January 12, 2005

Social Security and euthanasia

http://www.iSteve.com/05JanA.htm#suicide

Privatizing Social Security would lead to more suicide, euthanasia, and murder:

A feature of the current and much-denounced Social Security system is that no matter how long you live, you still get a monthly check. As has been mentioned before, one of the mysteries of life is that no man knows the length of his days. The current "defined benefit" Social Security system acts as an insurance program against what could otherwise be the disaster of living too long.

The popularity of "defined contribution" retirement plans like 401k's stem in large part from their being supplements to Social Security. Say you retire at 65. You can spend the next 15 years blowing your 401ks on world travel and golf, and feel comfortable that you'll still have your Social Security check to fall back on so you won't have to go live in a refrigerator carton if you happen to live past 80.

Or, if you are less self-centered, from age 65 you can treat your private retirement accounts as you children's patrimony and live frugally just on Social Security.

In either case, the existence of a fairly generous Social Security (and Medicare) system takes away a lot of the anxiety about living too long. Pro-life conservatives should contemplate some of the statistically inevitable consequences of cutting back on that insurance.

A reader writes:

The big unnoticed/ignored (by “conservatives”-who-like-political-revolution & “progressives”-who-like-cultural-reaction alike) income support move is the shift from defined benefit to defined contribution pensions for average workers.

(The move is in the opposite direction for CEO’s).

Previously, under defined benefit plans (Lockheed & Social Security) workers got a guaranteed life-time annuity. The smart money has figured that this is becoming one long free lunch.

Now defined-contribution pensioners will simply get what goes into the pot (income deduction + booming capital gains + hot tips) less what goes out of the pot (asset liquidation + busting capital losses + greater fools & trips to Vegas) Lower income personal account holders will not have sufficient assets to diversification, so will be more susceptible to risk of local stock losses.

They will also be more susceptible to asset liquidation, owing to higher marginal propensity to consume during low-income earning periods.

If the nation’s pension funds are put into play it does not take too much nous to figure out that a few people will own most of the marbles at the end of this game. Privatising pensions is so win-win for the Big End of Town it is embarrassing.

Their existing share portfolios get a big price boost as personal account money floods into equity markets. They get to keep their FICA deductions which will be diversified into value shares (so their lazy money goes into growth shares). They get to manage the accounts which will give them beaucoup fees from churning. They get to clean up when the little fish periodically get panicked into (peaks) and out of (troughs) the market by large financial swells.

No wonder they are getting other agencies to act as spear carriers in this moral obscenity.


Steve Sailer's homepage and blog is iSteve.com

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