US Social Security (Politics in Ecolang.)

by Bruce Brown | 25 Comments

US Social Security (Politics in Ecolang.) – Privatizers don’t like this! Best overview of US Social Security debate. Vote it up! The economy actually has a good outlook for Social Security and it stays stable as a percentage of GDP: see the Congressional Budget Office’s long-term budget outlook. The warning about the short-term Trust Fund deficit is a decoy to distract you from Social Security: It was the Bush income tax cuts that swallowed the payroll tax surpluses. (And then some!) Tell the politicians to put taxes back the way they were, fix the healthcare system instead, and leave Social Security alone. In another animation we will show that Social Security is the most-highly-evolved program to cover all the variables that it does so well. Social Security probably is “efficient” — in a COMPREHENSIVE economic sense that includes the minimization of the personal, social, and political transaction costs that must always be involved in balancing general welfare against distributional outcomes. It’s an amazingly good design for a universal safety net. The fact that Social Security nearly “pays for itself” with a dedicated tax (the payroll tax) is very important with regard to tying together the following things, automatically: people’s responsibility for a social safety-net; the life-long contribution that must require; and the final acceptance of one’s personal tradeoffs regarding one’s contingencies in the final outcome. So therefore, a discussion of “solvency” does

25 Comments on US Social Security (Politics in Ecolang.)

  1. leearnold
    November 7, 2010 at 9:06 am (8 years ago)

    @RaptillaMajor — Markets left alone? Derivatives spread the risk until it was beyond computation and virtually meaningless. Thank Gram-Leach-Bliley. And financial deregulation in the Clinton years began in the Reagan years, when it started with the savings-and-loan crisis.

    Somehow, putting millions of seniors into a gamble in the financial markets when the big shots don’t even know what’s going on, and the taxpayer bails everybody out every 5 years, sounds like a really bad idea.

  2. leearnold
    November 7, 2010 at 10:00 am (8 years ago)

    @RaptillaMajor — No, at the current time there is a demand recession, yet businesses are sitting on loads of cash. The circular flow of money has two halves: supply and demand. If you already have enough supply sitting idle as “capacity under-utilization”, then there is no sense investing for even more. Because demand is the problem. Propping up consumer spending is the quick way out.

  3. RaptillaMajor
    November 7, 2010 at 10:59 am (8 years ago)

    @leearnold The present mortgage disaster stems from the Clinton years, where banks were encouraged (by gov’t) to take on riskier loans to “promote affordable housing”. Practices as these went on through the next decade even with Bush in office it seems. Either way, it seems government adjustment actually leads to more problems with the market than if the market was left alone.

  4. RaptillaMajor
    November 7, 2010 at 11:24 am (8 years ago)

    @leearnold Lack of demand sounds like it stems from lack of being able to set up projects and businesses and other investments due to gov’t regulations and taxation. I’d be less motivated to start up a business too if markets were highly regulated and taxed. Only corporations get away with this because they can afford to outsource and go to different countries with less regulation and taxes for their products, while small businesses have to go through the tougher, expensive routines.

  5. leearnold
    November 7, 2010 at 12:19 pm (8 years ago)

    @RaptillaMajor — Except for the present mortgage disaster, which has taken down retiree wealth by several trillion dollars!

    On the contrary, for 75 years there has been no evidence that having a good safety net causes inflation or lack of economic development.

  6. leearnold
    November 7, 2010 at 1:01 pm (8 years ago)

    @RaptillaMajor — The main cause for current lack of investment is the lack of demand and the tendency to deflation, because at this moment it is smarter to hold onto money than spend it. This is about to change shortly. For most of the last 100 years, there has been no lack of credit to invest in good ideas.

  7. RaptillaMajor
    November 7, 2010 at 1:19 pm (8 years ago)

    @leearnold Also, hard assets are a lot less biased in analysis to inflation adjustment on the market than inflation adjustment by the government.

  8. RaptillaMajor
    November 7, 2010 at 1:47 pm (8 years ago)

    @leearnold But taxes are too much through the roof to do any of these good investments. A good hefty amount of our income goes through taxation, and while social security might not be a great contributor to that bulk, it sure is something worthwhile to cut to get at least a little more income to do investments. And cutting it would open up minds to cutting other bulk.

  9. leearnold
    November 7, 2010 at 1:59 pm (8 years ago)

    @RaptillaMajor — Social Security can be, and often is, inflation adjusted, so this is not an issue. On the issue of doing something else with your money, starting up a new small business depends upon having a good idea and access to credit. The question is why don’t we do both: keep a safety net, and invest for the future on your own. Because obviously people can do both. The answer is usually that people make choices to consume instead.

  10. RaptillaMajor
    November 7, 2010 at 2:10 pm (8 years ago)

    Social Security sucks because it’s able to be influenced by inflation. It should be hard assets which back its funding, not fiat currency in a big pool susceptible to deficits. Plus the idea that you’re forced to save a portion of your life income for retirements, rather than being able to choose wiser options such as starting up a new small business (creating new private jobs, too), or sending your kids to private schools for a better education (which will increase their wealth through life).

  11. zabaditafa
    November 7, 2010 at 2:23 pm (8 years ago)

    Thanks for this very educational video. The government has declared war on grandma , grandpa and the disabled. Legal insider trading will occur by our government if social security is privatized. Wall street will be licking their chops to get hands on grandma and grandpa annuity they have been paying on for many years. America will be destroyed by the politicians if we allowed this to happen.

  12. leearnold
    November 7, 2010 at 3:16 pm (8 years ago)

    @Houshalter — 1. No matter how responsible people are, about 1/2 of retirees end up below the poverty line. This is probably true under any social or economic system. You don’t know how you’ll end up, either. It’s just the safety net.

    2. Social Security has survived since 1935. Take it to court.

    3. It’s a continuous generational transfer at the Treasury bond rate, with no profit-making. There is no way a private entity could or would do it.

  13. Houshalter
    November 7, 2010 at 3:25 pm (8 years ago)

    @leearnold, you are making several assertions here that you can’t prove, and I don’t think are correct.

    1. The government should use any and all force to get people to be responsible with their money.

    2. That the Fedral government has the power to establish such a system, as opposed to the states.

    3. That a government agency is the most efficient way to handle the money and situation (as opposed to a bank or virtually anything else.)

  14. leearnold
    November 7, 2010 at 3:40 pm (8 years ago)

    @Houshalter — 1. Everybody gets the pay-out, too. You might move to a country without a safety net, like Somalia. No stealing, there.

    2. Returns on savings accounts look to be about equal to average SS return. “The Feds already insure” means “we the taxpayers bail you out.”

    3. The next best scenario would cost FAR more. I’ll choose the 1% overhead.

    4. If you mean you’re not making enough money, join the club. But taxes as % of GDP appears to be unrelated to stagnating incomes.

  15. Houshalter
    November 7, 2010 at 4:05 pm (8 years ago)


    1. Ya, everyone is forced to pay in, and if they don’t they get shoved in a little cell where politicians use them in ads saying “I put criminals behind bars!” It’s stealing.

    2. In a bank?! The Feds already insure and heavily regulate banks, at least enough to stop runs and failures.

    3. Percentages are meaningless when you are talking about such massive quantities of money. Still, 1% less or 1% more, which would you choose?

    4. Yes, they are, through taxes and promises.

  16. leearnold
    November 7, 2010 at 4:29 pm (8 years ago)

    @Houshalter — 1. It’s not stealing. Everybody pays in.

    2. This ignores market risk, and the vagaries of life. 1/3 to 3/4 of retirees would break even or lose, compared to the return on Social Security.

    3. Social Security’s administrative overhead is LESS THAN 1% — it is possibly the most efficient program, public or private. A means-testing bureaucracy would cost much, much more.

    4. Go right ahead — no one is stopping you from making investments.

  17. Houshalter
    November 7, 2010 at 5:02 pm (8 years ago)

    There are many problems with social security.

    1. Redistribution of wealth never works, and it’s stealing.
    2. You can invest your money almost anywhere and end up with more money then you started with.
    3. Social security costs administrative costs, and doesn’t produce anything for the economy.
    4. Have you even considered that you could pay into an insurance company, like any other, that would pay you if anything DID go wrong? Gov doesn’t stop you from doing this.

  18. leearnold
    November 7, 2010 at 5:41 pm (8 years ago)

    @me3tv — (c) No, that revenue increase has NEVER been sustained, beyond a short stimulus. Both Reagan’s and Bush’s tax cuts failed to pay for themselves, i.e. FAILED to close the revenue gap which they opened. (d) Obama had to bail-out Wall Street to prevent our whole bank account and credit system from collapsing, and you are complaining that the taxpayers didn’t pay even more, to cover the debt deals that hedge funds wanted from the automakers? Are you a hedge fund manager?

  19. leearnold
    November 7, 2010 at 6:33 pm (8 years ago)

    @me3tv — (a) No, there is no evidence of this. I would bet the opposite is true: If you were to monetize ALL the personal and social transactions costs in providing a safety net while avoiding moral hazard, I would bet that Social Security is a VERY efficient system. (b) It does not matter to the argument. In economics, the employer’s half of payroll tax is considered to be part of labor compensation.

  20. leearnold
    November 7, 2010 at 7:01 pm (8 years ago)

    @me3tv — (e) No, income mobility is a good thing but Social Security deals with retirement outcomes. About one-half of retirees would be under the poverty line without it — in GOOD times. They are probably in worse shape now, although I haven’t seen any statistics about this current recession. (f) Didn’t we just BAIL-OUT Wall Street? Do you guys have to get food stamps, too?

  21. me3tv
    November 7, 2010 at 7:45 pm (8 years ago)

    Fails to make clear several points:
    a. payroll tax “efficiency” is far outstripped by increases in payroll tax to carry the load.
    b. does not mention that half of payroll tax is paid by the employer.

  22. me3tv
    November 7, 2010 at 8:33 pm (8 years ago)

    c. fails to note the significant increase in government revenues that follow all major tax cuts because of greater employment and greater sales turnover.
    d.Says a “bond is a promise and we should keep promises” – so how does this jive with Obama stealing the bonds from GM and Chrysler and giving the companies to the unions? Democrats do the same dances with figures.

  23. me3tv
    November 7, 2010 at 8:59 pm (8 years ago)

    e. fails to note the lower income strata is dynamic and by retirement MOST of that strata have moved upward one or two strata higher.
    f. fails to note those remaining in lower strata at retirement are beneficiaries of many more government assist programs besides SS and these are NOT available to the higher strata

  24. leearnold
    November 7, 2010 at 9:45 pm (8 years ago)

    @simichbrau — No, Social Security is going to pay you back at the rate on Treasury bonds, as always — an average 3% return.

  25. simichbrau
    November 7, 2010 at 10:24 pm (8 years ago)

    But in the end, it matters not who one votes into office or out-the whole system is rigged and we will always be the losers.


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