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August 08, 2011 – Comments (2)

For the last fifteen years I have heard politicians tell us that small increases in the tax that supports Social Security was needed to keep it able to pay retired Americans enough to keep from being impoverished. Whether that tax came in the form of taxing all income instead of capping it, or a higher rate than the 12% it is, all that was needed was a small increase that never came. I heard that privatising SS was the answer, that people could invest their money better than SS could, though I have also heard that most mutual fund managers cannot beat the S&P500.

I heard that union pensions destroyed General Motors and were unsustainable.

Two years ago I began hearing that SS must be cut in order to "save" it, and that "taxes are off the table".

Great storys.

In unrelated news, reports that Grumman CEO Ronald Sugar retired with $50,000,000. in pension benefits, and a Legacy Officers Health Plan which includes "No Lifetime Maximums for essential medical, prescription drug or mental health benefits.” that it had 100% coverage of prescription, mental, and acupuncture up to 20 visits.

It almost seems like it might have been possible to have adequately funded Social Security. In fact it makes me believe that we still can choose to give a crap about the people who took the least return for the benefit of their labor.

Chris? Your comments please?

Best wishes,


2 Comments – Post Your Own

#1) On August 08, 2011 at 11:31 PM, TDRH (96.51) wrote:

As an undergraduate 20 years ago I researched Social Security and it was clear then that the system was not sustainable.    This year Social Security outlays exceded income, 5 years ahead of forecast.    Congress has continually kicked the can (both parties) down the road.

Tough decisions, adjustments in the US standard of living are coming due.   I am not smart enough to know if they could have been avoided by deciions at any particular point in time, but the time to pay the piper would appear to be at hand.


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#2) On August 10, 2011 at 12:05 AM, MikeMark (29.06) wrote:

The Social Security concept itself is what is unsustainable. The problem with the idea is that it doesn't account for two things: positive feedback and declining population.

The positive feedback case is the one where someone sees that someone else has worked very little (taken it easy) and yet receives an easy-life in retirement. Entitlement in addition to that makes us believe that in the future we will always receive more and better of whatever. These two aspects combined create a positive feedback system where more and more people want better, more. So the system craters, unable to support the desire.

Declining population simply means that there will be times when fewer people will be required to sustain more retirees. In a true savings-based system this might work. However in a socialist system where the money isn't saved, but re-appropriated to other seemingly important needs, the system fails again.

On the other hand, what does work is decentralization. Each individual is responsible for themselves. It works because no one knows how best to support someone better than that person themself. This seems obvious. It works because when each individual is made as strong as possible, the group as a whole is made stronger. It works because when everyone is strong, the occasional weaker ones are supported by the stronger, compasionate ones.

These things are true simply because they work with human nature rather than against it.

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