Facts are Persistent Things.

[ridgeway <riridgew@nyx.net>]

                     FACTS ARE PERSISTENT THINGS

I'm for the complete privatization of Social Security as soon
as possible.  As this debate comes to an end I would like to again 
direct attention to the facts about Social Security that underpin
my preference for a fully funded individually owned private Social
Security accounts.  Independent of this new SS system a social 
safety net should be funded from General Revenues appropriated 
each year out in the open for all to see and understand 
(not all twisted up inside a program like SS).  And on top this,
we need to limit the ability of the government to run up debts,
e.g. a Balanced Budget Admendment to the Constitution (like 
Rep. Joe Barton's version for example).

Several weeks ago when I first came to these discussions I posted several 
published references from experts on Social Security that laid out the 
undeniable, to my opponents the unbearable, truths about this 
government program.  I included quotes from several of the panelist that
participated in these very discussions (e.g. Robert Myers, Carolyn 
Weaver, see my post "RE: Some Facts" on May 10, 1999 in the General
Discussion forum).  I know of no more readily available and clearer 
analysis of the current situation than that of University of Delaware 
Professor of Economics William T. Harris as given in the interview 
found at the internet address given below.
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http://dogbert.kepler-solutions.com/newswise/articles/1998/6/PONZI.UDE.html
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To put it simply, according to Mr. Harris, nothing can save 40-something
Baby Boomers from getting a raw deal at retirement because they are
mired at the bottom of a massive pyramid or Ponzi scheme, according
to his analysis of the Social Security system published in _Humanomics_, 
an international social science journal (Vol.14, No. 1, January 1998).

Mr. Harris provides an excellent analysis of the economic facts of
life related to Social Security. The best and most succinct description
of the politics that brought us to this point were presented in
the February 22, 1999 article by Thomas Sowell entitled "'Saving'
Social Security".  This article can be found at the following 
internet address:
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      http://www.jewishworldreview.com/cols/sowell022299.asp
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Put simply and directly, many politicians have lied and misrepresented
the Social Security system.   

The politicians used the promises of Social Security benefits, 
increased and expanded since the start of the system, to buy 
votes to get themselves elected and re-elected.  Regretfully these 
promises were kept --- but the bill for them is now seen to be
coming due on later generations who were not voters, probably not yet 
born, when the goodies were being handed out.  Supporters of the current 
system imply some net benefit to future generations was derived, yet 
they offered no objective empirical tests to support their assertion 
when it was requested.  There are some researchers that have applied 
some econometric analysis to test the broad general aspects of this 
proposition.  These tests were discussed years ago in Carolyn Weaver's 
book _The Crisis in Social Security: Economic and Political Origins_ 
(Duke Press, 1982).  For example on page 186 Weaver concludes after a 
review of the literature that Social Security adversely affects private 
savings and will lead to increases in the rate of taxation over time 
(note: I've posted parts before in this debate and won't do so again, 
however, I again recommend pages 187-193 of Weaver's book to 
anyone who is interested in a more detailed description of the history
and future of the current Social Security system).

All of the facts described above have been known for some time.  
I know of no better and more widely circulated statement of the facts
about Social Security than the words of Milton and Rose Friedman 
in _Free to Choose_, published way back in 1979, pages 103-104 which 
I repeat here to enter into the record of this debate:

------------------start quote from Free to Choose -------------------------
    Social Security was enacted in the 1930s and has been 
    promoted ever since though misleading labeling and deceptive
    advertising.  A private company that engaged in such labeling 
    and advertising would be doubtless be severly castigated by 
    the Federal Trade Commission.  

    Consider this following paragraph that appeared year after 
    year until 1977 in millions of copies of an unsigned HEW booket 
    entitled _Your Social  Security_: 'The basic idea of social 
    security is a simple one: During working years employees, 
    their employers, and self-employed people pay social security 
    contributions which are pooled into speical trust funds.  
    When earings stop or are reduced because the worker retires, 
    becomes disabled, or dies, monthly cash benefits are paid to 
    replace part of the earnings the family has lost.'   

    This is Orwellian doublethink. 
 
    Payroll taxes are labeled "contributions" (or, as the Party 
    might have put it in the book  Nineteen Eighty-Four,
    "Compulsory is Voluntary").   

    Trust funds are conjured with as if they played an 
    important role.  In fact, they have long been extremely 
    small ($32 Billion for OASI as of June 1978, or less 
    than half a year's outlays at current rate) and consits 
    only of promises by one branch of government to pay 
    another branch.  The present value of the old-age 
    pensions already promised to persons covered by Social 
    Security (both those who have retired and those who
    have not) is in the Trillions of dollars.   That is the 
    size of the trust fund that would be required to justify 
    the words of the booklet (in Orwellian terms, "Little is Much").

    The impression is given that a worker's "benefits" are 
    financed by his "contributions".  The fact is that taxes 
    collected from persons at work were used to pay benefits   
    to persons who had retired or their dependents and survivors.
    No trust fund in any meaningful sense was being accumulated 
    ("I am You"). 

    Workers paying taxes today can derive no assurance 
    from trust funds that they will receive benefits when they 
    retire.   Any assurance derives soley from the willingness 
    of future taxpayers to impose taxes on themsleves to pay 
    benefits that present taxpayers are promising themselves.  
    This one-sided "compact between generations," foisted on   
    generations that cannot give their consent, is a very   
    different thing from a "trust fund".  It is more like a 
    chain letter.   
-------------------end quote from Free to Choose --------------------------
Sadly there seems to have been little learned from these facts.
Between the time Friedman wrote this back in the late 1970's
up to the article he wrote for the January 11, 1999 New York Times 
nothing has fundamentaly been done --- his estimate of the current 
unfunded liablities of the current Social Security sytem is 
something between $4 Trillion and $11 Trillion dollars.
Private insurance companies are regulated by government
regulators to prevent this kind of fraud from being perpetrated
on consumers --- but who protects the consumers when it is
the government itself committing the fraud?!?!?!

One of our expert panelist has said that he wished he had a
dollar for every time the heard someone call Social Security
a Ponzi Scheme (a.k.a. pyramid scheme, a.k.a. chain letter).  
The reason he hears this statement over and over and
over again, and the reason he will continue to hear it, is that
facts or persistent things.  Many young workers would gladly
settle for 70 cents on the dollar of payroll taxes they have
payed into Social Security.  Will we ever learn from history?
Are we going to "fix" this system like that wonderful "fix" back 
in 1983?  Are we not going to learn from history and repeat
it yet again?  Indeed, facts are persistent things.
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