Comments on: Prescott on Rebuilding Social Security

By: Davoid Rosenberg

Davoid Rosenberg — Mon, 17 Jan 2005 13:42:00 +0000

See some folks need to read the annual SS Trustees report to congress and need to understand that by law the SS surplus must be invested in federal bonds. Since this money is ultimately owed to us, the trillions of transition costs are already sitting there in the surplus account. All privatization will do is make this debt apparent so that politicans cannot pretend that we have a surplus.

By: Timothy

Timothy — Mon, 03 Jan 2005 21:14:00 +0000

“Social Security is simply bad policy. We have the opportunity to replace it with a better policy. So we should replace it.”

The last part does not follow. We should only replace it, if we can replace it with a better policy. How likely is that?

By: Nicholas Weininger

Nicholas Weininger — Mon, 03 Jan 2005 12:54:00 +0000

monkyboy’s namecalling aside, he does have a point about theoretical vs. real control of funds. This is one of my two principal reasons for being skeptical of many forced-savings plans: I don’t trust the feds to respect investors’ ownership of these accounts the way that, for example, 401(k) accounts are respected. Indeed, if the plan simply proposed to require folks to invest a certain percentage of their income in a 401(k) or IRA, I’d be a lot more supportive; but the current Bush plan envisages a different sort of account entirely and that makes me nervous.

Moreover, if there are going to be strict limits on how the accounts can be invested, and those strict limits are going to be set by a political process, that process can easily be used to reward favored companies and punish disfavored ones.

So I’m not sure that the privatization plan on the table will result in either a decrease in the real size and scope of government or an increase in individual autonomy. Maybe some other version, like Cato’s, could do so; but the devil really is in the details here.

My other reason for skepticism is that a forced savings plan, by itself, will do nothing to address the insolvency problem or the fraudulence of the “trust fund”. For that, we need real, honest, politically-difficult benefit cuts, and I don’t see the current administration stepping up to the plate on that.

By: monkyboy

monkyboy — Fri, 31 Dec 2004 17:08:00 +0000

Calling Edward Prescott a paid hack may be slightly trollish, but in my research on him I came across this quote:

“This is the golden age of economics. Economic theory has become quantitative – a hard science.”

Hehe, why must every social scientist make this claim about their field? Why can’t they just be happy to work in a ‘science’ where they can never be proven wrong?

Anyhoo, I stopped tracking the lesser Nobel prizes after they gave the Peace prize to Henry Kissinger for his ‘work’ on Vietnam.

By: monkyboy

monkyboy — Fri, 31 Dec 2004 15:48:00 +0000

Hehe, brooke, I admit to a lack of political science notches in my educational belt. But I did spend many pleasant hours long ago studying the economics of ancient and modern China. Funny thing about China, every time they are poised to take a place on the world stage, they instead withdraw and cut their ties to the outside world. Those companies and individuals who invest in China today, still a communist country last I checked, are certainly braver than I am.

Of course, a solid background in the social sciences is needed to discuss investing. Everyone knows that every student and teacher of philosophy, psychology, sociology, etc. is fabulously wealthy from using their utopian theories to invest wisely in the stock market. In fact, the only reason they don’t extract the entire GNP of the world is out of some misguided sense of altruism.

asg, I am more than willing to debate the ‘facts’ of this latest attempt to loot Social Security.

Please tell me, where exactly, will the $300 billion needed to fund private investment accounts for workers will come from each year?

I’m sure the government will set up these controled accounts for 100+ million workers and then use the honor system to control them instead of hiring people to do the job.

As for the potential for corruption, let’s ignore Enron and other failures of the past and turn to this week’s news.

In California, the shareholders of Disney lost a petition to nominate their own board members when they learned the company paid Michael Ovitz $140 million for a years work. Imagine, shareholders wanting a say in how a company is run, how utopian is that?

In D.C., epicenter of the world of psuedo-science, government official were shocked!, shocked! to learn that, after booting the head of Fannie Mae for inventing $10 biliion in phony profits to meet performance goals and collect incentive pay, he will retire with a lifetime pension of $1.5 million a year. Not bad for a company that started as yet another fuzzy-headed effort to get the government involved in investing.

As for the federal government getting control of companies, yes, the Social Security monies that some politically appointed seers will guild can buy General Motors right now for the low low price of $22 billion. In 10 years or so, the Social Security funds will own outright almost every company in America…thank god we have cadres of social scientists standing byto take them over and run them properly!

Happy New Year!

By: asg

asg — Fri, 31 Dec 2004 12:57:00 +0000

I think he takes the parody a little far by referring to a respected Nobel Prize winning economist as a “paid hack”, personally. But it’s not lack of education he’s feigning; it’s lack of honesty. Note his absolute unwillingness to engage arguments rather than motives. To him, the fact that an article appears in the WSJ is evidence that anything it says is false.

I hate trolls. It’s too bad no commenting software currently available supports killfiles.

By: brooke

brooke — Fri, 31 Dec 2004 12:52:00 +0000

Monkyboy’s parody (unintentional? Delicious!!) of someone who has never taken an economics or politcal science class at the undergraduate level is spot on. It brings me much joy.

By: monkyboy

monkyboy — Thu, 30 Dec 2004 16:50:00 +0000

Well Krybo, I politely disagree. I think that in the name of removing these funds from the control of politicians, the current plans to ‘privatize’ Social Security will:

Increase the size of government by about $300 billion a year.

Create a massive new government bureaucracy.

Make these funds available for massive fraud and corruption.

In the long run, give the Federal government control of every corporation in America.

Federal debt ain’t a bad investment. Lots of foreign governments and individuals buy it now. Why fix what isn’t broke?

By: Joe S.

Joe S. — Thu, 30 Dec 2004 11:46:00 +0000

Of course Prescott’s WSJ piece does not breathe a word about the enormous transition costs in moving to Libertaria. But then again, neither did Lenin’s.

By: Krybo Amgine

Krybo Amgine — Thu, 30 Dec 2004 08:20:00 +0000

I’ve yet to hear a Libertarian explain why, when they can’t even get the most obvious fraud and pork cut from the Federal budget that we should believe them when they say the trillions of ‘liberated’ Social Security dollars won’t be squandered too.

The reason Libertarians (and libertarians) can’t get the most obvious fraud and pork cut from the Federal budget is because it is Democrats and Republicans who make the appropriations and sign the spending bills. The idea behind “liberating” those Social Security dollars is to remove it from the control of those who perpetrate the fraud and pork – the politicians in Washington. Other than engaging in a bunch of name-calling, I don’t understand what you’re trying to accomplsh here.