Looting Social Security, Part 2

[mawilson 2,133]

Not necessarily, Dan. If you look at the income gap over the last 30 years, you'll see where that extra money from stagnant wages have gone to - executive pay and to the shareholders. There is plenty of play in that gap to lift all boats where the companies who remain the most competitive will keep the costs as low as possible.

I agree. However Dan is right in saying that higher wages are inflationary in the sense

that companies could get away with charging more money for the same products if their

customers had more money.

[SMR 368]

As I stated earlier, 34 hours is the average number of hours a full timer gets for service sector jobs. Thanks to the lobbying by corporations and their Right Wing politicians, companies can schedule them as little as 32 hours while still classifying them full time. They do this to save money and it is rare that you will find retail workers being scheduled 40 hours per week. Why? Because retail chains HATE having to pay overtime. You should read up or better yet, get to know some people working service sector jobs...ask them about hours. I've worked in retail for many years before I went to college. And I said goodbye to many good, intelligent people, some even college graduates, still working in retail and plan to do so until retirement. They work there because they've benefited from having a union represent them. But I digress.

There could never be a private investment that could match all that SS can and does for so many people, at the level of efficiency that it does. When I worked in retail, I worked alongside many retirement aged people. One guy in particular had been an accountant all his life. The company he worked for some 30 odd years, squandered his pension and he couldn't live just on SS, so he bagged groceries in his late 60's...and for minimum wage. Your naive and/or callous to think that only someone who mentally handicapped would be making minimum wage throughout their life. Guess what happens when you work at a place like Best Buy as a retail clerk and decide to go work at Target? Your pay will start at the bottom. They could of course pay you for your experience, but most often you will be told that when it comes to unskilled labor, experience means little in terms of pay rate.

So it doesn't take a stretch of the imagination to understand that many people will go from service sector job to job without progressing up much beyond minimum wage. This was well understood when I worked retail - that if you quit your current employer, you'll start at the bottom going somewhere else, which goes against the Right Wing argument that the market works in favor of the worker where you can simply go work where the pay is better. If you've never worked these kinds of jobs, you really have no idea how the workers get screwed, thanks to fights against unions, minimum wages, minimum hours, overtime, health benefits, etc.

You're really changing the subject (this was originally about social security taxes and the inefficiency of the SS system). Your last reply only touched on SS with the blanket statement that "There could never be a private investment that could match all that SS can and does for so many people, at the level of efficiency that it does."

I guess when you realize you have no support for your claim, it never hurts to repeat it and then quickly change the subject.

On the subject of wages, I agree that companies can be greedy, horrible, and mean, that working service jobs is hard, and that there isn't that much upward mobility. But I stand by my argument that anyone that makes minimum wage their whole life is doing it wrong (or retarded). Maybe that's offensive, but I doubt you can find anyone who has never made a dime over minimum wage.

He worked as an accountant all his life yet failed to plan for his retirement and the company, where he presumably was supposed to be keeping track of the money, squandered his pension. I guess there is a reason that nobody would hire him as an accountant and he had to bag groceries.

I don't have any hard data but after doing a quick search of internet question and answer boards for starting wages at various retail chains, I have yet to find someone who claims to have started at minimum wage in the recent past. BTW, it seems Home Depot has the best starting wages at $9+/hour starting out and a $.50 raise after 90 days.

[Dan J 277]

I agree. However Dan is right in saying that higher wages are inflationary in the sense

that companies could get away with charging more money for the same products if their

customers had more money.

There are two sides to that. One is what you said, companies will charge more if they have more customers who have money and a limited supply of product. Additionally, the higher wages will also get passed on in the price. The purchasing power for most people, would not improve.

[one...two...tree 2,762]

There are two sides to that. One is what you said, companies will charge more if they have more customers who have money and a limited supply of product. Additionally, the higher wages will also get passed on in the price. The purchasing power for most people, would not improve.

Since the biggest income gap is among service sector jobs, competition will keep those services as low as possible. I saw a figure that showed how much more Walmart could be paying their employees if their executives were paid less and it is doable.

If the bulk of growth in the job market remains in the service sector, those wages need to be lifted (through organized labor, IMO) if we want to see real economic growth. The housing and credit markets aren't going to do it this time around.

[one...two...tree 2,762]

You're really changing the subject (this was originally about social security taxes and the inefficiency of the SS system). Your last reply only touched on SS with the blanket statement that "There could never be a private investment that could match all that SS can and does for so many people, at the level of efficiency that it does."

I guess when you realize you have no support for your claim, it never hurts to repeat it and then quickly change the subject.

No, it's just that it gets to be futile to argue with Right Wingers over the efficiency of SS because you'd argue sideways and forward, and they'd still keep peddling the notion that private investment would be a better alternative. They've been peddling that idea since inception of SS.

Let me ask you, do you know of any industrialized nations that don't have some kind of SS program for their citizens?

[mawilson 2,133]

Since the biggest income gap is among service sector jobs, competition will keep those services as low as possible. I saw a figure that showed how much more Walmart could be paying their employees if their executives were paid less and it is doable.

I suppose if the highest/lowest salary ratio was limited by law (to, say, 100), the executives

would be incentivized to pay their employees more.

[SMR 368]

No, it's just that it gets to be futile to argue with Right Wingers over the efficiency of SS because you'd argue sideways and forward, and they'd still keep peddling the notion that private investment would be a better alternative. They've been peddling that idea since inception of SS.

Let me ask you, do you know of any industrialized nations that don't have some kind of SS program for their citizens?

Actually, we just talked about this. You run out of arguments so you repeat yourself without supporting your claims and then change the subject.

In regards to this question, it really doesn't matter what they do in Germany, England, Australia, Russia, China, France, South Africa, Greenland, or anywhere else. Either private investment is more effective than SS or it isn't. If you want to share a reason why it isn't, I would be interested to read. If not, repeating yourself and changing the subject is kind of silly.

I would like to point out that it isn't that I think what other countries do is unimportant. If they have a system that is more efficient than private investment, let's hear it. But I don't suggest doing something because other countries do. Do it because it works.

You seem to really like logical fallacies. This one is called the bandwagon.

[one...two...tree 2,762]

Actually, we just talked about this. You run out of arguments so you repeat yourself without supporting your claims and then change the subject.

In regards to this question, it really doesn't matter what they do in Germany, England, Australia, Russia, China, France, South Africa, Greenland, or anywhere else. Either private investment is more effective than SS or it isn't. If you want to share a reason why it isn't, I would be interested to read. If not, repeating yourself and changing the subject is kind of silly.

I would like to point out that it isn't that I think what other countries do is unimportant. If they have a system that is more efficient than private investment, let's hear it. But I don't suggest doing something because other countries do. Do it because it works.

You seem to really like logical fallacies. This one is called the bandwagon.

Show me a private investment that guarantees a return on your investment equal to the size which you could draw upon at retirement age like SS. This isn't a new argument, SMR. The Right Wingers keep tooting this horn over and over. The burden of proof is with your argument - that private investment would be better than paying into SS.

....

Here's a decently written piece on this argument...

If stocks pay more than bonds, especially government bonds, why do people buy government bonds? Are they idiots? Well, yes, there is a school of thought that they are idiots. People buy bonds, especially government bonds, because they are considered safer than stocks. But some wizards believe that the riskiness of stocks has been misperceived and that by using sophisticated techniques it's possible to enjoy the higher return without the higher risk. They were even bringing out books a couple of years ago with titles like "Dow 36,000." If you think the whole Social Security system should take a flyer on those theories, I bid you adieu at this point in the argument. The rest of us will stick to the conventional assumption that people who buy government bonds are not idiots. Which is fortunate, because if hundreds of billions of dollars in Social Security tax revenues are invested in stocks instead of helping to finance the national debt, the government will have to borrow that money somewhere else. Yes, yes, the government could also spend less, but the two issues are unrelated. If we want to cut spending, we should cut spending. Privatizing Social Security itself won't reduce total government borrowing by a nickel.

Therefore, privatization also will not increase the total amount of capital available for private investment. Every dollar of Social Security money that goes into private investment accounts instead of the U.S. Treasury will have an evil twin that is drafted out of the private economy to replace it in government service.

Now ask yourself: If privatization creates a bonanza for Social Security recipients, where did that money come from? There are only two possibilities. Either privatization must make the economy bigger somehow, or someone must be losing on the deal. There is a word for government policies that take money from some people to help others. That word, I'm afraid, is "tax." So, what about privatization making the economy bigger? There are also two ways this might happen. One is if the total amount of private investment increased. But we already have decided that dollars-out will equal dollars-in, for a net effect of zero. The other way is if the same-sized capital pool comes to be invested more wisely. You can believe, if you wish, that millions of financial innocents won't lose their shirts under privatization, but convincing yourself that their brilliant investment decisions will actually add vast billions to the economy is a more ambitious project.

So, if the Great Privatization Bonus isn't going to come from a bigger economy, either it will come out of someone's hide or it won't materialize at all. The most likely result is some combination of these. The stocks-are-better premise of privatization ignores the question of what happens when the government engineers a flood of capital from its own bonds into private stocks. Unless the laws of supply and demand are repealed at the same time, the return on stocks will go down, the return on government bonds will go up, and the gap between them will shrink. The more the gap shrinks, the more likely it is that people will be worse off than if they had settled for benefits based on government bonds. Meanwhile, those Social Security recipients who do end up better off will be enjoying a subsidy financed by what amounts to a tax on stock profits (which will be lower than if the government had not interfered).

http://www.slate.com/id/112604/

Edited January 7, 2010 by Galt's gallstones

[mawilson 2,133]

Show me a private investment that guarantees a return on your investment equal to the size which you could draw upon at retirement age like SS.

Bernie Madoff's hedge fund?

Or any Ponzi scheme for that matter. Oh, wait - SS is a Ponzi scheme too!

[SMR 368]

Show me a private investment that guarantees a return on your investment equal to the size which you could draw upon at retirement age like SS. This isn't a new argument, SMR. The Right Wingers keep tooting this horn over and over. The burden of proof is with your argument - that private investment would be better than paying into SS.

....

Here's a decently written piece on this argument...

http://www.slate.com/id/112604/

3% is not hard to find in a government insured CD. Look it up on any bank website. With a little bit of planning, the CD will mature when you retire. It's easy to plan. It can then be withdrawn in cash. I'm not talking about stocks. CDs are pretty reliable.

Edited January 8, 2010 by SMR

[Danno 1,228]

Show me a private investment that guarantees a return on your investment equal to the size which you could draw upon at retirement age like SS. This isn't a new argument, SMR. The Right Wingers keep tooting this horn over and over. The burden of proof is with your argument - that private investment would be better than paying into SS.

Of course no private retirement investment can operate lopsided like the federal Gov can and does so the question on it's face is not valid.

For instance here are the facts on the first person to get a SS check, this story has been going on all across the country for millions of people: people who collect the hell out of a system they hardly paid into, I know of a few cases myself.

---------------------

Ida May Fuller

The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.

This lady put is less than 25 bucks and took out nearly 23 grand!

You are right Steve for some it is a gold mine.. for many other it's a shaft.