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October 22nd, 2005Addressing Noid: Part 1
October 22nd 08:50:50 PM
Anyone who regularly checks on this site knows we have a militant libertarian who loves to post here.
He has some legitimate, if overblown and misplaced, concerns regarding Modernizing Social Security to include Productive Assets.
While I don't share his paranoia (or would that be Paranoida?) regarding SS reform, he is correct that our organization has tried to blow him off, instead of engaging him and his legitimate concerns.
This is the beginning of an occasional series. Unfortunately, I work for a living, so I can't do this very often. I strongly encourage my fellow S4 posters to pick up an aspect of this debate when you have the time.
Noid's first regular link is to a Heritage Foundation paper deriding direct government investment of SS money in the stock market.
Obviously, this is a horrible idea. Any notion the government can make universal investment decisions for everyone in the economy is garbage. The only people who might support that idea would be Karl Marx, Freidrich Engels, Vlad Lenin, Joseph Stahlin, Paul Krugman, Fidel Castro, Hugo Chavez, or Kim Jong Il.
As a past, and future, resident of California I understand fully the dangers of politically motivated pension funds.
Furthermore, considering what has happened to a great company like GM, one understands why Americans would be hesitant to embrace this defined benefit approach.
Fortunately, to quote a Washington expression (though I despise Washington) there's no there there.
This is an old idea from President Clinton which has never gotten off of the ground. Fortunately President Bush has rejected this idea from Day 1.
The only folks still supporting this idea are some irrelevant Dems.
Nobody has to worry about direct government investment in the stock market until 2008 .
Of course, we could act before then and avoid that whole mess.
Noid -- I'll get to your issues over corporate voting rights eventually. Unfortunately, I can't really devote much time to posting on here. It might take 6-8 weeks before I get to it, but I will eventually. In the meantime, other S4ers should address this if they have a chance.
Feel free to post all your links in one place so I can have one source to reference them from.
Love,
Adam
Posted by Adam Cahn| Comments (5)
S4 members visit with AARP members
October 22nd 01:44:31 PM
Members of S4 here in DC hit up the local AARP chapter meeting earlier this week to try and get an idea of how members of AARP feel about Social Security reform and Personal Accounts.
As most are aware, AARP is one of the largest and most influential opponents to PRA's...and here at S4, we don't quite understand WHY. Afterall, AARP represents retired people, so Personal Accounts would not affect their members AT ALL! Equipped with hand-outs and info about S4, we showed up early to the meeting and were able to ask the members questions and get conversations going. "What do you think about Social Security reform and Personal Accounts?"
Interestingly, none of the members present understood why we were asking them this- many laughed and said, "That issue doesn't affect me - I'm retired already." (translated: "HELLO-U R A DUMBO, why would I care about this?!?") One elderly lady said that she had no problem with people having the choice of personal accounts, but then reiterated that ultimately, she didn't care since it didn't affect her.
For a while now, we've had a hunch that AARP's anti-personal accounts rhetoric is not representative of its actual members - and at the meeting, they proved us right. Thanks AARP! You've renewed our determination to keep fighting for reform; to dispel the myths and lies and let the facts speak for themself.
Even your own members could see that personal accounts were a viable solution to the looming problems with the current Social Security system. Thanks AARP for proving that you don't represent your members, but instead are guided by partisan politics. Is that some sort of new recruitment technique? Not representing your members while at the same time, working as hard as possible against a cause that all your FUTURE members are totally in favor of? Note to self: don't be like AARP.
Posted by Evan Dent| Comments (1)
October 21st, 2005Let's Get Quacking!
October 21st 11:38:43 AM
We here in Washington know that the Social Security debate is very much alive. S4 has made quite an impact on Washington since our inception a few short months ago. Members of Congress and the Administration have responded so positively to us because we are the grassroots voice of young Americans. The generation with the most at stake in this debate. We don't have the money that AARP does, but we have an active and energized membership. Our chapters need to keep up the hard work they've been doing and keep reform moving forward. Keep it up!
Posted by Chris Schrimpf| Comments (2)
Social Security Made Simple
October 21st 11:32:10 AM
In an excellent piece in the University of New Haven Charger Bulletin Newspaper, Carl Soderberg explains the need for reform and reform now. Great job by the University of New Haven chapter!
Posted by Chris Schrimpf| Comments (0)
Do the Math
October 21st 11:10:53 AM
Over at his website, Ben Wright does some simple social security math. What did he discover?
"This must be the time of year when the Social Security Administration sends out its annual statement of estimated benefits; mine came in the mail yesterday. Usually I read it and am disgusted at how little I'll be receiving when I'm 67. Yesterday I did the math, and I was absolutely flabbergasted. You really need to do your own math for yourself. Here's why:
Based on the information in the statement, it will take me more than 11.5 years to receive Social Security payments that equal merely what has been paid into the system on my behalf! Let me say that again in a different way. If you add up all the money that I and my employers will have paid for my Social Security taxes over the course of more than 50 years of work, I will have to live until I'm 78 just to get back the principal! And when I die, nothing is left for my beneficiaries."
Posted by Chris Schrimpf| Comments (1)
October 20th, 2005Keeping the Debate Alive
October 20th 09:26:56 AM
The Social Security debate isn't dead yet, thanks to S4 activists like Ryan Lynch. He just got published in the Sacramento News and Review.
"Seth Sandronsky's article attacking Social Security privatization fails to address a rather important point: The program is going to fail. The author notes that benefits are secure until mid-century. What happens after that?
A variety of factors--including demographics and the lack of a 'trust fund'--contributes to Social Security's problems. But the biggest contributor to the program’s struggles consists of people who attack personal retirement accounts without advancing other reform. As former President Bill Clinton (who is in favor of personal accounts) said, 'You can’t just attack the other guy’s ideas unless you have something to say.'"
Posted by Chris Schrimpf| Comments (2)
October 19th, 2005Young Dutchfolk do the Right Thing
October 19th 03:18:09 PM
From TechCentralStation.com
The Pension Generation
By Joshua Livestro Published 10/13/2005
A European pensions expert was once asked whether he thought Europeans would ever be willing to transform their expensive tax-funded systems into more sustainable fully funded systems. His answer: "Not until the young take up arms against the old."
In The Netherlands, that is exactly what is happening right now. In July of this year, a group of young civil servants took the dramatic step of publicly declaring their opposition to a deal safeguarding the early retirement rights of older workers. Since then, the Dutch airwaves and op-ed pages have been filled with bitter intergenerational recriminations. The main Dutch trade union, the FNV, accused the authors of "corroding the cement of society by only showing solidarity when it's convenient to them." The young pension refuseniks in turn accused the unions of "hiding behind a mask of altruism while blatantly serving the narrow interests of its own, ageing membership." Where, they asked, is the solidarity in a deal that sees younger workers pay twice, once for their own retirement, and once for the early retirement of older workers, while older workers aren't expected to make any sacrifices at all?
To understand exactly what these young civil servants are objecting to, it helps to know the history of the Dutch pension system. The Dutch made the switch to a largely funded system nearly 50 years ago. The launch of a number of early retirement schemes in the 1980s, however, reintroduced an element of unfunded liability back into the system. The early retirement option proved so popular that it left the Dutch Treasury facing a potential double whammy: a mass exodus of older workers meant falling income tax revenues, as well as rising early retirement expenditure. Something had to be done. In the late 1990s, government, employers and unions agreed to make the switch from an unfunded to a fully funded early retirement scheme. In 2003, the new centre-right government decided to revisit this deal. Its proposal to speed up the closure of all existing unfunded schemes was met with fierce opposition from the unions, whose older members were angry about the prospect of losing their cozy early retirement arrangements.
In the end, the government caved in to union pressure. A deal was brokered, covering all public sector workers, in which the government abandoned its plans to speed up the phasing-out of early retirement schemes by agreeing to their continued existence until 2023. The new package contained one major change compared to the measures adopted in the 1990s. Instead of starting with a high extra tax contribution from all workers, and allowing the tax part of pension contributions to taper off as the number of early retirement claims dwindled, the new measure proposed a slightly lower flat-rate tax contribution for the entire transition period.
It was this change that sparked the revolt by the young civil servants. They argued, quite plausibly, that it went against the spirit of the intergenerational contract that serves to uphold the entire pensions system. Under the old arrangement, all generations were asked to make a significant initial contribution to solving the funding problem. Once the main challenge of the early retirement of the first age cohorts of the baby boom generation was met, younger workers would start to see the tax component of their pension contribution reduce sharply, leaving more money to be paid into their own retirement funds. Put simply: under the old arrangement, every generation made a significant contribution, and all stood to profit in one way (early retirement) or another (eventual higher tax-free contributions to own pension fund). Under the new arrangement, the pain of paying for the unfunded early retirement liabilities was switched from the old to the young. After all, if the older generations are asked to pay less, another generation will have to foot the bill. That generation is the under-35s. Calculations by the main Dutch civil service pension fund, the Algemeen Burgerlijk Pensioenfonds, showed that under the new arrangement, the under-35s would be paying eight times as much towards the total costs of switching as the over-55s. Not only would they be paying more towards the continued existence of the early retirement scheme than any other age cohort, they would also be the only ones not to profit from it.
In their open letter, the young civil servants initially objected only to the fact that their generation was asked to bear the brunt of the transition costs. Their protests were aimed at the reform of the system, not at the system as such. All they wanted was a fair deal. Since then, however, the parameters of the debate have shifted dramatically. Many now openly question the very idea of intergenerational solidarity itself. The prominent Dutch economist Lans Bovenberg asked why, in union statements about the issue, solidarity was always self-evidently presented as meaning the young showing solidarity with the old. Why not the other way round? Why not ask the over-55s to make a sacrifice for the sake of the under-35s by making them work longer before retirement?
Interestingly enough, one organization that seems to have taken Bovenberg's comments to heart is the FNV union. It recently announced a change to its pension scheme. Effective immediately, it would abolish the existing early retirement scheme by raising the standard retirement age from 60 to 62. The reason? "The existing scheme didn't provide sufficient funds to finance the early retirement of all older FNV-workers," a spokesman for the union stated in the Dutch daily de Volkskrant. "We just don't have enough money in the bank. And the last thing we want is an intergenerational battle like the one currently raging in the public sector."
Quite right. On pensions, at least, the union's message is clear: do as we say, not as we do.
Posted by Adam Cahn| Comments (0)
October 14th, 2005Choice & Security
October 14th 05:41:59 PM
This deals with Health Care more that Retirement issues, but the fundamental principles still apply.
From National Review Online
Choice & Security
What conservatives know about economic freedom.
By Michael F. Cannon
Which would you rather have, freedom or security?
The Left has argued that since September 11, 2001, President Bush has curtailed civil liberties in an attempt to keep America safe from terrorism. Few people on the Left believe this bargain will pay off, and the skepticism runs deeper the farther left one moves across the political spectrum. The same cannot be said when it comes to the economic freedom. Here, acceptance of a tradeoff between freedom and security increases as we look leftward. In The New Republic, Jonathan Cohn recently asserted the existence of that tradeoff — and argued for making the trade — on issues from Social Security to education to healthcare.
Cohn criticizes conservatives for selling greater choice in these areas without acknowledging that it would result in less economic security. His argument goes like this: The limits on choice that conservatives would sweep away also make people more secure. Social Security provides Americans a guaranteed pension; having the choice of putting one's Social Security taxes in a personal account would weaken that guarantee. Public schools are devoted to educating all comers; vouchers take money away from those schools and that mission. Each state has its own set of health-insurance regulations, many of which attempt to make coverage more affordable; allowing consumers to choose what slate of regulations they want would make those well-intentioned rules less effective.
Though not a conservative, I will break bread with conservatives when their aim is to tear down barriers to choice. Social Security privatization, school vouchers, and deregulating healthcare would expand the menu of choices available to ordinary people. There is an alternative explanation of the relationship between choice and security: Rather than crowd out economic security, choice actually increases it, whether it's saving for retirement, educating one's children, or protecting one's health
Who Wants to Buy from a Government Monopoly?
My argument goes like this. From whom would you rather buy bread: a government monopoly, a private monopoly, or one of a number of competing grocery stores? It's really not much of a contest. The government and private monopolies would have consumers right where they want them. They don't have to take much care to meet specific needs, and they are likely to overcharge, which leaves consumers with less money (i.e., they are less economically secure). Competing grocery stores, on the other hand, will fall over themselves to provide fresh whole grains at a price that most increases a consumer's economic security.
Adam Smith said it well: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." But once consumers are dispossessed of their freedom to choose, businesses worry far less about consumers' economic security.
That is the basic argument. But it is over time that choice really begins to look good. In the process of falling over themselves, those producers strike upon tiny improvements in quality, delivery, etc., all of which translates into even greater security. Such innovations have caused prices to fall for everything from food to computers to telecommunications. Over time, choice makes products of ever-increasing quality available to an ever-increasing number of people at an ever-decreasing cost.
Applied to some areas of the economy — retirement savings, education, healthcare — the details become more complicated but the theory holds. In fact, the areas where people feel least secure — e.g., health care, education — are those where choice is most constrained.
Cohn reserves most of his caveats for healthcare, where he takes aim at one of the most innovative health-policy proposals in recent memory. Each state requires health insurers to obtain a license before they can do business in the state. The most basic licensing requirements include such things as solvency standards. But each state also requires health insurers to provide certain types of coverage, to cover certain categories of people, and/or to price coverage however the state thinks is best. Idaho has passed the fewest such laws (13) and Minnesota the most (60).
Cohn concedes that "some state rules . . . really do seem dubious — or, at least, suspiciously likely to benefit certain well-connected groups of health care providers." Those would include requirements that insurers provide — and that consumers purchase — coverage for hair pieces (seven states), dieticians (four states), marriage therapists (eleven states), massage therapists (four states) . . . you get the picture. At a time when the biggest health-policy concern is the number of Americans without coverage, these laws make coverage more expensive by requiring people to purchase coverage they do not want (or need).
Rep. John Shadegg (R., Ariz.) and Sen. Jim DeMint (R., S.C.) have introduced legislation that would allow individuals to avoid the cost of unwanted regulations by allowing them to purchase insurance from any carrier in the country, with the coverage subject to the rules of the licensing state. Cohn objects because some regulations are intended to expand coverage, such as laws that increase the cost of coverage for healthy people in order to reduce premiums for less healthy people. If healthy people can choose insurance from a state that doesn't charge that mark-up, he argues, those laws won't work. That's also the accepted wisdom among health-policy analysts.
The problem is that the data don't seem to bear out the accepted wisdom. Over the past decade, Mark Pauly of the University of Pennsylvania has made some fairly surprising discoveries about individual and employment-based health insurance. For example, the data show that insurers don't adjust health-insurance premiums for risk very much in either market. Moreover, that the type of laws that Cohn defends don't do much to expand coverage for high-risk people, and "the increase in overall premiums from [these laws] slightly reduces the total number of people buying insurance." In other words, healthy people know that they're being charged more than they cost to insure, so they stop buying. That increases the ranks of the uninsured and leaves insurance pools older and sicker, which puts further upward pressure on premiums. Talk about a "race to the bottom."
Having the choice of evading such regulations should make healthy people more secure. But the Shadegg-DeMint bill could even make less healthy individuals more secure. Many high-risk consumers certainly would benefit from having the option of lowering their premiums by declining coverage they don't need. Should teetotalers really be required to purchase coverage for alcoholism treatment (44 states)? Moreover, Pauly and colleagues find that administrative costs account for most of the price difference between the individual and employer markets. Those costs run 30 to 40 percent of premiums in the individual market, but only 5 to 25 percent in the employer market. Giving people the choice of purchasing coverage from anywhere in the country would allow even the not-so-healthy to seek out carriers who hold down that administrative mark-up, perhaps through higher volume individual sales or sales to large groups (churches, etc.). The point is that it is entirely possible that expanding choice could provide more security than laws limiting choice, even for the intended beneficiaries of those laws.
In essence, health-insurance regulation is a product. We pay government to ensure, among other things, that carriers actually pay our hospital bills. When we see regulation this way, it should come as no surprise that we are likely to see quality improvements and cost savings once its producers (the states) are forced to be competitors, rather than indulged as monopolists. Not only that, but the quality and price of related products (the coverage itself) would improve in an environment that is more competitive and more open to innovation.
Just as a pluralistic society that respects civil liberties ultimately makes for a stronger nation with fewer enemies, an open economy with few barriers to choice could ultimately provide ordinary people with the economic security we typically pursue — but fail to obtain — by limiting choice. My aim is not to establish that choice increases economic security always and everywhere. It is more to ask whether the presumed tradeoff really exists, or whether we can use choice to promote economic security in areas where we traditionally have not — particularly for those at the margins, and particularly in healthcare.
— Michael F. Cannon is director of health-policy studies at the Cato Institute, and co-author of Healthy Competition: What's Holding Back Health Care and How to Free It, which will be released by Cato this month. Portions of this article originally appeared in The New Republic Online.
Posted by Adam Cahn| Comments (0)
October 14th 01:37:15 PM
Posted by Chris Schrimpf| Comments (1)
October 12th, 2005Boston Globe's Jeff Jacoby Argues For Personal Accounts
October 12th 10:38:22 AM
"Social Security is hurtling toward a cliff; that is clearly one of the ways in which it is getting worse over time. Because it is a
pay-as-you-go scheme, with current retirees' benefits paid from current workers' taxes, it can remain solvent only as long as the ratio of workers to retirees stays comfortably high. But that ratio is plummeting-- from 17-to-1 in the 1950s to only 3-to-1 today. In little more than a decade, payroll taxes will no longer be enough to cover benefits. Social Security's deficits will rapidly explode. By 2020, it will be losing $72 billion a year. By 2030, losses will be $275 billion a year. To keep the system from collapsing, Congress will have no choice but to massively hike taxes, slash benefits -- or both...
Yes, personal accounts would help the system in the long run. But the
better reason to champion them is that they would give Americans more
control over their own lives. Personal accounts would be vehicles for
creating real wealth, not accounting gimmicks in phony government
'trust funds.' Your personal account would be yours, not Washington's
--and if you died before reaching retirement age, it would become the
property of your heirs. Under the current system, nothing in your Social Security account belongs to you, and if you die before retiring, it doesn't pass to your loved ones.
The late senator Daniel Moynihan, a lifelong Democrat, favored personal retirement accounts. They offered, he wrote, something better than a government benefit: 'an estate! For doormen, as well as those living in the duplexes above.'"
Posted by Chris Schrimpf| Comments (1)
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