, Social Security is so complex that no one really agrees on what the real rate of return is. That should be bothersome to any citizen who has invested in this ponzi scheme.

Of course, that assumes that social security can actually pay as promised. I think that's pretty questionable right now. There will be changes. Either the younger generation is going to be supporting the older generation with higher taxes, or the ancients are going to have to take the hit...

As for lowering taxes, it's hard to debate the fact that lowering taxes increases revenues. The problem in this country is not low taxes, it's out of control spending. Voodoo economics as you call it work much better than obamanomics on the short term and the long term.

Looking at Europe right now, it's clear that socialism does not work. Over the long run, it strangles an economy, and the people become less self-reliant and more dependent on the government. This dependency leads to corruption, control and all sorts of negatives. It just gets worse from there, with the destabilization of geographic regions and then world markets.

The fact is that in the end, not every service is going to be available to every citizen. It's an unfortunate truth of life.

>> "The Market" is both heartless
>> and doesn't actually allocate
>> resources fairly, as it never
>> fulfills the basic requirements
>> to do so.
I agree that the market is faceless and heartless. People do need to be part of the equation. I think the government (Federal or State) has a role in oversight, regulation and the like. Implementation and efficient administration is just not possible for a government entity that is really responsible to no one.

I could go on about the corruption, power, and ethical bankruptcy that occurs when the government gets involved in our lives and starts tasting the fruits of our labors (ie: taxes). Again, it's hard to dispute these things.

Some want to cling to the notion that government is the only way to solve a problem. While government may be one part of the solution, in the end the only real long term workable (and solvent) solution will be one that involves and engages the people.

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