Want to understand Social Security?
Jeff Jacoby in a Boston Globe column titled "An eighth of every paycheck" gives the clearest explanation of the program that I have read. If we could get all to read and understand this column, our politicians would begin to get some good direction from us as to what we would prefer for a fix, for there is clearly action required - and I believe major changes in the philosophy of the program - in the near future.
Read the column and find out what your Senators and Representatives are saying - then let them know what you think. It is important!
WORD FOR THE DAY: cavil
Hint: many people have these against the proposed changes to Social Security.
Read the column and find out what your Senators and Representatives are saying - then let them know what you think. It is important!
WORD FOR THE DAY: cavil
Hint: many people have these against the proposed changes to Social Security.
posted by Jim | 12:30 PM
6 Comments:
Jeff Jacoby begins his column with either a poor understanding or a tautology, I'm not sure which. He writes: "YOU DON'T have to be a financial wizard to know that Social Security is a lousy investment." Indeed. Because Social Security is an Insurance program, not an Investment program. It's a plan to ensure that Americans have some income no matter what bad luck comes their way in old age.
I could just as well say "YOU DON'T have to be a financial wizard to know that car insurance is a lousy investment." True, but not to the point.
We already have some tax sheltered investment programs, like 401Ks, and I'm all for expanding these programs. But I believe there is also a role for an insurance program.
Curt, you are being quite generous with your interpretation of Social Security as an "Insurance program."
THAT IS WHY IT IS SO DIFFICULT TO DISCUSS!!
Social Security is simply a transfer of wealth from the young to the old. Period!
If we could all see this truth, it would be easier to discuss.
I'm happy to try to get to the truth (I wish it was easy!). When I refer to SS as a 'insurance program' I am referring to its intent, not its financing. It was never constructed as an 'investment program,' so I find it disingenuous to criticize it for being a 'lousy investment.'
I think before arguing details, it's worth thinking about what we are intending to achieve with such a program. Then we can try to figure out the best way to achieve the goal.
If we as a society are committed to keeping retired workers at some level of income, and the ratio of workers to retirees is dropping over time, the financing is a problem.
I agree that the current financing is a transfer from workers to retirees. But in some sense that will always be true. If I build up an investment portfolio during my working years, then start cashing it out when I retire, I must sell the assets to someone who wants to buy them. If there is a declining percentage of people working, then there could be a slowing economy, and fewer potential buyers of my assets (ie. dropping stock prices).
Glad we agree Social Security is simply a transfer of wealth from the young to the old. This is important.
Mr. Jacoby neither lacks understanding nor uses a tautology (thanks for the new word!!), but is simply using sarcasm - note the opening sentence of his second paragraph where he states your Social Security "account" does not even exist! He must know it is not an investment!
At your suggestion, I am going to clear my brain of all the misrepresentations given to me by FDR through W (this certainly shows you can't trust any politicians) and state the goal:
"We agree it is a noble and appropriate program to assist any elderly citizens who need financial help in their old age."
Tomorrow, after an evening of deep thought and hopefully some great insight into achieving this goal, I will propose a plan. You may do the same if so inclined.
(Note: I have not cluttered the goal with many additional services the Social Security Program supports - such as, I believe, help for surviving dependents in some cases - all these variations make it impossible to talk about, so let's keep it simple in the beginning).
P.S.: Your last paragraph is not analogous in my opinion because it is the free market at work and is appropriate - whereas Social Security is the redistributiion of wealth by the Government, seldom if ever a good thing in my mind!
Curt, I am going to go to my February 25 post on Social Security to share my program!
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