On the Other Hand...

Social Insecurity

by Jim Davies

Perhaps the scariest thing about the government's universal retirement and disability-insurance scheme is that it stands or falls at the voters' whim.

Isn't it outrageous that the security of one's golden years should be way outside one's own ultimate control?

Seniors have to maintain their income by lobbying for it! - and though right now the Gray Lobby is well-organized and powerful - so much so that so-called "Social Security" is called the "Third Rail" of politics (Touch it, You Die) - a decade or so hence the balance might swing the way of the majority who are being taxed. If so, today's 50-year olds will be up a creek without a paddle.

How much better it would be if, having paid a premium all their working lives, they could retire and enjoy TRUE security, knowing their pension would continue as a matter of contract, not by the grace and favor of the voting majority!

Well, they easily could have, if the government had not enacted and maintained this compulsory scheme all these years. And if it were now terminated (with all reasonable provision for those who now have no alternative income, OF COURSE) all younger Americans could do exactly that from now on.

The lobbyists could then do some productive work instead, and the elderly they now represent could go sailing or play golf without that financial worry.

The supposed problem of voter resistance to abolition goes away, provided that those now over (say) 50 are well and fairly cared for - for instance, out of the proceeds of a one-time sale of government assets. I don't know of anyone in middle age or younger who has looked at the free-market alternative, yet who still prefers the Social Security Swindle, for him- or herself.

COMPARE

For any reader who may not yet have compared "Social Security" with the free- market alternative, let's fill in the blanks.

The cost, or "premium" in insurance talk, is about 15% of everything each of us earns. Government people like to disguise that by pointing to the SS payroll deduction as half that, 7.5%, but it's not true: for the employer's "contribution" is another 7.5%, and the only place he can get that money is from the profits he generates by hiring us. Therefore, our true earnings (what we cost him, aside from other overhead costs like office space) are 107.5% of our nominal "gross pay" and we lose 15% out of that to the SS.

I asked a friend of mine with 31 years' experience selling insurance what that 15% would buy commercially, to compare with the benefits it obtains us from the SS; and he took the example of a couple aged 30 with an income of $30,000/yr.

First, he said, there would be a wide variety of options, in place of the one-size-fits-all we get from the SS. Most insurers offer several life policies and there are over 1,000 companies competing; so the customer will be able to find a close fit for his circumstances.

Next, if he chose to apply one third of the $4500 a year that he'd save from abolition of the SS and bought disability insurance, the latter benefit would pay him TWICE AS MUCH as SS, and do so with many fewer restrictions.

Then if he paid the other two thirds as premium for life insurance, it would buy him a death benefit of $200,000 and a retirement lump sum of $565,000 - which many would use to buy an annuity at age 65. So this AVERAGE worker would retire a half-millionaire!

More: if that half mil were invested at modest market rates, it would yield a pension THREE TIMES GREATER than the SS would pay on the same "premium"; AND, upon death, his heirs would inherit the half million dollars. Under the SS, in contrast, the heirs inherit nothing at all; and in the case of Blacks, who die sooner after age 65 than Whites, there may be no benefit of ANY kind - a fact that makes the SS one of the most racist government programs of all time.

Anyway, I asked my friend whether he, as a veteran insurance salesman, could sell the SS scheme if it were privatized tomorrow morning.

He said, first, it would be illegal to do so (!!) because of its lack of a trust fund from interest on which to pay benefits - so that couldn't arise. Supposing otherwise, though, he said: No way. It's utterly uncompetitive.

So, as well as being inherently insecure, "Social Security" steals massively from all of us by confiscating our money and paying out at less than a third of the rate at which a competitive free market would. The question arises:

WHY?

Why, with all of these facts being so readily available, do our "represent- atives" persist in foisting it upon us?

I can see two answers and only two: either they are well-meaning but grossly incompetant (in which case they should be fired), or else they are intelligent and competant but malevolent, deliberately impoverishing our old age for the benefit of their political friends.

I'm highly critical of government in this column, but you will not find that I think its leaders are dumb. Alas, they are only too intelligent. If I'm right in that, the second of those explanations must be the correct one.

Either way, they should go; along with their SS Fraud, which is neither Social nor Secure. When next you go a-voting, please be certain to vote for nobody who does not swear to terminate it at the first opportunity.

© Copyright Jim Davies 1999

Jim Davies lives in New Hampshire,
and enjoys contemplating which way is up.

The above is Edition # 12

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