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Matthew Hoy currently works as a metro page designer at the San Diego Union-Tribune.

The opinions presented here do not represent those of the Union-Tribune and are solely those of the author.

If you have any opinions or comments, please e-mail the author at: hoystory -at- cox -dot- net.

Dec. 7, 2001
Christian Coalition Challenged
Hoystory interviews al Qaeda
Fisking Fritz
Politicizing Prescription Drugs

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Wednesday, September 29, 2004
Sowell on Social Security: Economist Thomas Sowell has a couple of pieces on Social (In)Security here and here.


How did Social Security get into its present mess in the first place? Because politicians made it the "risky scheme" that they now claim privatization would be.

The same political expediency which caused Social Security to be called "insurance," in order to get public support, guaranteed that it would be nothing of the sort. Unlike an insurance company, Social Security has never had enough money to pay for all the pensions it promised.

Instead, Social Security has been run like a pyramid scheme, where the first people to pay in get money back from the second wave of people who pay in, and the second wave get money back from the third wave, etc. This is so risky that pyramid schemes are illegal -- except when the government does it.


That's exactly what Social Security's key problem is -- one of demographics. This pyramid scheme is going to collapse -- probably sooner. If you're a Gen Xer or Gen Y and think Social Security will be there for you -- don't bet on it.

2:08 AM

Comments:
wasn't the retirement age a lot closer to the life expectancy of the recipient when social security was first set up? instead of paying for just a few years, we're now having to pay for maybe a dozen years! that sure is nice of us, but this is one of the reasons it just can't work. I know I'm touching on a dangerous topic, and I'll probably have my liberal id card taken away, but if we don't raise the social security retirement age, we won't have any program left at all!

dd
http://www.jadbury.com/
 
Matt, I've given up on Social Security. All I ask is that the guv-mint keep their grubby hands off my 401(k). Maybe I'm paranoid, but I'm convinced they're going to seize the money I've saved in 2030.

Am I crazy? I don't think so.
 
The "base" of the pyramid has been the Boomers. Because of their numbers and the increasing bite of SS they have flooded the system with money. Their retirement (How dare they!) is a double whammy to SS because they stop funding it and start drawing down SS.

There are two possible remedies that can be imposed simultaneously. One is to keep taking money from the Boomers. This can be done by switching to a national sales tax from the income tax. This gets the Boomers retirement savings in play.

Two is national health insurance. The Boomers' life span can be rationed down by what the nationalized health care covers.

Yeah, it screws the Boomers but, they should be used to that by now.
 
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