by J.D. Tuccille
December 16, 1996

We’re All In It Together

Looks like the democracy-as-suicide-pact folks have their hackles up again. Now, these folks surface every time some element of their warm, loving, and somewhat desperate embrace of the human race as a friendly ant hill is challenged. It doesn’t matter that the ant hill doesn’t suit everybody, or even that it’s about to get stomped by the giant waffle-soled workboot of reality; that somehow we’re all in it (whatever “it” is) together is these folks’ driving concern.

What got the suicide-pact folks in such an uproar this time is the fragmented report of the Social Security advisory panel. It seems that several members of the panel, charged with devising a system to “save” Social Security (apparently from the threat posed by simple arithmetic), had the temerity to recommend limited privatization of the system.

Whoa, Nelly! But Social Security is a community commitment that binds us together as a nation! Born in the depression, it ties the weak with the strong in an intergenerational ... ummm ...

An intergenerational pyramid scheme that requires a constantly growing population with a large worker-to-retiree ratio in order to maintain the pretense of solvency. But the American people haven’t seen fit to pump out heirs with the enthusiasm of nineteenth-century farmer-folk, which is why Social Security taxes have risen roughly 1,000 percent in real terms since FDR foisted the system on an unsuspecting nation. Unlike private con men, government reagulators can simply raise the stakes as the base of the pyramid broadens. Eventually, though ... well ... you run out of people and money. And that “eventually” is real soon.

And that’s where the Social Security advisory board came in. The members of the board were handed the mess and told to fix it. The largest faction within the group suggested staying the course with the existing sytem, but diverting 40% of Social Security revenue into the stock market (currently it’s all loaned to the government in the form of Treasury bonds). That would make the government a major player in the market, and eventually a dominant owner of shares in American corporations.

In some countries, this is called socialism.

A smaller faction wanted to establish mandatory retirement accounts for workers. Technically, these would be owned by the individual workers, so immune from the plunder suffered by the Social Security “trust fund.” In reality, though, the accounts would be managed by the government. Still, this was enough to upset the traditionalists.

But what really raised all the fuss was a third recommendation to establish mandatory “personal security accounts” with part of each worker’s Social Security payroll tax. While a half-way step towards real privatization, Americans could invest the money in this account at their discretion, and reap the rewards or suffer the consequences of their own financial judgments.

What? Let people make their own preparations for retirement? What an ... an ... “extraordinarily high degree of go-it-alone individualism” as one former Social Security commissioner quipped (trust me; for a bureaucrat, that’s a quip). But some people might do better than others. And what if people make poor investment decisions?

Poor investment decisions? Like letting the government invest it? That’s not even a cheap shot — ya see, like all pyramid schemes, the rate of return for the original participants was reasonably good (although private scams usually pay off early entrants better than Social Security did), but the system is now approaching a negative rate of return. That is, young workers, if they get anything, will pull out less than they put in. Talk about your lousy investments.

As for uneven investments, well, that’s part of living in a free society. If you want enforced equality, I can think of one or two small nations that still make a go of it — but ya better take advantage of the limited time offer before they’re all gone!

But the guardians of the suicide pact know this. Social Security isn’t a retirement system to them; it’s a symbolic institution. They believe in Social Security because of that old-timey, social democratic “we’re all in this together” aspect. Deep down, they want to break into a chorus of the old socialist anthem, “The International” every time they think of Social Security. The fact that it’s a horrible, irresponsible scam can’t penetrate through the emotional bond. They’ve convinced themselves that a little tinkering and a tax hike or two will keep the system afloat for another generation.

But look at your next pay stub and run the numbers on what you could do with the money taken for the Social Security tax (and remember that it’s double what your paycheck says — your employer has to match the amount deducted from your salary. And you can bet that the tax was factored into the cost of hiring you to begin with). Think in terms of conservative investments. You’ll still come out ahead of what Uncle Sam promises.

But don’t fantasize for too long. The folks who see life in this republic as a suicide pact already have their hooks in you, and if they’re goin’ down, then hell, they’ll take us all down.

After all, we’re in it together, aren’t we?

So you think I’m full of it, eh? Then go to the primary source:
• Social Security Advisory Panel Disagrees on Everything — CNN

• Proposed Social Security Reforms — CNN

• Dismantling the Pyramid: The Why and How of Privatizing Social Security — Cato Institute

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Ah well, and so much for the power of argument. So back you go to Full Automatic or to my home page.