Social Security’s Winners and Losers

Even Federally authorized Ponzi schemes are a scam, here’s why:

The latest annual Social Security trustees report recently came out. One of its “lowlights” was the program’s massive unfunded liabilities (currently a $42.1 trillion cumulative shortfall under intermediate population and economic growth assumptions), reiterating what has long been known, though frequently ignored. The program is far from sustainable. Continuing the status quo, is not an option, despite being the default approach every time government decision-makers just kick the can down the road.

Responsible leadership would require serious efforts toward deflating Social Security’s excess promises bubble. But that is not what Americans have seen. Many Democrats have pushed a massive expansion, even though they know it will already be unable to pay all its bills. Others are maintaining their long-time strategy of targeting anyone who brings any aspect of the program into question, particularly when pandering for senior votes at the expense of future generations.

Such a position implies that no change other than increased taxes on “the rich” could possibly improve Social Security. But that position is indefensible, since the program is not just unsustainable in its current form, but it is the source of multiple inequities and deprives Americans of many valuable options.

Winners and Losers

Social Security’s structure guarantees inequities. It gave earlier retirees far more than they paid in, but that has left a 14-digit tab for later generations to pick up, with progressively worse results the younger a worker is now.

Since benefits are only available monthly after retirement, those with shorter life expectancies are treated far worse than others. Similarly, since taxes are paid over one’s entire working life, but only the highest 35 years of earnings determine benefits, those who begin work at younger ages, including those with the least education, are penalized. For instance, if the standard retirement age is 66 and real earnings rise with age and experience, the return from Social Security “contributions” made before age 31 is zero.

Social Security also treats single people worse than married people, because non-contributing spouses qualify for benefits. Non-working wives, who are eligible for 50% of their spouse’s benefits, but pay no Social Security taxes, are treated far better than working wives, whose Social Security taxes often add little to their benefits (and nothing at all if they qualify for more benefits as a dependent spouse than from their own earnings).

We need to also consider valuable options lost due to Social Security. An important one is derived from one of its inequities. The program’s underfunding, which imposes added burdens on younger generations, means that current workers are denied even the returns available from risk-free government bonds.

Further, when retirement saving is replaced with Social Security taxes, Americans lose the power to choose the risk and return they will bear in financing retirement, foregoing far higher average returns that every financial advisor can demonstrate. That substitution also imposes other restrictions. It eliminates the ability to leave accumulated retirement savings as a bequest, if one dies before retirement. It sacrifices the ability to choose a lump-sum distribution of retirement savings, rather than being forced to receive a monthly annuity (which imposes a huge burden on those with shorter life expectancies). It sacrifices the ability to use accumulated funds for emergencies prior to retirement. It sacrifices the ability to retire and live on accumulated savings, starting before the program allows. It also undermines the potential to finance one’s later years by continuing to work.

Social Security has also depressed incomes. Substituting its underfunded benefit promises for retirement saving has reduced investment and slowed the growth of the capital stock (particularly in conjunction with the burdens of many other taxes and regulations) for decades, leaving productivity and worker earnings substantially below what they would have been. Yet those burdens, which compound over time and are borne by all workers, are almost always ignored in discussions of its burdens.

Importantly, the Supreme Court has also ruled that, unlike private saving for retirement, Social Security “contributions” do not actually entitle workers to the benefits they have been promised. That makes the supposedly “sure thing” of Social Security only as reliable as future politicians facing insurmountable shortfalls, which is less reliable than each of us can accomplish via diversified market investments, backed by real assets.

If Social Security was efficient, equitable, reliable and sustainable, defending the status quo might be sensible. But it is none of those things. Further, delaying adjustments that must occur will only expand its problems and make things worse in the future. So the sooner we realize the multiple inequities Social Security creates and the valuable options it eliminates, the sooner we might question how “sacred” everything about it should be. Only then might we be able to reason our way to the least painful options, rather than demonizing our way into an even more painful financial hole.

 

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read.

Does WP have the right to censor blogs?

Reprint:

THEY TOOK DOWN MY BLOG, PART 2

by Jon Rappoport

I say, “Dear Parents, All over the world they are injecting your children, from the day of their birth, with poisonous chemicals and germs, and they’re calling it a miracle.  But it isn’t.  It’s devastating.”

And then, someone somewhere behind a curtain who’s hidden his name-badge in his underpants says, “Censor that man.  Cut off his expression.  He has no right to say what he’s saying.”

The Soulless Ones are at it again.

Many of you now know that, last Saturday, WordPress took down my blog without warning or notice.  After 10 years—boom.  Gone.  We are in the process of restoring the blog through “other means.”  Meanwhile, my home page at NoMoreFakeNews.com is still up, and you can let others know to go there to sign up for the email list to receive my articles in their inbox on a regular basis.  You can also order products at that same home page.

I strongly suspect that my articles criticizing vaccines triggered the censorship move.  The justification would be: well, we must protect the health of the public and your influence could be quite negative in that regard, etc.

Information, evidence, opinion are all now subject to the preferences of “those in charge,” who of course “only have the best interests of The People at heart.”  Sure.

The reality is: when there is something called official science, then unofficial science must be trampled on and stamped out—the word “official” tells you that authorities are pushing lies down on people’s heads and those lies must be maintained and never doubted.  Unofficial science becomes dangerous.  It contains repressed truth.

I’ve learned that first-hand over the past 35 years working as a reporter.  All my major investigations have been “unofficial,” and in every one of those cases, there was someone standing in the middle of the road behind barricades shooing people away and warning that there was nothing OFFICIAL to see by going farther.

THE RIGHT TO HAVE AND EXPRESS AN OPINION OR VIEW OR FINDING are under attack.  Structures that would enable persons to express an opinion publicly are censoring certain voices.  They don’t have to give a reason.  They just do it.

They might say a writer “violated community standards.”  What community, and what standards?  Oh, the ones they make up and pretend exist.  Those communities and standards.  Or perhaps “the community” they’re talking about is some collection of goody two-shoes robotic idiots they’ve convinced to form an organization and make a so-called mission statement in line with official truth.  Blank minds, blank stares, earnest faces.

The age of rational argument and debate, if it ever existed, appears to be over.  Now it’s just FIND THE CONTRARY VIEW and silence it.

Of course, I’m not the first person to be censored recently.  And I’ve noticed that the black-listing hasn’t worked.  Those independent reporters and analysts and editorialists and activists are still talking and writing.  I’ll do the same.

You can help.  Spread my articles any way you can.  Get others on my email list.  Consider ordering my three MATRIX collections. Get in touch with WordPress and let them know how you feel and what you think.  Refuse to obey the Law of Silence.

There is a WE here.  It isn’t a collection of dumb know-nothings.  It’s many individuals who happen to have arrived, separately, at a similar place: the crossroad where a choice is made for justice and against surrender.

If you’re not already there, get there.  If you’re there, make your presence count.

The game isn’t lost.  It isn’t over.

It’s never over.