No, I said it is absurd to assume something is sustainable just because it currently brings in more than it outputs. A retirement system's sustainability either has to assume perpetual growth or the input from an individual (on average and as a ratio of total input) has to be less than or equal to what the average person receives.

Ten people each stick in $1000 a year into some system for a decade, then withdraw $1000 a year afterwards. Now - ignoring interest - this is sustainable only if they are withdrawing for an average of 10 years, some maybe not at all, some for 20 years, so long as the average is less than ten. You've got interest, inflation, and administrative costs but we'll ignore those. You can not look at this system and say 'ah, positive bank account balance, it works.', that's obvious. But you also can't say it is working if it brought in more money in a year than it put out, if it's still accepting input form other people not yet being paid out.

The reason I say 'mostly agree' is that I don't view SS as a Ponzi scheme because that implies everyone involved was either a damn fool or a malicious self-serving bastard. When concieved they didn't really have expectation that many more people would live to seriously collect off it. It wasn't a pyramid scheme, it was an insurance policy.

Investment - High risk, high gain or loss, average moderate gain
Savings - Low interest gain, low risk, average low gain
Insurance - No risk, average net loss

You can exist in between these things, insurance as low interest bond or moderate risk investment like a mutual fund, but hand waving is needed to have insurance risks with investment gains. Original SS was insurance, essentially a lottery, most would live to collect it only shortly if at all. It was security, not profit, motivated. Not a pyramid scheme. It began to mutate into one when it was noticed that the number of people paying in would exceed previous years as long as the population was growing which it has been and will continue to be for at least some decades. Thus benefits have been able to be artificially higher while appearing sustainable. The core concept of a mix of savings and insurance is not flawed - my objections to SS conceptually have to do with it being both mandatory and singular in nature, rather than voluntary and allowing some range of options - my objections to how it is being run practically though parallel A2k and Cannoli I imagine.

Feel free to inform those claiming said absurdity that it is "Kinda hard to run in the red any sort of pension or savings plan where your customer pool has been increasing every year:" They refuse to hear it from me.

Trust me, they heard what I was saying more clearly than you did.

View original postHaving irrefutably established SS is not causing Americas bankruptcy (actually PREVENTED it for 30 years, ) debating its return rate/size is quite reasonable.

Irrefutably established? We did no such thing, we discussed how an increase in obligations can conceal the sustainability of a system. Robbing Peter to pay Paul is only effective if the specific method involves taking $100 from Peter, earning $10 in interest and returning $100 plus inflation to Peter before giving Paul whatever is left over. Not if it is achieved by getting the $100 from Peter, giving it to Paul, then borrowing $100 from Luke and repeating the operation on Matthew and Mark.

Risk and return are not inherently proportional on investment. In a free market system absent fraud and concealment and subsidy a higher rate of return must be promised to potential investors if successful for higher risks to convince them to input their cash. A person informed that investing $100 in a bank for X time will have a 99% chance of returning $120 and 1% of total loss approached by a startup that tell him they can offer him a 50% chance of total loss is going to be expecting at least a 50% chance of getting $240 or more by time X to make it worth their while.

Investors CAN do better in the stock market—at the substantial risk of instead getting NO return. The US government (theoretically...) will not go bankrupt, nor Obama abscond to the Caymans with all our money. Even banks holding savings accounts can fail, like Citigroup and so many others did, but America has NEVER defaulted on a debt, so SSs return is the closest thing in the world to a sure thing; its rate reflects that. People who invested in stocks and retired in 1998 did well; those who retired in 2002, not so much. We dare not gamble with the whole nations retirement fund.

The nice thing about gambling your cash with the gov't, especially the US gov't, is that if it does collapse you are guaranteed to have much more serious concerns then the status of your portfolio, and that our sheer size and quantity of military hardware represents a safeguard against pesky debt collectors in the worst case scenario. We still gamble though, its just the epic-bad loss options on gambling on the stability of a superpower are fairly minimal and likely to be twinned to something of an 'oh, fuck, is that a mushroom cloud?' case. I'm not debating the security of an investment in the US based on its stability and security, I'm debating the management of that investment and the mandatory and singular nature of that investment. I don't think it is morally right to force people to do SS, but I understand and sympathize with the logic of it, I do not understand giving people only one option. One need not include wild gambling to let people have a diversified portfolio subject to some control and options by them, but required by the state and managed principally by the state.

Hence why I always complain about confusion of concept. Welfare is a form of insurance, taken out by a nation, not an investment though it can have aspects akin to that such as education, training, etc. The left - and I mean the sane left not the fringe commies and the like - are fixated on a safety blanket, which is laudable and in my opinion even practical, I am a Republican, not a Libertarian, and a Christian, not an Objectivist. The issue with the left is that perpetually seek a higher standard and an increasingly lower risk, and faster than society can really build up for that, especially since they also stack on lots of the things that make high return investment harder. It is not simply ensuring that every $1 invested into public works is getting me back a $1, when it should be getting me back at least $1 and in practice is often less than $1, it is also that this is mandatory investment.

If my neighbor sees me unloading my groceries and spots a bag of apples and asks me how much I paid, and I say $5, and he says "Hey, for $4 now I can give you the exact same thing this fall" I have the right to take that offer and be either happy with my investment or angry at getting screwed or I can decline the deal and I have no right to complain. When someone demands my money (democratically, we're not talking robbery here) for a specific investment I have every right to throw a fit if it fails to live up to promises. Alternatively if the gov't approaches us and says "Here's the score, we have three different types of schooling and we'll be taking 5% of your income to fund them, and we'll be taking 5% of the income of the graduates of these schools to give back to you, you get to pick which one your money goes into and those are the grads you'll be getting refunded from." that is an infinitely preferable option to many of us because we have been given an individual choice. More a lot of us feel a system like that would give people motivation to run that system efficiently and effectively.

Eliminating withholding or making it means testing is shifting it more to insurance rather than savings, one of the things about SS is that we perpetually tell people they've 'paid into the system', implying savings rather than insurance. The issue with an insurance variety pension system is that a lot of people know very well they have a better than 99% chance of doing better by handling it themselves, and that this is true of everyone who has to be considering withholding limits. Insurance is still an economic concept revolving around risk and benefit tied to pay in vs return by the individual, national welfare systems are by the nation, not the individual. Investment/insurance revolves around everyone involved receiving their risk and benefit relative to their amount of investment, not as a percentage or progressive percentage of their investment.

Now as to LE, that is kinda-sorta right and wouldn't be a bad idea, but it isn't LE that really matters, retirement age onto the public system needs to be tied not to age but to when someone can no longer work to produce. Part of our problem is this relatively new concept of retirement at all. Part of the whole lists of queer ideas that developed mid century. A moral society has a need to attend to those who can't take of themselves and to supplement those who can only partially do so. Nobody should be going from 40-hour work week to 0 hour at age 65 unless they just coincidentally suffered massive impairment one their 65th birthday. It's just a flawed concept, people should work to support themselves until they have the funds to retire if they wish to and in cases where that is not possible they should be working as much as is reasonable and ethical. Frankly I think it almost insane to dump people directly into retirement anyway, not healthy, they should be decreasing their workload gradually and phasing into retirement.

View original postWe could also end our thirty year addiction to collecting trillions for SS, noting the funds as Treasury securities—then spending them on everything BUT SS. However, since the Boomers retirement made 2010 the last time SS collected more than it spent those days are over regardless. We still owe SS $2.7 trillion, and if walking away from THAT creditor is legal and moral perhaps we should do the same with China: We only owe them HALF as much.

A case can be made that the people who owe a debt they themselves inherited are not morally obliged to pay it. One of the reasons I've never seen it as moral to deficit spend outside of a defensive war for survival.