RE: More on Risk: A Response to Mr Reischauer

[Javier Jimenez <jimej@yahoo.com>]

>>>>>> James wrote:
>From: Javier Jimenez 

>>>>Yes, I understand the concept of pooled risk, but insurance
companies don't force people into their pooled risk scheme, the
government does. Moreover, the insurance co. will make you a better
deal too.

Then, where are the insurance companies with their shared risk
proposals for the cohort problem? Why not tell us the private
solution to that 'problem' instead of complaining about somebody
mentioning it? The 'I don't want it so lets not discuss it' in
terms of SS reform doesn't really fly. You don't seem to realize
that this will be a political (collective) decision. You have to
show enough people how it will be better for them, to get your
reform accepted.

We all know how you will vote, now convince the rest of us that
you are right. Avoiding the 'problems' that may affect somebody
else won't do that.

<<<<<<<<
First, your reply to my comment makes absolutely no sense.  Moreover,
my position on the issue of privatization has been consistent all
along, you can go back and read the many postings I have written.
In all of them, I argue for freedom to all workers to decide for
themselves where to best put their money.  This freedom will gain
them security in their retirement years because a) they know that
they were self-reliant to provide for themselves; b) they don't
depend on the government on a daily basis for their support; c)
they created wealth that belongs to them and no-one, except for
the government taxing them, can take it away from them; d) they
have an ownership stake in the private economy; e) there is a safety
net to assure them a minimum benefit should they outlive their
savings; f) they, not the government and its formulas, will determine
when they retire; g) they have better retirement income (see Michael
Jones excellent posting: RE: Discussion Questions on Personal
accounts sustainability during bad economic time); h) and best of
all, they are not a burden on their children through higher income
taxes and payroll taxes to pay for the unfunded liabilities of
today's ss and the benefits of workers on the wealth transfering
ss scheme.

It is a fact of life that in this country, we have a great financial
infrastructure that would serve PRAs well for the benefit of all
workers, rich and poor, not only those that have the spare income
to rip the benefits of investing.  From my own experience, I started
investing in the Janus group of funds back in 1994 with $50/month;
Janus charged me nothing for my account or small contributions;
total management fees for most funds at Janus run between .5% and
1.25%, and like Michael Jones, I have been able to experience the
same kind of compounding he is experiencing in his 401k (minus some
taxes paid); today I contribute more than because a) I realized
that investing was the way to create wealth for myself; b) now, I
have prioritized my expenses, I pay myself first; c) I've been able
to acquire two homes with earnings (and principal) from those
investments.  So, if I have been able to achieve success by investing
with discipline- through dollar-cost averaging, reprioritizing my
expenses, and acquiring property with the income I have left over
(I am fortunate enough to have had the $50 to start), then I strongly
believe that all workers should have the opportunity to do the
same.  We don't need to create new entitlements, or tip the formulas
in favor of low-income workers, 12.4% is more than enough to achieve
success (12.4% of any worker's income, including minimum wage
earners, is more than the $50/month I started with) without having
to beg from the government for a meager benefit.  Education, like
in everything else, is the key for a successful retirement;  it
should be the role of government under a system of PRAs to educate
the workers, point them in the direction of the information.  In
Chile, a third world country, when their ss system was privatized,
they achieved this goal, so we should be able to do it here as
well, unless, in your paternalistic wisdom, you think our workers
are more ignorant than those living in sub-human conditions assosiated
with 3rd world countries.

In summary, the fact of the matter is that PRAs will empower workers,
give them a better retirement with freedom and security away from
government dependence, and our children, helpless as they are today,
will be able to enjoy a future without the heavy burden of taxes
imposed on them by our excesses and lack of action.