bloxy-moron

Social Security II: Privatize it?

Privatizing Social Security (SS) is a major waffle issue for me.  On the one hand, I believe in the market and think that it would be an efficient way to bolster retirement returns.

On the other hand, I find it extremely scary giving the government   power in investing capital in the free market system.  There are countless ethical questions that could be raised of how stocks/funds are invested.  Could the feds go after Enron knowing that retirement funds that they are responsible for could come crashing down?  There are many other well documented and valid points against privatization but that is not my point here.

I have two ideas of how to privatize SS.  My first idea is very simple.  Have the government give a dollar for dollar refund for the first $1000 given to an IRA.  This would privatize a part of SS but it would take away the government control of the investments.  If a person can not afford to put in a $1000 into an IRA and wait for their income tax return,  then they could set up the IRA and the feds could send the check directly to the bank or broker.  There could also be a %100 tax penalty for early withdraw.

Basically this system would give free money to everyone to invest however they like and there would be very little overhead and new bureaucracy at the Fed level.  This would force people to set up IRAs and then they may be more likely to contribute to them with their own funds.

Second idea was borrowed from an editorial I read in Business Week.  It said we should privatize part of SS, but instead of funding it by borrowing from SS.  We should fund it by raising the top income bracket back up to where it was prior to Bush's cuts.  At first thought, I am naturally against raising taxes to fund programs.  But since this money would go directly back into the economy through private investment, I don't see this tax hike hurting the economy. 

I see the combination of taking the investing out of the government's hands, funding from outside of SS, and need based payments could potentially secure SS and also take care of our retirement needs better.  In the 30 years with the privatized IRAs, retirees would not need as big a SS payment and therefore it would have less chance of bankruptcy.

My Plan for Social Security Reform

This is a post of why the libertarian in my believes we should fix the Social Security(SS) problem by not giving benefits to everyone.  Privatized SS will be a post for another day.

After reading Tax Shift, I firmly believe SS is the worst form of tax.  First it taxes income or productivity and secondly and it is regressive. If you make over a certain dollar amount, you don't have to pay SS.  This means it is a tax on the poor and middle class only. 

Let me take a step back though.  Yes SS is a tax!  It is not a retirement plan.  There is no guarantee that a person will get back what the put into it.  Therefore it is a tax!

I don't think that the premise of SS is all bad.  It is not realistic to think that all people will retire and still have an income that will support them.  Or if a breadwinner dies or is injured, then will be able to support a family.  So some type of social security net is necessary.  SS is what we have now and I am proposing how it might work better.  There are surely better systems to solve this problem, but that is not the point of this post.

There are two parts of the SS system.  One is collecting funds and second is distributing the funds.  It is a simple system and it will fail when funds distributed are greater than funds collected.  My first proposal is that all workers pay into SS.  This way the tax is no longer regressive. 

Secondly after lots of thought, I think payouts should become need based.  I think everyone who pays in should be guaranteed a fixed amount of monthly income, say $2000.  If a person has another retirement plan, then they may not receive all or any SS benefit.  If you have plan that pays you $1500 a month then maybe you will only collect $1200 in SS.  Or if your plan pays you over $4000 a month then you don't collect any benefit.

At first thought, this may seem unfair.  "I payed money into SS my whole working life so I deserve to receive a benefit!"  Well, the libertarian in me says wait "Do I want to depend on the government for retirement income?"  Hell no!  So, I would rather not receive benefits (unless something tragic happens to me of course).  So given the choice, I would prefer paying a smaller SS tax and not receiving benefits then paying a bigger tax and receiving them.  Because, this is the option.  It is a simple system either collect more or payout less.  I opt for payout less and I will attempt to save for my own retirement.

Propaganda Channel

This is a reactionary rant on a news snip-it about the new Pentagon Channel.  I have not watched a minute of this channel yet but I saw snippets of Rumsfeld being interviewed talking about the positive things going on in Iraq.  This infuriates me.  My tax dollars are being spent on a t.v. channel that tells me how great a job the military is doing.  To borrow an abused phrase "This is un-American." 

The premise of the station is to support the troops.  Now the troops everywhere in the US can get up to the minute military news. But does anyone think there will be realistic footage of what battle really looks like.  Will we see any funerals or shows on the fallen troops?  Oh, this negative information might hurt the troops?  I doubt it.  Our troops are extremely tough and brave.  They are also not stupid.  They know the realities of war much better than us civilians so I don't see the value in hiding the realities from the rest of us. 

By definition this is biased news.  Do you think if Microsoft created a channel to help developers that they would be promoting the values of Lynx?

This propaganda is going to be spewed to support warfare that I believe hurts my country's security and I am paying for it.  Can anyone say 1984?

Libertarians Lost

My first blog of the New Year will be about the event that started my blogging career: Bush's surprising win in 2004.  I was shocked and angered by the election because I believe Bush's first 4 years have gone against my libertarian principles.  I took the World's Smallest Political Quiz on my understandings of Bush's policies so far.  Low and behold he is a STATISTS which is opposite of a libertarian!

In the future, I may blog on each of the political questions but for now I will only talk briefly why he is wrong on both economic and social issues.  I will conclude with another political axis that he is also on the wrong side of.

The social argument is easy.  He is against too many individual freedoms:

• patriot act - "giving up freedom for safety will leave you with neither" Ben Franklin

• gay marriage - government taking away one of our most basic rights

• abortion - again he is on the wrong side

• drugs - he also fully supported the "war on drugs"

The last three appeal to his religious right.  Appealing to religious influences is a bad thing for politicians! Just look at the Middle East. Bush fails big time on social issues.

Economic issues are also easy if you look at his actions and not at his rhetoric.  Bush is a RECORD spender (link takes you to an article by the CATO institute.)  Bush also governed over a terrible economy.  Bush supporters blame Clinton while opponents blamed Bush.  I am not an economist and do not understand how a president can directly effect the economy, but I do know that all of his economic promises leading up to the election were blatantly wrong.  Numerous times he told us how many jobs he was creating and he was terribly wrong every time.

Now it is Bush's intangibles that make me the most sick after the election.  "At least you know where I stand" is not something I need from a leader.  I would prefer having a leader who admitted to mistakes, changed her/his mind when necessary, and considered all sides of an issues before making a decision.  None of these describe Bush.  I also disdain the international animosity that he has brought the US.  This rant could go on a long time so I will just say "Arrogant ignorant cowboys can stay in Texas!"

Libertarians definitely lost this election. I can only hope that the next four years wake up the electorate on the evils of the neo-cons instead of strengthening their power.

Liberal Professor discussion

Was thinking about Peter's comment  about professors as I was falling asleep last night (blogging is taking over!)  Peter says:

"My brother has tons of stories dealing with profs in class and I've got a few more from UCSB to prove this point..."

Here is an observation that professors tend to be on one side of the "political fence". Is this a liberal conspiracy? Or is there a more clear reason?  Is this a sign that many professors are just incompetent (don't research or study all sides of their academic interests?)

My own experiences taking engineering classes have been that professors tend to be behind in terms of technology and lots of times teach technologies that are out of date. This doesn't pose a terrible problem since engineering is more about fixing problems and new technologies can easily be learned when they are needed.

One insight could be a literal definition of liberal is to embrace new ideas and discoveries.  This is the role a professor should play and a good one will pass this on to students.  So therefore by this particular definition a professor should be liberal.

Let’s also look at the current political environment. The people in power don’t seem academic or intellectual (this is a post unto itself.)  So, politically speaking professors are most likely “liberal”.

To wrap up, good professors should have experience and knowledge of all angles of their study.  They should also be open minded to academic and thoughtful discussions of ideas that they don’t agree with.  I don’t think that there is a problem of “liberal professors” but more of a problem of incompetence (all professions have incompetence) and problems with the overuse of the word “liberal”. 

Even if one disagrees with the previous paragraph and believes that there is a problem because most professors are too liberal, how does this harm capitalism?  As Peter pointed out, free market economist used to be “liberal”.  Both Edwards and Kerry unsuccessfully tried to appeal to the conservative south by appealing to issues like immigration and jobs with non-capitilist (word?) ideas.

Enemies of Capitalism

Peter quoted Milton Friedman as a response to a previous post. To paraphrase: "Businessmen and college professors are the biggest enemies to capitalism".  Never heard this before and it fascinated me.  I found irony in the fact that "liberals" characterize businessmen as evil conservatives and "conservatives" characterize professors as evil liberals (ughh I hate those two words "conservative" and "liberal". I shutter to think I used them both repeatedly in one sentence)

The aforementioned post spells out the businessmen side of the quote.  It is the professor side that I find more interesting.  My first thought was professors are liberal and liberals hate capitalism and that is what he meant.  Well this is far too elementary and also bad logic depending on how one defines liberal.

Professor liberal = free thinking person in search of academic truth.
Capitalism hating liberal = socialist.

Even if one believes both these "liberals" are the same person, how are they a threat to capitalism just because they hate it?

Here is my second theory:

Professors are highly intelligent, educated, and also dedicate their lives to teaching and learning about an academic subject that most often furthers society.  When thinking of solutions for society outside of their own domain, professors might forget that it is rare for a person to posses all three of these traits. A society structured around smart, educated, hardworking, people working towards the common good would look a lot different then one structured towards selfish lazy uneducated people. Capitalism might not be fair or efficient for the former where it works very well for the later.  So educated hard working unselfish people (i.e. professors) influencing politics while forgetting that most people are not like themselves could damage capitalism. 

I can see that one might see argument 1 being the same as argument 2 but it is the subtlety between the two that I find important.

Move On Democrat Party

MoveOn.org has reportedly sent an email to the democratic party leaders saying that they now own the party. Reportedly they called the party "professional election losers" and said "We bought it, we own it, we're going to take it back."  I think this is a great sign for US politics since we have a grass roots organization flexing their muscles against the political establishment.  When talking purely about the issues (political issues not social issues like abortion, gay marriage, etc.) I don't see a huge difference between Republicans and Democrats. This might move the Democratic party more to the left and then we might have more political debate.

I also like this event because it may get more people involved in politics.  MoveOn has gotten a lot of support from people who where not participating in politics. 

I find the best part of this scenario is that it causes a shift of power from corporate sponsors back to citizens.  Now I can only hope that other grassroots organizations start to grow and give a voice to other under represented citizens. This might start to break down the walls of the 2 party system.  There are more than 2 political sides and we need more than 2 political powers!!

Are companies Red or Blue?

Here is a site that will tell you how much money companies contributed to political campaigns:
http://www.choosetheblue.com/main.php

I would rather the site was non-partisan but I have no reason to doubt this data.  Since we live in a capitalist society, which I think is a good thing, one of the best ways to "vote" is with your check book.  Some interesting observations:
Toyota was the only automaker who gave more to Dems.  Honda is not listed and the rest are American automakers.  Coors is Repub and Guinness is Dem.  Have fun with this.

Old Conservatism

I found a blog on type pad and found a definition of conservatism that I couldn't agree with more.  Here is the blog:
http://davidgaier.typepad.com/gaier_on_fire_writings_of/

I enjoyed reading his posts.