More responses etc...

[ridgeway <riridgew@nyx.net>]

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Excellent! I think the battle has now been joined! 

Mr. R and Ms. W  -- recognize that, although the other expert
panelist and guest experts might have something to contribute,
you two are THE experts, some of the best resources in the world,
therefore this is the best this debate will have available to it.
Frankly, if you go back and look at the other expert panelist's post,
in general, a lot was just re-issues of boiler plate comments cast
in a very gentle way  ---  I think that's one of the reasons we
many seem to think we've not made a lot of progress.   I can
clearly see that Mr. R and Ms. W are reading the various ravings
that have been posted.  
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Mr. R, the assertion that SS has a Ponzi-like nature was made within
these debates before I arrived.  Yet, the bottom line
description of the situation is just that --- politicians made a lot of
promises and actually delivered on those promises for a pure transfer
of income scheme where those that would have to eventually
foot the bill were not yet born.   It seems that after my prodding
it might appear that you possibly, indirectly, kinda-sorta
agreed to that with: "...we decided to provide the initial cohorts
of retirees (those retiring from 1940 through to the present)
with benefits that exceeded those that could be justified by their
contributions."  If course I was not part of that "we".
  
Now at least we have a statement of historical fact
that we can use in consideration of reforming the existing
system.  Please note that I did gave a reference to a professional
journal and an interview with a independent researcher that
supported my assertion of the Ponzi-like nature to SS.  So, its
not just me!  Also note that his (the UD economics professor) 
independent analysis yielded a number of about $7 Trillion 
for the current size of the Ponzi transfers.  Do you believe the 
$7 Trillion estimate to be materially wrong?  What is your estimate?

As to this being a different America if SS had not paid out
those excess benefits --- probably true, would it be less
pleasant?  Don't know, can't rewind history and do it over,
but I don't think so.

You say people might not have had the income to go to
college had it not been for SS, along with other wonderful things.
But SS simply transfers income.  Today's young workers might
be having a problem saving up buy a home, or the income lost
to FICA taxes could go to put their kids in a safer, better
private school, etc.  Has any objective econometric studies been
done to test your theory?  I can't help but think of an interview
I saw of Donald Trump.  As they talked they showed bus loads
of seniors going to one of his Atlantic City casinos where
the traded their SS checks for chips. You said: "its water over 
the dam".  Perhaps a better metaphor is "its all chips down 
the slot machine."  However, there is a lesson to be learned 
here by the younger generation.  In reforming SS we need to 
make sure we keep the politicians hands away from the pile 
of money so they don't do the same thing again --- we nee
to stop them before the spend again and again and again...

Young workers can learn from the historical facts of
Social Security how to construct a new reformed SS
system that might prevent future political bidding
wars from engulfing future generations.  Yet, this can only
proceed if these basic facts are made public.  I think, in
the limited statements you have given us, that has now been done.

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The above leaves us with the basic facts of the process of
evolution of SS to its current state of having a net present
value unfunded liability of about $7 Trillion?  I'm now using the
average of the amounts suggested by Milton Friedman in his
NYTime article of 1/11/99 "Social Security Chimeras" (about
the same estimate as the University of Delware Economist estimate).
I, as others before me, have made specific reference to this
article.  Using my powers noted earlier to provide a "succinct
evaluation of the situation", it appears that Mr. R's proposal,
in executive summary to be sure, is the conversion of the
SS system more or less as is but with the current trust fund
balances being converted over time from a Bond Mutual fund
with undivided ownership interest to an Equity Index Mutual fund 
also with undivided interest. It might buy some time, but even then,
SS is probably still underwater.  And the fundamental problem
of how to arrange the system so another spiraling out of
control into massive unfunded liabilities due to political
bidding wars does not seems not to have even been touched upon.
The key seems to me is the undivided interest in the fund,
reguardless of the allocation.  A pile of money that belongs
to everyone and no one is a tragedy of the commons waiting
to happen, especially within the political process.

In this are I think the following from Professor Friedman's article, 
the last paragraph, is important to remember in this discussion, at least it is for me:

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   "I have no illusions about the political feasibility of moving
   to a strictly voluntary system.  The tyranny of the status
   quo, and the vested interests that have been created,
   are too strong.  However, I believe that the ongoing
   discussion about privatizing Social Security would benefit
   from paying more attention to fundamentals, rather
   than dwelling simply on nuts and bolts of privatization."
   -------------------------------------------------------------

I think some kind of system of Private SS Accounts offers the 
best chance of solving the more important problems.   Yet, we 
don't really have a complete Private account plan before us that 
gets its arms around these problems. The only available more-or-less
complete plan I know of that is associated with a panelist is from 
the 94-96 SS Advisory Council.  It seems that in my effort, in the 
brief time that we have the true experts with us, to interject some 
context for the discussion questions as they might relate to a 
personal account system I've too closely associated Ms. W with the 
plan her group suggested.  If I have done so, please accept my regrets.

I'm very glad to here you suggest that we can do better
than that plan.  But that does raises the question, if not that
particular plan, can you direct us to a web page or a widely
available publication of a plan, that you do recommend?
Without such context, I feel that my input on the general discussion
topics you proposed as they might be related to a Personal
Saving Account system would not be guided by the appropriate
context.  However, I will give it some thought and see what
I might come up with; but that will have to wait a little 
while (I'm preparing to go on vacation and as much as I like
the brisk exchange of ideas we are having here....).

By the way, there is no greater Libertarian than Milton Friedman.
I'm sure you probably know him very well, please pass along that his
insights and wisdom are very much alive on the internet and in the
perspectives of Gen X --- there is still hope.

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I appreciate both our expert panelist's time.  I noted that some of the
other panels in the other discussion groups clearly were just re-issuing
some general form letters --- they didn't even come close to taking
on the hard questions the peasants out in the public put on the table
as has our two current panel members for this discussion.

Clearly Mr. R and Ms. W are actually putting some time and
energy in here and it is appreciated.  This is the probably the
only chance that most of us will have to ask SS experts any in depth
questions.   Thanks.
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