Social Security

[kipperthefrog]

Since this is a hot debate, and this will effect America for generations to come, I thought we need to explore the topic more.

 

My dad said it means we would have to put our social security in the stock market, and we might as well put it in the horse races.

 

Most of the time people loose in te stock market. Once the stock market crashed, and people jumped out of windows killing themselves becuase they lost everything. It took FDR and his new deal to straighten it out again. If we could depend on the stock market for retirement, we wouldn't need social security. they wouldn't build casinos without all those loosers.

 

Thankfully, there are people questioning it. Labor gruops are planning a protest, democrats oppose it, and I heard even some republicans are upset.

 

Lets hope we don't loose the retirement plan founded by Franklin D Roosevelt witch worked fine for 70 years. we may never get it back

[SkinWalker]

There is some study of the plan that indicates that the earnings that the government would get by placing a portion of the account in the stock market would be nominal or non-existent. This is because the stable investments don't have the kinds of returns that would be greater than the current strategies.

 

But what I'm wondering is what would an economy be like when the government is the largest single investor in corporations? There seems to be some conflicts of interest here. This is the same government that is supposed to apply controls and restrictions on corporations that ensure worker safety, labor rights, consumer safety, etc. These are also the corporations we expect, to some degree, to vend to the government in the areas of defense and services.

[kipperthefrog]

Originally posted by SkinWalker

There is some study of the plan that indicates that the earnings that the government would get by placing a portion of the account in the stock market would be nominal or non-existent. This is because the stable investments don't have the kinds of returns that would be greater than the current strategies.

sorry, I don't understand. could you simplify for me please?

 

Originally posted by SkinWalker

But what I'm wondering is what would an economy be like when the government is the largest single investor in corporations? There seems to be some conflicts of interest here. This is the same government that is supposed to apply controls and restrictions on corporations that ensure worker safety, labor rights, consumer safety, etc. These are also the corporations we expect, to some degree, to vend to the government in the areas of defense and services.

 

Dad and I hear that the politics are protecting corperations. Corperations can pay off politics and get what ever law they want.

 

In Enron, they got away with what they did, they should have broke up microsoft, but didn't. Oil companies are getting a fortune becuase the Prez and senaters and congress men are in the oil shares, It is practicly a corperate run country.

[lukeiamyourdad]

Perhaps, but breaking big corporations also causes problems. If they decided to crush Microsoft when they had the chance, you'd have a big economical problem. Everything runs with Windows(well no, but a vast majority of computers run with Windows). You'd need every other companies that produce software and related products to change to linux or apple in a few weeks or months.

 

The same thing would apply for Wal-Mart. If you removed it, you remove 1.3 million jobs worldwide plus everyone who provides them with items, making the number climb higher then you think.

 

Not to mention the number of investors who would lose money.

 

You can't remove a near monopoly so easily.

 

 

 

Originally posted by SkinWalker

But what I'm wondering is what would an economy be like when the government is the largest single investor in corporations? There seems to be some conflicts of interest here. This is the same government that is supposed to apply controls and restrictions on corporations that ensure worker safety, labor rights, consumer safety, etc. These are also the corporations we expect, to some degree, to vend to the government in the areas of defense and services.

 

This is a problem we have in Canada, or rather Quebec, to a degree(since the largest investor is not the government but let's say it's large enough).

 

A government owned company must by their ressources from another government owned company. This is the communist effect. In a perfect world, the company provides great ressources(let's take leather for example). Let's say the first company makes shoes.

Now, they're forced to buy leather from the second company, regardless of its quality. So the shoe company makes crappy shoes because the second company, its ressource provider, can't give them decent leather.

 

There's also a huge conflict of interest scandal here in Canada. But I won't get into it.

 

Sometimes, such kind of protectionism(if we can call it that) can become a necessity. In Quebec, during the 60's, the government had to nationalize a lot of industries in order to keep them in the hands of its people. The anglo-canadians owned pretty much everything before leaving the people without anyone of their men controlling anything in the economy.

It was to keep the Quebec economy in the hands of the Quebec people.

 

It's also like when PM Trudeau nationalized the oil industry in Canada, to keep it away from the Americans.

[Samuel Dravis]

Originally posted by kipperthefrog

sorry, I don't understand. could you simplify for me please?

He means that the privatization of SS would mean that some of the money would be put into accounts that generate interest reliably, but the amount of interest made from that type of investment may not exceed what is already being earned. To make enough money for the change to private accounts to be worthwhile, you might have to actually risk the cash in your account.

[toms]

We haven't had much in depth reporting of the plans to shake up US social security over here, but the few reports we did have indicated that US social security was actually in pretty good shape compared to most other countries.

 

I just have a slight suspicion that the reason to float it on the stock market / privatise it would be based on some politicians dogmatic political ideals (private sector = good, public = bad) rather than sound financial reasoning.

 

When Mrs Thatcher was PM in the UK int he 80s they privatised EVERYTHING. At first it made sense... increased competition = better service and lower cost. But soon it stopped being based on practicality and became entirely dogmatic. They privatised things like the railways that made NO SENSE as there was no inherent competition. These privatisations were all total disasters where prices went up, standards went down and the government STILL had to pay a large subsidy to keep thing going.

 

Maybe this has no relevance, but i can't help being a bit suspicious when most reports indicat that US social security is in reasonable shape and only needs minor tweaking.

 

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You can't get money from nowhere... whether it is government run, privatised or floated.

 

Almost all UK pensions have become fairly useless over the last decade or so because they were all reliant on the stock market, and when it crashed they all lost too much money to be able to make it up.

 

So i wouldn't consider the stock market to be a risk free solution to all problems.

 

But then again, i don't know enough about the details to know if the idea is good or not.

[Wilhuf]

The sad reality is that US legislators don't want to take the political bullet of either increasing taxes and reducing payout benefits today to ensure the long term solvency of Social Security.

 

Will privatization fix Social Security solvency? Show me the data to prove that it won't.

 

10% average return through the stock market isn't bad. Certainly better than some lousy 3% T-bill that funds Social Security.

 

Leaving Social Security as is won't work: the fund will be insolvent by 2042. Benefits to retirees must be reduced 70% by then, according to the Social Security Administration.

 

Inevitably, legislation will be made today that increase taxes and reduce benefits for future generations. And it will be done at a higher cost to those future generations than to the current generation of retirees.

[kipperthefrog]

since people living longer is the whole problem, souldn't we just raise the retirement age to 85?

[Wilhuf]

Here is the process.

1. Imagine you are a US Senator.

2. Imagine considering a vote to increase the minimum age for Social Security payouts.

3. Imagine being voted out of office by millions of angered senior citizens unwilling to make any sacrifice for the benefit of future generations.

4. Imagine just keeping the status quo.

[kipperthefrog]

the seinior citizens who are already getting it will still get it. those who who don't get it yet will just wait longer.

[Wilhuf]

Explain how exactly it that is fair to future retirees? Why should current retirees enjoy a longer retirement than future retirees?