RE: James: Social Insurance, market insurance and social safety-net

[James <jamesk_51@hotmail.com>]

>From: Ken Diamond 

>>>>Rates of return matters. To suggest they don't is to deny the pervasive natural desire not to be treated unfairly.

I never said rates of returns in general don't matter.  Just that SS is not a 'rate of return' vehicle.  Was never meant to be.  Hammers are important.  But wrenches aren't hammers, no matter how important hammers are to you.  Why don't we all discuss our 'rate of return' on income taxes or defense spending?  

>>>>I have to wonder what you mean by social insurance when you use how market insurance functions as an example.

Well, the only good example of 'social insurance' I can think of where the 'premiums' (taxes) are seperate is SS.   The thing social insurance and market insurance have in common is indeed insurance.  We ususally don't talk about rates of return on 'pure' insurance vehicles.   The 'social' aspect of social insurance is the way 'premiums' are based on the society's risk and income, instead of an individual's.  Before anybody has a coronary, I am not necessarily saying that it is good or bad, I am saying that is WHAT WE HAVE.

>>>>If some posters aren't taking these various elements into account in their calculations, neither has the system done much to make them clear.

But the system isn't some deep dark secret.  And the posters I am challenging are those who think they 'know' the solution who apparently haven't bothered to learn the problem.  That is indeed why I sent the post which you seem to be bothered by:  to illucidate what the problem is.  It is not merely an issue of rate of return.

>>>>Don't you believe, in the interest of openess and honesty that we make the system transparent? How about separating pensions and insurance benefits that are based on actuarily sound principles and premium-type contributions from those that are part of a social safety net financed by tax contributions where a return is irrelevant?

Feel free to post those facts and figures.  That is indeed where I am trying to point the discussion.  To focus on rates of returns from SS is to miss much of the picture concerning the social safety-net and insurance aspects.