The Atlantic - Latest Comments in Are you serious?

Re: Are you serious?

tfowler — Thu, 29 Nov 2007 09:21:38 -0000

Njorl - The would be no default, but I agree there would be political consequences for not paying out Social Security, or greatly reducing the payout.

But if it became political necessary to find the money elsewhere, than your back to square one. The situation (other than the political fallout) is the pretty much the same as it would be if you had not scaled back benefits, the benefits would simply be restored. The total cost would not be higher than its going to be anyway, so there would be no additional fiscal problems beyond what we are already going to have. So beyond the other financial catastrophes not being required, I'd say there is no real connection between them and the issue of social security payouts. Well there is the one you point out, if the US does really does undergo a total fiscal meltdown than maybe it won't be able to pay any of those things, but I don't think that's in the cards.

I agree eliminating social security payments isn't going to happen absent the total fiscal meltdown, but I also agree with SG that the current benefit structure will probably not service unscathed. There should be no need for actual cuts (even in real terms), in the size of the checks, but they might increase slower than is now planed, and/or the retirement age might have to be raised again (perhaps multiple times, if life expectancy continues to go up)

Re: Are you serious?

SG — Wed, 28 Nov 2007 14:56:40 -0000

Njorl, I agree that the trust fund will be honored on some level; an out-and-out default will not occur. But when paying SS beneficiaries starts to require large transfers out of the general fund, I don't think the current benefit structure will survive unscathed. I think there will be means testing and an increase in the retirement age to minimize the hit to the general fund.

Re: Are you serious?

Njorl — Wed, 28 Nov 2007 14:25:44 -0000

"The government would not need to default on the Social Security bonds in order not to pay them back, because the holder of the bonds is the SSA and the SSA is part of the government. There is no debt from one part owed to another, because their is only on US federal government."-Tim Fowler

Tim,

I am not saying that the other financial catastrophes would be legally required. I am saying they are political corequisites to default on social security. The number of people who would be denied their benefits would make it poitically necessary to find the money somewhere. The only way that it would not be possible to find the money somewhere is if the other catastrophes were occurring.

Re: Are you serious?

Rob Lyman — Wed, 28 Nov 2007 12:18:51 -0000

What is the difference between putting your money in a bank account and taking out principal plus a defined interest in 40 years, or paying it into Social Security and taking out the same principal plus defined interest in 40 years?

Could it be that the bank won't go out and spend your money on current consumption for its executives, and then hope that it will be able to find enough future "depositors" to pay you when the time comes?

Re: Are you serious?

SG — Wed, 28 Nov 2007 11:54:10 -0000

Well, for starters, if you die with money still in savings account, the money doesn't disappear. Also, if you go to withdraw the money from your savings account and the bank doesn't have it, you can sue the bank. Nor could the bank win the suit by an ex post facto change of the rules. Also, the bank isn't obligated to put those deposits in the single lowest returning investment, and in fact tries to get a higher return (and this capital then spurs economic and productivity growth). Because of this, the return on a savings account is not contingent on having more depositors tomorrow than today (a condition we know to be false). Also, retirement accounts could be used for things prior to retirement, such as buy a house, fund education, or pay for health care. Also, a bank doesn't use the deposit to fund current spending while counting the deposit as an asset, at that point the account becomes properly accounted as a liability. Also, a bank shouldn't continue to accept deposits when it is in the middle of a bank run (banks were shut down during the S&L crisis to stop this).

So in summary, I see many real and substantive differences between a savings program and Social Security. Property rights matter, they have value that the law recognizes and protects. A non-binding (and insufficient) claim on someone else's future income does not approach the same value.

Re: Are you serious?

TakeFlight — Wed, 28 Nov 2007 11:47:16 -0000

I haven't been following all of SG's arguments, but for me the point isn't to have the exact same thing just nominally "privatized", but instead what advantages privatization offers. A better question then might be "What is the difference between putting your money in the investments of your choice and taking out principal plus a defined and likely substantially larger amount of interest in 40 years, or paying it into Social Security and taking out the same principal plus less interest in 40 years?"

The answer: potentially thousands of dollars.

The fact that it's paid in dollars that were recently collected from your kids is as irrelevant as would be the provenance of the particular dollars your bank hands you back when you go to the ATM machine.

True in a strict accounting sense, but relevant because it distorts the true costs involved:

Generation 1 pays SS tax to the government, and the government lends that to the General Fund to pay for programs. At some point in the future, Generation 1 requires its SS payout. Where does that money come from? Generation 2, or 3 or 4. Except that if there are more of Generation 1 than Generation 4, there will be a shortfall because that money was spent on other things.

Who will pay? Either (1) Gen 1 will have the rules (retirement age, amount payed out, etc) "adjusted", or (2) Gen 4 will be taxed more.

IMHO, option (1) is the only fair option because option (2) means that Gen 4 is stuck holding the proverbial bag for financing both SS and those gov't programs that Gen 1 voted in but did not finance separately at the time in order to generate enough to pay back Gen 1's SS.

For me, these are the biggest reasons to privatize. Not only do I want the chance to earn more on my "investment," but if there are more of Generation 1 than Generation 4 (my generation, in this case) then that makes option (2) much much more likely because we have fewer voters and can't defend our interests as well.

What am I not considering?

Re: Are you serious?

brooksfoe — Wed, 28 Nov 2007 02:15:50 -0000

You've blown by blunt questions like: "Why do you want to need to take your kids' money for your retirement? How is that preferable to just having saved your own money?" - SG

I've blown by this because I anticipate an irritating argument where we get nowhere, but here goes: this is a way of phrasing things that is based on confusion about fungibility. You're not "taking your kids' money for your retirement". You're collecting what you've paid in. You have, in fact, saved your own money. The fact that it's paid in dollars that were recently collected from your kids is as irrelevant as would be the provenance of the particular dollars your bank hands you back when you go to the ATM machine. Again, I think you should consider what it is that distinguishes Social Security benefits from government bonds. The answer is, nothing, except the form of the contract, which is a harder and faster one in the case of the bonds.

I have no objections to people "keeping" more of "their own" money and then supplementing that with a smaller wealth transfer to poorer people, as an alternative to Social Security. But I just don't think the difference is very meaningful. What is the difference between putting your money in a bank account and taking out principal plus a defined interest in 40 years, or paying it into Social Security and taking out the same principal plus defined interest in 40 years? As long as the promise from Social Security is ironclad, none. And the only reason it's not ironclad is because of people like yourself who want to scrap the system. You've made an argument that if the money were in savings accounts it would contribute more to the economy, but I'm really not sure how important that is. It is the part of the argument that seems most coherent to me, but it has nothing to do with talk of "crisis" or "Ponzi scheme"; it's about a disincentive to national savings, as Megan points out. The problem is, though, that it's unbelievably hard to get there from here; it means a huge increase in SS taxes to both pay current benefits and save for the future. So I don't think there's much sense talking as if we could choose between one system and the other; you're talking about adding on an additional system, at tremendous expense. And if the goal of the system is to increase the national savings rate, then that's how you should be presenting it. You should be saying, "We need a national program to increase the savings rate. If it works, it might allow us to better finance the reduce or scrap Social Security without shortchanging any of our workers."

Re: Are you serious?

ScentOfViolets — Tue, 27 Nov 2007 19:33:32 -0000

To the contrary, I am pointing out that you are not arguing in good faith, have no intention of doing so, and are unwilling to meet very minimal requirements for basic reasonableness.

Your whole demeanor reeks of it . . .

For example, putting words in my mouth that I never said. For example, insisting that you have a lock on what's 'fair' and 'unfair'.

Iow, I am agreeing with brooksfoe, you twit. That shouldn't be difficult to understand.

If you're not arguing in bad faith, you'll change your demeanor and apologize for any misunderstanding you may be the author of. But I'm guessing that's simply not in the cards.

Re: Are you serious?

SG — Tue, 27 Nov 2007 17:58:50 -0000

SOV:

First, brooksfoe and I have been going back and forth for many a day over several threads. My statement here is a summary of many threads that included links to such authorities as the SSA trustees. I don't expect you to have read them all, but a little context might save you from coming off like as ass.

Second, rhetoric need not take the form of a proof, and often doesn't. Unless you believe FDR proved that "the only thing we have to fear is fear itself" from first principles.

Third, my assertions that the payroll tax is regressive and you hold no property rights to your SS contribution has been readily conceded by those on all sides of this issue. I need no more prove these assertions than that the sun rose in the east this morning. I notice that you didn't bother to actually challenge those assertions, either.

Fourth, the assertion of mine that you did actually challenge was that SS is unfair. That statement does logically flow from the still unchallenged statments like, "It transfers money from young and poor to elderly and wealthy. It transfers money from black and (relatively) short-lived to white and long-lived. It harms post-boomers for the benefit of the boomers. It provides less return than the same money rationally invested. It keep the poor from amassing wealth. It a flat loss to those who die young. It's demographically unsound."

Finally, as you rightly point out, you're under no obligation to respond to me in any case. I invite you to take advantage of that right. Unlike brooksfoe, who I believe is arguing in good faith, I believe you to be the equivalent of a fecal flinging monkey.

Re: Are you serious?

MEH — Tue, 27 Nov 2007 16:35:11 -0000

ar·gue (ärgy)

v. ar·gued, ar·gu·ing, ar·gues

v.tr.

1. To put forth reasons for or against; debate: "It is time to stop arguing tax-rate reductions and to enact them" Paul Craig Roberts.

2. To attempt to prove by reasoning; maintain or contend: The speaker argued that more immigrants should be admitted to the country.

3. To give evidence of; indicate: "Similarities cannot always be used to argue descent" Isaac Asimov.

4. To persuade or influence (another), as by presenting reasons: argued the clerk into lowering the price.

v.intr.

1. To put forth reasons for or against something: argued for dismissal of the case; argued against an immediate counterattack.

2. To engage in a quarrel; dispute.

http://www.thefreedictionary.com/argue

SOV, there are, I believe, better ways to endeavor stress reduction...

Re: Are you serious?

ScentOfViolets — Tue, 27 Nov 2007 15:10:48 -0000

I've argued six ways to Sunday about the basic unfairness inherent in Social Security. It transfers money from young and poor to elderly and wealthy. It transfers money from black and (relatively) short-lived to white and long-lived. It harms post-boomers for the benefit of the boomers. It provides less return than the same money rationally invested. It keep the poor from amassing wealth. It a flat loss to those who die young. It's demographically unsound. And so and so forth.

Sigh. This is why a lot of people tend to think of libertarians as being mentally . . . underpowered. You have not made any 'arguments' that I can see; what you have made are flat declarations, unsupported by reasoning or evidence. Hint: if you want to declare something 'unfair', a procedure, an act, a program, you had better be very sure that you have communicated what you mean by unfair to your audience. And you better make sure that they agree on that meaning.

You had also better wake up to the fact that no one has to argue against your positions; you have to persuasively argue for them, back them up with cites, etc. I have zero, let me repeat zero obligations to try to show you why you are wrong.

I've been told by one person explicitly already that libertarians reject these requirements, to which I reply, that it is not only the facts that are against libertarians, but apparently logic itself now has a 'liberal' bias.

Re: Are you serious?

SG — Tue, 27 Nov 2007 11:41:40 -0000

"Well, SG, for a while there I thought we were having an actual honest discussion, but apparently you were speaking in bad faith." - brooksfoe

I've argued six ways to Sunday about the basic unfairness inherent in Social Security. It transfers money from young and poor to elderly and wealthy. It transfers money from black and (relatively) short-lived to white and long-lived. It harms post-boomers for the benefit of the boomers. It provides less return than the same money rationally invested. It keep the poor from amassing wealth. It a flat loss to those who die young. It's demographically unsound. And so and so forth.

You've failed to address any of those arguments. You've blown by blunt questions like: "Why do you want to need to take your kids' money for your retirement? How is that preferable to just having saved your own money?". To be fair, it's clear that you would much prefer a system where the wealth transfers were from the "ultrarich", but you've argued against having means-tested assistance provided out of the general fund (i.e., the progressive tax base) if that meant that payroll taxes were placed in private accounts.

My good-faith understanding is that you favor wealth transfers, the details are secondary. A system, even a more progressive one, that would result in people retaining more of their own money is unacceptable to you. Assuming you're not just arguing for the sake of arguing, I don't see any other way to read you.

If I am misreading you then I apologize. But in that case, I really don't understand what you're arguing for.

Re: Are you serious?

brooksfoe — Tue, 27 Nov 2007 05:33:30 -0000

Randall, I didn't say that the person who SAID it was sinister, or that the rhetoric was sinister. I said that the rhetoric was designed to make something banal and obvious (the fact that Social Security lets people retire) seem vaguely sinister (by rephrasing "retire" as "shrink the labor supply").

Re: Are you serious?

Randall Parker — Tue, 27 Nov 2007 03:20:55 -0000

brooksfoe,

If people say something obvious as a rhetorical strategy that does not make them sinister. That seems equivalent to saying that rhetorical strategies are sinister, or vaguely sinister.

Really, you don't agree with Megan and so you are finding fault with her style of argument.

Speaking as someone who is not a libertarian I don't always agree with her either. But if she states something obvious I don't have a problem with that.

Oh, and of course deregulation of prices will cause prices to rise to the place where supply and demand equal. If someone wants to claim that who opposes deregulation I'm not going to think them sinister for stating that.

Re: Are you serious?

brooksfoe — Mon, 26 Nov 2007 21:26:25 -0000

And I think leftists just like the idea of government transferring wealth en masse. Who it's transferred to and from is largely secondary. - SG

Well, SG, for a while there I thought we were having an actual honest discussion, but apparently you were speaking in bad faith.

Re: Are you serious?

Henry — Mon, 26 Nov 2007 15:15:11 -0000

The point is that when kids are cared for, real work is being performed.

In the case of a couple that elects to hire child care, all parties are part of the social security system.

But the couple that elects to get by on one income to care for its children gets less social security in the end (no one has to die here).

For many middle and working class families, paying for child care is of marginal financial value. Yet the rational decision -- to have one parent stay home or work limited hours -- is penalized by the system. In effect, social security multiplies the income of professionals who can afford to both work. The more you make more than your nanny (within limits, of course), the better Social Security works for you.

Re: Are you serious?

Rob Lyman — Mon, 26 Nov 2007 14:47:26 -0000

If Betty and Bob both work -- they accrue more social security than if Betty works and Bob stays home. The math doesn't change no matter how married they are.

Yes, they also make more income if they both work. What is the point here? If they can get by on Bob's salary alone, and if the two of them can get by after retirement on his SS alone, why can't Betty get by on his death benefit after he dies? If he dies young and the death benefit doesn't pay for college, why can't she go out and get a job to support herself and the kids?

(And why the hell isn't Bob carrying real life insurance?)

Re: Are you serious?

tfowler — Mon, 26 Nov 2007 14:16:36 -0000

spencer - Re: "I agree that SS reduces labor supply, but would argue that that is a positive feature. Would you care to argue with me that reducing the supply of 75 year olds or the number of widows with three young kids that have to work is a is a bad feature of SS?"

Reducing the labor supply is a negative feature. Reducing the supply of elderly people who have to work can be a positive feature. The two are very connected but they aren't the same thing. Even when one you can't get one without the other, you can still reasonably talk about the separate effects of each. Reducing the labor supply means less people work, and less gets produced. One can argue that the benefit of the elderly not having to work provides a larger benefit than the cost of reducing the labor supply, but even if you accept that beyond any doubt, it still doesn't mean there isn't a cost, or that it is ridiculous to talk about the cost.

Re: Are you serious?

tfowler — Mon, 26 Nov 2007 14:10:52 -0000

brooksfoe - "And, second, does the US face a shortage of labor? Do we need more 65-and-older seniors working? Why do we want to increase the labor supply? If we need more workers, why don't we allow more legal immigration?"

Its not an issue of total number of laborers, but rather of laborers compared to those who are directly or indirectly (mostly through government programs) dependent on those laborers. Now allowing more immigration will still improve the ratio, but adding an additional person as a worker, doesn't improve the ratio as much as moving one person from dependent status to worker status.

Re: Are you serious?

tfowler — Mon, 26 Nov 2007 14:07:56 -0000

Njorl - Re: "If the government is defaulting on Social Security, the FDIC will be reneging on deposit insurance, savings bonds will not be honored, the stock market will likely have crashed and so on. Unless the American worker has decided to invest their savings in foreign currency, they'll likely be screwed no matter what they've invested in."

The government would not need to default on the Social Security bonds in order not to pay them back, because the holder of the bonds is the SSA and the SSA is part of the government. There is no debt from one part owed to another, because their is only on US federal government.

The SSA can be directed by legislation to cancel the debt, or the treasury could pay back the debt and the SSA could be directed by law to transfer that same amount of money to the general treasury fund.

Even if there was an actual default (and that's unlikely because the government can not "pay back" the "loan" to itself, without defaulting), defaulting on these specific bonds does not cause or imply a general default on all the Federal government's obligations.

Re: Are you serious?

Henry — Mon, 26 Nov 2007 13:54:05 -0000

If Betty and Bob both work -- they accrue more social security than if Betty works and Bob stays home. The math doesn't change no matter how married they are.

Re: Are you serious?

Rob Lyman — Mon, 26 Nov 2007 13:40:31 -0000

A stay-at-home parent accrues no social security.

Death benefits from the working spouse: the "S" on OASDI.

Re: Are you serious?

Henry — Mon, 26 Nov 2007 13:21:53 -0000

The birth rate relationship seems self-evident.

A stay-at-home parent accrues no social security.

That cuts the heart out of any moral argument for social security, as far as I'm concerned.

Re: Are you serious?

SG — Mon, 26 Nov 2007 13:21:04 -0000

Curmudgeon,

I share your amazement. But you've forgotten about the elderly. They have good reason to like SS; they get a check every month.

And I think leftists just like the idea of government transferring wealth en masse. Who it's transferred to and from is largely secondary.

Re: Are you serious?

Curmudgeon — Mon, 26 Nov 2007 11:23:19 -0000

I’m always amazed that ANYONE really likes SS. Leftists should hate it because its most-common effect is to take money from relatively-poorer young people with children and give it to relatively-richer, childless old farts. Libertarians should hate it because it treats people as a means rather than an end. Conservatives should hate it because it’s a ponzi scheme.