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From: mcgeer@ucbvax.BERKELEY.EDU (Rick McGeer)
Newsgroups: net.politics
Subject: Re: Re: Social Security vs Social Welfare
Message-ID: <10936@ucbvax.BERKELEY.EDU>
Date: Sat, 9-Nov-85 02:23:06 EST
Article-I.D.: ucbvax.10936
Posted: Sat Nov  9 02:23:06 1985
Date-Received: Sat, 9-Nov-85 20:57:39 EST
References: <756@whuxl.UUCP> <29200244@uiucdcs> <361@whuts.UUCP> <1270@mhuxt.UUCP> <784@whuxl.UUCP>
Reply-To: mcgeer@ucbvax.UUCP (Rick McGeer)
Organization: University of California at Berkeley
Lines: 101

In article <784@whuxl.UUCP> orb@whuxl.UUCP (SEVENER) writes:
>>  From Jeff Sonntag: 
>>      If social security *were* government forced savings for retirement,
>> then I wouldn't consider it social spending.  But that's not what social
>> security is.  In reality, as I'm sure Sevener is well aware of, the 
>> government collects funds from working people and transfers them to
>> retired or disabled people immediately.  This sounds *awfully* similar
>> to other forms of social spending.  
> 
>It is *not* similar to other forms of social spending.  In order to
>be eligible for social security you must have paid into Social Security
>for a certain number of quarters of your working life.  Those people
>who have worked all their lives and dutifully paid into the Social
>Security have every right to the pension they have paid for.
>Moreover this is often the *only* protection some people have,
>particularly those with lower incomes and less ability to save 
>voluntarily, for some sort of pension at retirement.

Sevener, you never fail to amaze me.  I didn't think that anyone other than
Tip O'Spendit could actually spout that propaganda with a straight face.
OK.  (1) Nobody currently receiving social security paid into the program
anything like what they're getting out.  The relationship between payments
made and benefits received is essentially nonexistent.  Those currently
receiving benefits have contributed a small fraction of the amount they
receive.  Second.  At no time did the US government contract for any
particular level of benefits -- the benefits are those mandated by
Congress from time to time.  Hence not only do those receiving SS not have
a moral claim to the level of benefits they receive, they don't have a legal
one, either.

Social Security may be the single most odious program the US Federal Government
runs.  It is not so much a pension plan as a ponzi scheme, and it is as
singularly successful as the latter as it is unsuccessful as the former.  It
is a poor social program, as well: it transfers from the poor to the rich,
from the working to the idle, and from the young to the old.  Milton
Friedman points out that it is a genius for political salesmanship that a
program which consists of a regressive tax and a welfare-for-the-rich scheme
(neither of which, obviously, would have flown alone) has been turned into
the most popular political program of the century.

> 
>There are some major problems with the way that many corporate pension
>programs work.  If you get laid off and are forced to work somewhere
>else your private pension is usually untransferable.  Social Security
>remains in effect wherever you work, so long as payments are made
>into the Social Security Trust Fund.

IRAs have the same advantage, as do other private (non-corporate) pension
plans.

>Many corporations unfortunately engage in the practice of deliberately
>laying off older employees as they approach their retirement so
>they are not forced to pay the full benefits they would otherwise
>have to pay if those workers remained in the company until their
>retirement.  This is frequently done to engineers and others with
>technical skills which become considered *obsolescent*.  Younger
>workers fresh out of college are assumed to be more up-to-date and
>also to be a lot cheaper given that they have not accumulated the vacation
>days, and salaries of older workers at the same time they do not
>present the same potential costs in terms of imminent full-fledged
>retirement benefits.

EVIDENCE?

>Nor are corporations (*or* unions!) immune to using pension funds for
>other uses besides simply paying workers' retirement.  The New York
>Times Business Section just had an article on corporations use of
>pension funds for their own investments and purposes.  I believe there
>is something approaching $400 billion controlled by pension funds
>in today's economy.  That is a lot of money to have to use for capital
>leverage.

This is true.  But note how we're now financing the deficit, since the house
won't pass the deficit-cutting package.

> 
>The fact that current payments to Social Security are used to pay
>retirement benefits to current retirees is a potential problem
>for the Social Security system as the very large baby boom population
>comes to retirement to be supported by a much smaller generation of
>younger workers.

Bingo.  I'm 28, and I'll never see a nickel of Social Security. A combination
of extended lifespans and fewer young workers will see Social Security to its
deserved death long before 2022, or whenever it is that I retire -- and I'll
bet that the same demographic forces that kill SS will keep me working well
into my 70s, at least: of course, I'm at the age where that doesn't sound
unattractive.

>But this problem and this practice is no different than that used by
>banks, insurance companies or other pension and disability funds.
>
>-tim sevener  whuxn!orb

The difference is that most such programs are actuarially sound -- and those
that aren't go broke.  SS is run on principles that would make an actuary
puke, and when it goes tits up -- every decade, or thereabouts -- another
generation is stiffed to pay for the mistakes of the past.  One of these days
the con won't fly anymore.

						Rick.