[OT]America. The land of the not-so-free (economy)

[Derek Martin]

On Fri, Jan 07, 2005 at 07:59:28AM -0500, Will Johnson wrote:
> > I can hardly think that people controlling their own money, and
> > getting a decent rate of return on it, is a bad thing.  Still, no
> real
> > problems with the program?  It can hardly be said to pay a liveable
> > amount of money to seniors today.   I call that a problem.
>  
> (Why am I getting dragged into this?  Why?)

Because it pains you to see smart people spreading misconceptions
amongst other smart people?

> My problem with this issue is that it's not as clear cut as either side
> would have us believe.  Do I believe that I am better equipped to handle
> my own money than the government is?  Yes.  Are most Linux users (an
> above average lot in my experience, intelligence-wise)?  Yes.  But is
> the average citizen?  No.

Yay!  It always makes me happy when someone displays that they get it.

The fact is, the average American can't be trusted to manage their
money.  Case in point: the ever-rising credit card debt owed by
American citizens...

The other fact is, even smart invenstors screw up -- big time.  Case
in point: Donald Trump's bankruptcy.  Sure, he's a billionaire again,
but how many of US could do what he did to recover from his mistakes?
Well, raise your hand if you're a billionaire today.  Right.

How many people committed suicide after losing all their money in the
financial markets during the Great Depression?

> The problem is that privatizing social security doesn't really take the
> burden off of The Government.
[snip]
> But suppose there's another huge stock market crash?  Or imagine the
> results when folks with the financial acumen of peanut butter go trying
> to manage their retirement money?  Yes, it's theirs to do so, but if
> they squander it on foolish investments, then at retirement age, instead
> of ending up on the SS rolls, they end up on the Welfare rolls, and it
> still comes out of The Government's pocket.

Exactly right.

> I don't really like the current situation, but as with a lot of
> government, sometimes a bad solution in theory turns out to be in
> practice much better (in terms of workability) than the others.

What we need is for the government to stop playing card tricks with
people's money...  I'm not going to hold my breath waiting though.
Someone rightly pointed out that the SS fund operated at  a surplus
until congress, in all its wisdom, decided it would be a good idea to
borrow the money from the fund.  This is just like paying off your
credit card debt with other credit cards...

On Fri, Jan 07, 2005 at 10:12:40AM -0500, James A. Kuzdrall wrote:
> 1. The Social Security system is insurance, not a savings account.  It 
> spreads the risk of uncertain health and longevity over the population.

Exactly.  Only the insurance companies actuaries do a much better job
of managing the risks (money outflow) against the premiums (money
in-flow).  But even that's not a big deal, really.  The problem boils
down to congress misappropriating money.  As always.

> 3. Capitalism depends on growing markets or increased consumption to 
> give an investor dividend.  What happens when the population saturates 
> and the natural resources wane?  Might that not happen in your time?  

I had a really long, cynical, and dpressing answer for this, but I
decided to spare you.  ;-)  In short, I think Marx was right; in the
long run, capitalism robs the working people of their value in order
to reassign it to the capitalist.

I'm not trying to be the poster boy for communism, here...  As an
ideal, people working together to ensure the common good of all is
hard to beat; only in practice it suffers far worse than capitalism
from the greed and corruption of individuals.  Until we find a way to
stifle those urges in people, communism can't work.

Good post.  Thanks.  :)

On Fri, Jan 07, 2005 at 07:39:18PM -0500, Fred wrote:
> Well, I would never criticise *individuals* on their health, of course,
> but I will speak in generalities.

If a behavior is bad for a population, then its practice amongst the
population is detrimental to the population.  Period.  Only the scale
is flexible.

There is an alarming trend in this country to justify bad behavior.
Since Fred brings up diet, an example I'll use is what I will call the
"fat is beautiful" movement.  There is no rational thought process
that can justify this ideal.  Excess weight is bad for the individual,
because it causes health problems.  This is a medical fact.  In turn,
this is bad for society, because it must shoulder the burden of the
cost of that health care.  Both of these lead to resources being
consumed needlessly.  That is bad for everyone, except perhaps for
capitalists who are concerned only with their own personal immediate
gain.

Now, don't get me wrong...  I'm not suggesting that we should all
become vegetarians and kill all the fat people, or anything so
extreme.  But as a society, we should be nudging people in healthy
directions (for themselves and for society), NOT justifying our vices.

Government should have a hand in this -- this is among the best
reasons to have "leaders" rather than true representatives. And in
this regard, our government has failed miserably.

Another great way the government should lead the people is by
requiring the use of open-source computer code to run all critical and
security-sensitive systems, and encouraging its use elsewhere.  Oh my,
an on-topic comment.  What has come over me?  ;-)

But the sad fact is that our government isn't interested in doing
what's right; it's only interested in what keeps rich people rich, up
to the point where public outcry is insufficiently great to distract
them from that goal...

> The healthcare costs in this country are so enormously high. And I fear
> that part of the reason is due to the prevalence and deep pockets of
> insurance. 

Bingo.  The insurance people have the biggest scam going in the
history of time...  They've taken something that should be nearly
free in a "civilized" society, and made it one of the most profitable
(for them)  and most expensive industries we have.  What exactly do
the insurance companies sell?  For most people, the answer is nothing.
If you're healthy, you (or your employer) pay insurance companies
thousands of dollars a year so that they can pay your doctor a couple
of hundred dollars a year in fees.  And they wouldn't be anywhere near
tha much if it weren't for the fact that your doctor's medical
practice  has to pay 3 full-time people to handle all the insurance
claims of its patients...

In large part, of course, you're buying health care for elderly and
unusually sick people, in exchange for the promise to have it paid for
when you're elderly or unusually sick.  But mostly, you're paying to
line the pockets of the insurance people.

> >    c) How long do you plan to live?  With bad luck you will live past 
> > your savings.
> 
> The idea is to build cash flow, thus you do not deplete your savings
> over time, but build them up. How to do this is an exercise for the
> student. :-)

Right, an exercise that the vast majority of students aren't up for.
Most people can't even manage to figure out how to calculate
anualized return rates.  I'd bet a fair percentage of people on this
list can't, and probably more than a few don't even know what that
means...  That doesn't make them stupid, and it doesn't make them bad
people, but I think it does make them unqualified to manage their own
retirement plans...

> >    d) It is recommended that you have a minimum net worth of $300K per 
> > person plus own your house outright to get through retirement with SS 
> > as it is.  How many of you wise investors are on track to have that 
> > money tucked away?  Going to make it all in the last few years?
> 
> If you have not planned ahead *early*, no, you won't have it. But no one
> plans ahead because they have this dim expectation that the government
> will be their for them when they need it. 

Maybe, but I don't think so.  I think most people don't plan ahead
because, for one reason or another, they can't.  Lack of income, lack
of knowledge, what have you.

> I think about that all the time. My "greater fools" theory states that
> in any zero-sum or near-zero-sum situation you *will* run out of
> "greater fools" to take the market higher. For every dollar you gain,
> someone *somewhere*  or at *sometime* must also loose that dollar. Since
> the supply of fools is finite, you *must* run out someday.

Nah, we just keep making more...

> I'd say ditch Bush's plan and create your own. 

And the country will, as a whole, be a lot worse off, both now, and in
the future.

-- 
Derek D. Martin    http://www.pizzashack.org/   GPG Key ID: 0xDFBEAD02
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