A modest proposal to save Social Security

"Being uninsured means foregoing necessary care, especially preventive care, which annually causes the premature deaths of at least 50,000 people." [Joe Conason, RealClearPolitcs]


“There are simple solutions - just not easy ones.” Ronald Reagan

History and current events: the economy, part 2

This is a coincidence. As I finish my morning coffee, waiting for the construction workers to start demolishing our fireplace (long story-check Not Mayberry) I read in the Washington Post an article by Robert J. Samuelson germane to our discussion of the state of the stock market, 401(b)s, and history. Here's one part of it:

But Schumpeter's question remains. Will capitalism lose its vitality? Successful capitalism presupposes three conditions: first, the legitimacy of the profit motive -- the ability to do well, even fabulously; second, widespread markets that mediate success and failure; and finally, a legal and political system that, aside from establishing property and contractual rights, also creates public acceptance. [my emphasis] Note that the last condition modifies the first two, because government can -- through taxes, laws and regulations -- weaken the profit motive and interfere with markets.

It is that public acceptance that is the problem - it plays hob with theory, expectations, and hope for those rationally inclined. It makes it a political problem. Yes, I do not doubt that one can prove on paper that investing Social Security funds into the stock market ought to work out best. But the required public acceptance brings in all kinds of unmathmatical and irrational considerations. Not to mention the fact that most people have no idea how investment works (see Madoff, Bernie).

That's all I have time for this morning.

History and current events: the economy

Jack took me to task for ignoring history. I, on the other hand, think that if people are still alive who can remember hearing about it firsthand from their parents it is not history, had a reply. It was about the Social Security privatization plans in light of recent developments. You can check it here if you are interested.

Social Security might have been.

Since I met Carmen decades ago (she was practically a child) while working briefly for Social Security I have always had a soft spot in my heart for the middle classes favorite Federal Agency. Which leads me to ask: do you remember the Bush plan to privatize Social Security so that your money would be invested in the stock market?

We don't hear so much talk of that anymore. I myself was always stunned by how many soi-disant conservatives wanted this program. They wanted the Federal government to become the biggest single investor in the market with all the resulting distortion, corruption, and old fashioned stupidity (of which we have seen much of late) that would go with it.

Here is one sane conservative's view on it, the Cunning Realist (thanks to Andrew Sullivan):

The stock market crash has shown how catastrophic private accounts would have been, and who would have really benefited from them. Would the government have allowed the Bear Stearns and Lehman outcomes had the Social Security system been chock full of those stocks? Remember, both were former blue chips, the sort of companies that proponents of private accounts insisted any new system would be limited to. The same for Citi, AIG, Fannie Mae, and others. How much pressure would the Fed and Treasury have felt -- and what more would have been done -- to keep those afloat and/or out of penny stock land?

Well, dodged that bullet.

thanks to the socialists, uh, I mean liberals. Oh well.