For years the investment community has run around buying and selling stocks based on the next quarter’s earnings. Suddenly, significant sections of this notoriously myopic community have their eyes glued to the financial equivalent of the Hubble telescope, trying to scry the far future. When such people start telling us that we should worry about the state of the social security fund in 2035, I’m afraid I smell enough rats to call in the Pied Piper.
The big cheese that the panic-mongers want to nibble is the hundreds of billions of dollars each year that American workers pay into the social security system. In fact the crisis is not only far off, but even using the dubious assumptions of the reformers and privatizers, there are many options – like lifting the ceiling on contributions for employees. That would postpone it indefinitely.
Indeed, the sky-falling-in scenario is based on very conservative economic and income growth rates. For comparison, just look 40 years in the opposite direction. In 1959, passenger jets were new and untried technology; VCRs and cellphones were science fiction writers’ dreams; while computers filled vast halls with vacuum tubes to produce the power of today’s palm-top. Good heavens, even campaign donations were derisory. A man could become president for less than the going price of a Senate seat now.
The would-be ‘rescuers’ of social security really want to kill it. The same people so anxious for the welfare of millions of future retirees remain silent over the rapid withdrawal of private employers from guaranteed pension schemes in favor of plans that are far less generous. In fact, they resent the torrents of social security money that do not pay a cent in commission to salesmen or brokers.
The Achilles’ heel of social security is that it is based on a big white lie – that all these contributions are squirreled away in somewhere like Fort Knox where they wait until each of us starts chiseling at our own personal gold bar. In fact, the government uses it to avoid borrowing on the markets, and in the real world of macro-economics, all pensions are pay-as-you-go, depending on the collective willingness of our offspring to work hard enough to keep us in the comfort that we all feel we so richly deserve.
It is indicative that the privatizers’ big guru is Jose Pinero, who was the Chilean minister of labor under the military government of General Pinochet, someone who is himself being fêted in a rather different way before the British courts. I may be eccentric, but I wonder why, if the idea was so good for pensioners, the Chilean army and police exercised their considerable prerogatives to ensure that they retained their own (state-run) pension scheme when the rest of Chile’s workers took the privatization route.
Of course, there is no way that President Clinton could defy the massed lobbying power of the American Association of Retired Persons since they are almost the only people who vote nowadays. So his state of the union address promised to ‘save’ social security, while allowing investment of some of the proceeds in equities, which will keep the bull pawing a little longer and the brokerages happy; and subsidized individual retirement funds, which offer the prospect of plenty of commission for the salespeople.
Chicken Little runs around saying the sky is about to fall in. You ignore the fact that Chicken Little has some nice sidelines in protective head gear and cloud bump insurance, and agree with him, while giving him the hard-hat concession for the country. Hell, it’s almost as much fun as a good cigar. In one fell triangulated sweep, every lobby has been paid off, and the privatizers now have a millipede’s worth of feet in the door for future expansion.
Swift execution of my modest counter proposal is necessary. In January, Lewis Gorin Jr died. In the 1930s the massive veterans’ lobbies wanted a ‘bonus’ to be handed out to anyone who had ever signed up, no matter how briefly. In 1935, the young and remarkably prescient Gorin set up ‘Veterans of Future Wars’. His impeccable logic was that there was bound to be another war soon, and it would be better to pay out the bonus to the participants in advance, while they were still alive and young enough to enjoy it.
The plan has some merit if adapted. At, say, 35 years-old, every citizen could get a lump sum advance on their social security. Provided they invested it wisely, they would be able to live a richer and fuller life. However, at, say, 65, if they no longer had the resources to live on, that would be it. Of course euthanasia has a bad name now, and execution facilities are already hard-pressed, so we need a humane, 21st century way of coping.
As always the great Victorian era of enterprise offers an immediate solution. All indigent elderly who had misspent or misinvested their cash opportunity would be incarcerated in Dickensian-style workhouses where a baloney sandwich would be a weekly treat and medical treatment would consist of aspirin. They would not have the vote, of course, in case they tried to reverse this compact between generations at the ballot box. Taken together this should incentivize a whole generation to enterprisingly free themselves from state peonage and dependency on social security, Medicaid and other entitlement programs.
The Speculator
