Firestreak said:
I was being sardonic, it was Trippyhippy's argument that they need it most.
My argument is they would be hurt most by privatization. If you would try to understand what I'm saying, you would realize this.
Firestreak said:
So you believe it's the job of the government to tell people they own too much money and give it to other people who didn't earn it?
I believe it's the job of the top 1% of earners in our country to try and give back something to a country so great as ours that has allowed them to accumulate such wealth. This country has been great to them, why not make it an even better place? The money goes to defend this country, build new roads, better education, and many otherthings... Why not help out as much as you can?
Rones said:
I think I see where the problem is. Trippy is right that social security with privatization pays less to women and minorities...but this is because the social security system we already have pays women and minorities less. You can see it in action here. People who put in less, worked less, and earned less will get less out of SS with or without privatization. Thus your main complaint Trippy has nothing to do with whether we privitizatize, but rather the current social security design.
When I say it would pay women and minorities less, I mean less than it does now, not less than other people. I will say that SS needs reform, but privatization is not the way to go.
In programming we have a term for describing run time called order O notation. This is used to describe an alogithm that will run at worst equal but can run better than the item it is compared to. For example: calling an log
order O algorithm means it will run in worst log
time, but has the potential to run much better. Why am I describing this? Simple, because privization is order O to our curren system. At worst people can just leave their money in the old SS system and get the exact same benefits they would have got before privitization. However, with privitization, there is the ability to perform better than the old system.
"Unlike a typical private pension plan, the Social Security Trust Fund does not hold any marketable assets to secure workers' paid-in contributions. Instead, it holds non-negotiable United States Treasury bonds and U.S. securities." Source This means all the money that is paid in and not immidiately paid out is just sitting there not doing anything. At the very least, this money could be put in bank CDs for example which are 100% safe and wouuld have a better result than the current system.
Social Security is funded by a flat tax of 12.4 percent of each worker's wage income, up to $90,000 in 2005, split evenly between employers and employees. About four out of five of those tax dollars go immediately to current beneficiaries, and the remaining dollar is used to purchase U.S. Treasury securities held in the system's trust funds. Beginning in 2018, well after the huge generation of baby boomers born between 1946 and 1964 begins to retire, a portion of general income tax revenues will be needed to pay interest and eventually principal on those bonds to fully finance benefits. A "crisis" is not forecast to arise until the program becomes entirely "pay as you go" again (as it was throughout its history before 1983) in either 2042 according to the trustees' forecast or 2052 according to the Congressional Budget Office. (By way of perspective, in 2052 the oldest surviving baby boomers will be 106 years old and the youngest will be 88.)
Diverting 2 or 4 percent of payroll to create private accounts as proposed by the President's Commission to Strengthen Social Security doesn't sound very radical, but it would shorten significantly the time until current benefit levels could only be sustained by raising taxes. In part, this is because funds now being set aside to build up the trust funds to provide for retiring baby boomers would be used instead to pay for the privatization accounts. The government would have to start borrowing from the private sector almost immediately to be able to meet commitments to retirees and near-retirees. The trust funds would be exhausted much sooner than the thirty-eight to forty-eight years projected if nothing is done. In such a short time frame, the investments in the personal accounts will not be nearly large enough to provide an adequate cushion. The upshot: a much larger share of today's workers would confront large benefit cuts, or tax increases, than if no changes were implemented.
Privatizing Social Security will escalate federal deficits and debt significantly while increasing the likelihood that national savings will decline-all of which could reduce long-term economic growth and the size of the economic pie available to pay for the retirement of the baby boom generation. The
2004 Economic Report of the President included an analysis of the fiscal impact over time of the most commonly discussed privatization proposal by the president's commission. It found that the federal budget deficit would be more than 1 percent of gross domestic product (GDP) higher every year for roughly two decades, with the highest increase being 1.6 percent of GDP in 2022. The national debt levels would be increased by an amount equal to 23.6 percent of GDP in 2036. That means that, thirty-two years from now, the debt burden for every man, woman, and child would be $32,000 higher because of privatization.
One impact of those seemingly abstract numbers after privatization is that interest rates are likely to be substantially higher, raising the cost to the average household of mortgages, car loans, student loans, credit cards and so on. As a result, the economy would be likely to grow more slowly than it would otherwise.
Creating private accounts with increased federal borrowing at first blush would seem unlikely to affect national savings, because additional savings in the new accounts would offset exactly any new government borrowing to pay for those accounts. Economists believe that increased national savings, especially in a country with savings levels as low as they are in the United States, can increase growth by keeping interest rates low and financing investments in productive activities.
But privatization is actually more likely to reduce than increase national savings.
Diamond and Orszag point out that evaluating the overall effect on national savings requires taking into account the likely responses of government, employers, and households. Historically, neither the government nor businesses have changed their spending levels consistently in response to large changes in deficit levels. But households that consider the new accounts to constitute meaningful increases in their retirement wealth might well reduce their other saving. Diamond and Orszag argue, "If anything, our impression is that diverting a portion of the current Social Security surplus into individual accounts could reduce national saving." That, in turn, would further weaken economic growth and our capacity to pay for the retirement of the baby boomers.
Rones said:
You say privitization would only benefit the rich only. That is wrong. It benefits the smart. Those who know how to use money to earn money are losing money due to missed opportunities with the current system. Privitization would allow those who know how to manage and use money properly to earn more money. Unless you want to claim the poor are stupid, you can not claim it does not benefit them.
If people want to be stupid and invest their money poorly, then I say more power to them. People should be responsible for their own lives and accepts the results, even if it means shooting themselves in the financial foot. Just how far do you want the government to go to protect people from themselves?
It may very well benefit the smart, but the ones that fail at investing or just don't even try... You will help support them later on down the road when they are living off the government because they didn't try to save anything. Of course helping them to live would be the right thing to do. Sacrificing the needs of one for the good of many of your countrymen. Otherwise, about 4 years after privatization you'll be stepping over people sleeping in the streets because they didn't take advantage and plan ahead, or because they tried and failed.
Advocates of privatization often cite other countries such as Chile and the United Kingdom, where the governments pushed workers into personal investment accounts to reduce the long-term obligations of their Social Security systems, as models for the United States to emulate. But the sobering experiences in those countries actually provide strong arguments against privatization.
A report this year from the World Bank, once an enthusiastic privatization proponent, expressed disappointment that in Chile, and in most other Latin American countries that followed in its footsteps, "more than half of all workers [are excluded] from even a semblance of a safety net during their old age."
Other cautionary points made in the World Bank report and other studies about the experience in Chile:
Investment accounts of retirees are much smaller than originally predicted-so low that 41 percent of those eligible to collect pensions continue to work.
Voracious commissions and other administrative costs have swallowed up large shares of those accounts. The brokerage firm CB Capitals calculated (see English language discussion by Stephen Kay here) that when commission charges are taken into consideration in Chile, the total average return on worker contributions between 1982 and 1999 was 5.1 percent-not 11 percent as calculated by the superintendent of pension funds. That report found that the average worker would have done better simply by placing their pension fund contributions in a passbook savings account.
The transition costs of shifting to a privatized system in Chile averaged 6.1 percent of GDP in the 1980s, 4.8 percent in the 1990s, and are expected to average 4.3 percent from 1999 to 2037. Those costs are far higher than originally projected, in part because the government is obligated to provide subsidies for workers failing to accumulate enough money in their accounts to earn a minimum pension.
In the United Kingdom, which began encouraging workers to divert payroll taxes to personal investment accounts in 1978, many citizens were victimized by poor investment choices as well as unscrupulous brokers. The national government was left with substantial new administrative expenses, lost tax revenues, and responsibilities to bail out some failed private pension plans. Indeed, the problems were so wide-ranging that even the most enthusiastic supporters of private accounts now say that the United Kingdom simply did not do it right.
A British government commission headed by Adair Turner reported in October 2004 that Britain had been living in "a fool's paradise" by thinking it had solved its pension problems. According to pension experts at the Organization for Economic Cooperation and Development (OECD), the Adair Turner report has sounded alarm bells. "What looked like a very good idea from a financial perspective in cutting costs has put pensioner poverty, which had been all but eradicated, back on the agenda."
Rones said:
Let's look at this from another direction. Why does communism fail in theory (ignoring massive corruption atm)? It is because people have no self interest and motivation in the economy. Why is this? Because they get the same result regardless of what they do and there is no reason for them to put an interest into being economically smart. What happens when we take control of money away from people here in the states through programs like SS? People become less interested in being successful and the economy stagnates (only a little in the case of SS because it doesn't control all money like communism). Capitalism depends on everyone having a vested interest in success and profit. Take that away through government controlled money and the economy suffers.
Communism fails because people try to make a Communist nation. Unless you know everyone in the nation, you will not have the motivation to help make their (and your) life any better. I've always been of the opinion that communism can't work in a community bigger than around 1000 people. These people have to agree with each other on a great many things. Communism is too idealistic, that's why it fails IMHO. That and the widespread Corruption from people in power that don't know all of their constituents by name, therefore couldn't care less about them.
