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Author: fingfool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19222  
Subject: Comments on SS Reform Discussion Date: 5/22/2000 1:23 PM
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It appears to me that the arguments against any major changes to SS coming from discussions, past and present, on this board revolve around the proposition that there are a number of people, normally the poorer and less educated among us, who do not have sufficient judgement or discipline to save for their retirements. This is usually followed up with a statement that we cannot let these people starve.

My observations of people over my many years are that poor judgement and discipline are not directly correlated to income or education. I have known of many people with high education levels and incomes who did not prepare well for their retirements and, on the other hand, those with low formal education and income levels exhibit the judgements and discipline that allowed them to do quite well in retirement. I have also noted that when people are given a cushion to full back on, they can more readily rationalize their irresponsible actions. Those who allow this rationalization are called enablers. If significant numbers of people are really going to be irresponsible, what's to say they will not fritter away their SS checks and not be able to feed themselves. Then do we continue to reimburse them until they can spend no more?

But lets assume such irresponsible persons exist as a significant portion of the population and that a certain portion of them would continue to do so even in the absence of the enabler effect. Lets also assume that some portion of the population, through no faults of their own, do not have the resources to provide for their retirements or insurance. Do we want to fund these programs by forcing everyone to put up to over 12 % of their income into an inefficient program like SS with its Ponzi scheme structure that makes us all beholden to the Washington politicians? Why not separate the problem into the issue of retirement investment (where I favor a transition to voluntarism) and the issue of charitable response to those who can't or will not contribute to investments/insurance? Why is their no push from the politicians in Washington to educate people on the needs (and exhilaration of the independence it brings) of people saving for their own retirements and contributing to insurance programs?

We should also remember that when SS was started in 1935, the Roosevelt administration sold it and set it up as a fully funded trust. After four years the fund was converted to a pay as you go (or Ponzi) structure and has remained as such ever since. During the depression years a large number of people were unemployed and, particularly, the older part of the population. Fewer people in those times retired. SS allowed some of these people to retire and thus for the government to effectively state that the unemployment numbers had been reduced. The idea was borrowed from the Germans who, during Bismarck's time set up a similar system and used 65 as the retirement age for collecting benefits. Unfortunately the unemployment rate in the US in 1939 was as high as it was in 1932.

Regards,
fingfool
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Author: hotfoot Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4020 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/22/2000 6:59 PM
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fingfool writes:

My observations of people over my many years are that poor judgement and discipline are not directly correlated to income or education. I have known of many people with high education levels and incomes who did not prepare well for their retirements and, on the other hand, those with low formal education and income levels exhibit the judgements and discipline that allowed them to do quite well in retirement.

Whether or not poor judgement and discipline correlate to income or education, there are people who have problems with voluntary savings. Look at the current records of savings vs debt today. Consider that credit card debt is $7000 per cardholder. What is the average savings figure? How much is in the savings accounts of the people we are concerned about?

In your observations, how many people do you estimate will never put money in the market because they do not trust it? How many are there that have only a glimmer of what the market is and how it functions?

Why not separate the problem into the issue of retirement investment (where I favor a transition to voluntarism) and the issue of charitable response to those who can't or will not contribute to investments/insurance? Why is their no push from the politicians in Washington to educate people on the needs (and exhilaration of the independence it brings) of people saving for their own retirements and contributing to insurance programs?

A charitable response to the issue is not a reasonable response.
Charity stinks - no one likes it if they are on the receiving end and IMHO, the administrators of the charitable program will create a really inefficient dole.
Talk to the guy on the line every day about the exhilaration of saving for retirement and you will find the edge of where the gap between the haves and have nots begins.
I think you have a really big educational problem on your hands.
H.










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Author: PVFOOL Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4023 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/23/2000 1:30 AM
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fingfool (post 4015) You raise some interesting arguments. Agreed, there is no correlation between education levels (or income levels) and intelligence/discipline to prepare for retirement. But, then there are many more low-income people than high income, so my input is still valid.

We have forgotten another reason for SS, which, in short, is to take the 65 and older out of the labor pool. (Really, this was part of the ideal.) This opens up more jobs for the younger unemployed, who then help provide for the SS benefits for the older retired. Part of our 30's era social engineering.

Actually, while we have a certain lack of comfort for paying retired people not to work (That's what it is!) we also pay other segments of the population not to work (you know who!) And, if we eliminated all the "work" which consists of moving paper from one pile to another (all government, insurance, banking, you name it) we would have REAL unemployment.

So (I've gotten off the subject here) SS is only one part of our larger social engineering situation, which is to redistribute our wealth without "killing the goose that laid the golden egg." Yeah, I suppose I'm a radical, but I believe our problem isn't getting people to work, but to preserve the work ethic among those who do produce our goods and (non-paperwork) services, typically our lowest-paid workers.

Comments?
PVFOOL

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Author: fingfool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4024 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/23/2000 9:02 AM
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Dear Hotfoot:

You imply from your reply (#4020) that people exhibiting poor judgement in credit card use makes part of the case for forced savings for Social Security. Some of the most prudent savers I know were once credit card abusers. Like being a parent, there are times when you have to allow the children to make their mistakes so they can learn from them. I hope you are not suggesting that since we can force people to save with SS, we could force them not to abuse their credit cards by controlling the process from Washington. Our politicians in Washington have not exactly been shining examples of prudent spending and budgetary control.

Your observation that many people will never put money in the market or trust it or understand it seems a bit on the gloomy side. I'll bet that 30 or 40 years ago there were many prognosticators out there who would never have thought we would have anywhere near as many people with investments in stocks and bonds as we now do. On the other hand, do these people to which you refer understand the Social Security system sufficiently well to make intelligent voting decisions about it? It's all about informing and educating people.

You commented that no one likes being on the receiving end of charity and I agree. That's because we don't like being dependent on others, like, for instance, the politicians in Washington who dole out Social Security benefits.

You also commented that talking to the guy who is on line every day would reveal the edge of where the gap between the haves and have nots begins. In my former life, I talked to the guy on the line every day, as I did the guys in the laboratory and in the corner offices and never noticed this edge of which you speak. I am more familiar with the have/have not terminology coming from our Washington politicians when they need to invoke some emotional appeal to class distinction in order to pass legislation.

Regards,
fingfool


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Author: hotfoot Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4034 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/23/2000 7:40 PM
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fingfool,
So many of the respondents on this issue are intelligent, educated and capable of handling their own retirement programs. We could leave them alone and they would be fine.

Trouble is, they are one general group of the populace -- where is the response from the people who don't even have a computer let alone an understanding of the financial implications or a desire to know??

In many respects this has become a "me" society. I saw a response that asked why "the responsible young have to now care for the irresponsible elderly."
Conversations like that do not deserve a reply. Society has a responsibility to provide support for, lacking better words, the less fortunate.

You wrote:
I hope you are not suggesting that since we can force people to save with SS, we could force them not to abuse their credit cards by controlling the process from Washington.
Why are you expanding on my remarks? This is a silly supposition.
I do believe forced savings is one of the best ways to help resolve the problem. Expanded 401K programs and those programs instituted by some unions allow for participation in the market and the programs have a conservative bent. There is little gov't involvement as far as I know.

On the other hand, do these people to which you refer understand the Social Security system sufficiently well to make intelligent voting decisions about it? It's all about informing and educating people.

No, I do not believe they understand the SS system. Nor do they understand the market. I agree education is critical, starting in the schools.

In my former life, I talked to the guy on the line every day, as I did the guys in the laboratory and in the corner offices and never noticed this edge of which you speak. I am more familiar with the have/have not terminology coming from our Washington politicians when they need to invoke some emotional appeal to class distinction in order to pass legislation.

And how did the conversation go? Did they discuss the market and SS as we have on this board? Did they participate in a 401K? Did they debate the merits of the S&P 500 Index vs the NASDQ 100?
I actually meant "line" to be a more general term not as in "assembly line". Some of those people do very well especially in unionized shops or in high dollar product manufacturing.
If you have not seen the edge you are walking past it or you don't get out enough.
I think the reduction of the middle class is well documented.
H.














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Author: tmbFool One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4048 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/24/2000 2:24 PM
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hotfoot wrote:
<I do believe forced savings is one of the best ways to help resolve the problem.>

*Forced* savings is bad enough. But Social Security is hardly that. Forced transfer of funds (i.e. no savings involved) is more like it. I fail to understand why S.S. is termed so successful when even the lowest earners get very poor return on their "investment".

In other words, since the people who benefit the most from this transfer dont benefit very much, why are so many people such great fans of S.S.?

Ted

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Author: hotfoot Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4054 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/24/2000 8:41 PM
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*Forced* savings is bad enough. But Social Security is hardly that. Forced transfer of funds (i.e. no savings involved) is more like it. I fail to understand why S.S. is termed so successful when even the lowest earners get very poor return on their "investment".

In other words, since the people who benefit the most from this transfer dont benefit very much, why are so many people such great fans of S.S.?


Because a bird in the hand gets eaten.
H.



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Author: caddman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4055 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/25/2000 9:13 AM
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"Charity stinks - no one likes it if they are on the receiving end and IMHO, the administrators of the charitable program will create a really inefficient dole."

Inefficient! Washington is the most inefficient distributor of benefits. $5 dollars in taxes are collected to dole out $1 dollar in social spending.(includes Welfare, SS, Food Stamps, etc.)

While making retirement contributions should be completely voluntary, I am not against requiring a % of income be put in your own private investments instead of FICA/Medicare payroll taxes.

But problem is that people now realize that they can vote in representatives that will put programs in place to pay the voters money. A majority of US households now receive some sort of check from the United States Treasury.


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Author: r2d2t2 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4058 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/25/2000 11:48 AM
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caddman, sorry to take issue with your statement that ss is welfare (if this is what you meant). anything I pay money into to hopefully get a return from is not welfare. this is similiar to what happens when I invest in market.I can understand how it could be viewed as welfare in some cases, but not when you are paying money into the system to recieve a benefit when you reach age 65. my opinion

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Author: Elect5 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4060 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 5/25/2000 6:45 PM
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Caddman,
Where did you receive supportive information to make the following statement? "A majority of US households now receive some sort of check from the United States Treasury".

Elect5

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Author: PVFOOL Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4109 of 19222
Subject: Re: Comments on SS Reform Discussion Date: 6/1/2000 12:57 AM
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caddman wrote (post 4055)Inefficient! Washington is the most inefficient distributor of benefits. $5 dollars in taxes are collected to dole out $1 dollar in social spending.(includes Welfare, SS, Food Stamps, etc.)

I am pursuaded that SS is one of the most efficient wealth redistribution schemes going. There is no investigative staff to find cheaters, no need to determine "need" or eligiblity, just "Are you of the correct age?" "How much have you paid in?" types of questions to answer, which even bureaucrats can usually handle.

SS has been suggested as the appropriate means to expand wealth redistribution (and let's call it what it is). Our various "welfare" methods have certainly not measured up. SS is a bargain by comparision.

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