I'm For Personal SS Accounts: Here's Why.

[ridgeway <riridgew@nyx.net>]

Here is a very interesting and relevant article on the subject
of this public policy debate:

           Jewish World Review Feb. 22, 1999 
                   Thomas Sowell 
             "Saving" social security 
Here are some excerpts of the above article...see the 
article in full at the URL:
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  http://www.jewishworldreview.com/cols/sowell022299.asp
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Nothing seems so insecure as Social Security. However, before 
we start "saving" Social Security, we need to stop and think 
about why it needs saving in the first place. Then maybe we 
can avoid making the same mistakes all over again...[snip]

Social Security's problems go much deeper than the size of 
the generation that is going to be retiring. In fact, Social 
Security's problems go all the way back to the beginning 
--- to the way it was set up, to the lies that politicians 
told about it and to the misconceptions and political 
irresponsibility that have now come home to roost. 

Private insurance companies aren't panicked about the 
annuities they are going to have to pay to baby boomers 
because insurance companies operate in an entirely different 
way from Social Security. Insurance companies take their 
customers' premiums and invest them to create real wealth. 
Later, the earnings from that wealth can be used to pay 
annuities or life insurance benefits whenever they become 
due....[snip]

The reason it matters under Social Security is that there 
has never been any real wealth created. The government 
has simply been robbing Peter to pay Paul. This worked 
great when the baby boomers were paying into the system 
and their money was being used to pay benefits to a much 
smaller generation that was retired. 

Now it has become obvious to everyone that this game will 
not work any more when the huge baby boomer generation 
itself retires...[snip]

The biggest lie about Social Security is that it is some 
kind of "insurance." But, unlike insurance premiums, 
Social Security taxes create no wealth. They are spent 
when they get to Washington, just like other taxes. 
Paper transactions create the illusion of a Social 
Security "fund," but there is no corresponding real 
wealth created --- no factories, farms or railroads. 

The basic principle of Social Security is the same as 
that behind illegal pyramid schemes run by con men. 
The first people to put their money into pyramid schemes 
get repaid handsomely from the money received from 
others who join later. That is what attracts still 
more suckers and enables the con men to rip them off. 

Since the first people to join the Social Security 
system were from the relatively small generation of 
the 1930s, their later retirement benefits were easily 
paid with the money received from the much larger baby 
boom generation. So long as the pyramid keeps expanding, 
things are great, but eventually the pyramid stops 
expanding and those who joined last get left holding 
the bag....[snip]

It was the deceptions and irresponsibility of politicians 
that got us into this mess. If you think the way to get 
out of it is to let politicians continue to guide Social 
Security in the future, then you have missed the point 
completely. 

Investing the public's retirement money in the creation 
of real wealth is an essential part of any permanent fix. 
But, if that means letting politicians throw their weight 
around in the stock market, then this is truly putting 
the fox in charge of the hen house. 

There are all sorts of sound financial institutions 
through which ordinary Americans can put their retirement 
money into the creation of real wealth, without having 
to pick individual stocks themselves. The time is long 
overdue to let them do it. The whole history of Social 
Security shows how important it is to keep 
politicians' hands off that money.  
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I agree with the above article.  I'm also in general agreement
with Ms. Weaver's statements.  Moreover, even if it 
were just a zero sum game of investing vs the current 
SS system, I would support individual accounts for
several fundamental reasons:

1. Freedom --- Freedom to Choose.  The money you
   earn is yours!  The government taking money
   from you *for you* with the promise to return 
   it to you later when you retire is foolish!  
2. Letting the government directly control
   (i.e. collective ownsership) such funds leads
   to socialist redistribution of income schemes 
   that the politicans use to bribe the electorate
   for their election and re-election to
   public office (didn't FDR say something
   like with SS "we will spend and spend and
   elect and elect"?).
3. I think it was some old Greek long ago that
   suggested that Democracy would fall due 
   to loose fiscal policy when the mass of
   voters would vote themselves gifts from
   the Treasury --- thus, one again we
   see the need to keep money out of the
   hands of the politicans, it's our duty and
   responsibility to see that democracy
   not fail due to our own foolish self-dealing.
4. Fidelity, Vangaurd, etc..., and do it cheaper
   than the Feds.  The reported cost i've heard of puts
   the cost for SSA "administration" of funds is about 1 
   percent of assets (I doubt if this is the true full cost,
   for example I doubt if the cost of the Treasury 
   resources used to collect the funds is included,
   I doubt that the cost of the building space
   SS office use is included, I doubt if other
   overhead items are included...).  However,
   my Vanguard fees are a MAX of 0.50 percent
   --- one-half of one percent.  My Fidelity
   Puritan fund has total cost of about 
   0.84 percent.  And even though Fidelity
   Puritan is a conservative plain jane mutual
   fund its returns are a lot better than the
   returns SS will yield!

These are but a few reasons to convert SS into
a system of privately owned individual accounts.
What do you think????  Let's do it! ASAP!!!!
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