Buckeye State Blog - BizzyBodyBlog needs to read more - Comments

is all privatized social security bad?

bryan — Thu, 14 Dec 2006 11:28:57 -0700

i agree that personal accounts are a bad idea vs. guaranteed benefits. but i wonder if it might make sense to allow supplemental payments into a pooled account?

here's how it would work: create a pooled retirement investment account that puts the money in an unweighted index account. make the investment capital gains free.

at the same time, force congress to separate out social security from the general fund budget. yeah, it's a tall order, but it has to be done.

this would essentially infuse the entire stock market (and, thus, american companies) with a massive level of investment income. this tax-neutral investment would also force the congress to stop raiding social security to balance the budget.

Well

staff — Thu, 14 Dec 2006 10:15:58 -0700

Without going back to even look at the numbers, let's assume your right. That's still a massive number of people who this system has failed for. I'd also add that a British attempt at something similar ran into the exact same problems. At the end of the day the fundamental proble is that the market can go down as well as up and if you happen to retire when it's down your toast. Then what ? The other problem is that most people are not qualified or educated to make investment choices, especially when those choices are broad. It's why we have advisors. Most people don't have the time to track markets and the players in those markets they invest in. When you add onto the that social security provides disability benefit and death benefits too - something this market ponzi scheme can't then the solution is pretty darn clear. Leave it alone. One possible solution that I would contemplate is if instead of breaking the fund up into million of accounts (each with their own transaction and administrative costs) you simply have the government invest the pile with experts who understand the markets and its their job to do so everyday running it. You could get a higher rate of return without individual risk and you eliminate a lot of the cyclic problems individual accounts have.

Chile

mmatters — Wed, 13 Dec 2006 22:15:12 -0700

Maybe the best point is at the end of the AP link cited earlier:

++++++++++++++++++++++++

In any case, administration officials said they would not return Chile to its pre-1981 social security plan, which was managed by the state — and broke.

Said Labor Minister Osvaldo Andrade: "No one is thinking of going back to the old system."

SocSec

mmatters — Wed, 13 Dec 2006 21:50:47 -0700

The immediate point is that if you accept the #s in the excerpt, the relevant percentages are 50-20-30 -- 50 not covered, 20 alleged to have inadequate bennies (40% x the remaining 50%, NOT 40% x 100% -- reread the Times piece), and 30 who are acknowledged as being at least OK. You ought to at least acknowledge that factual error.

Therefore, of those working and covered by the retirement system, the Times is saying that 60% are on track for OK or better retirement benefits (because 40% are not).

But the bigger point is that "50% not covered" claim is really incorrect, because it includes non-working spouses, who are at least 60% of all working age women in Chile (this link has women's workforce participation rate at 36%).

Having "read more" -- This AP article says that the country has 6 million workers in the privatized retirement system in a country of 16 million. The Wiki demo breakdown has 10.8 million between the ages of 15-64.

So I estimate that there are at most 8 million adults (out of roughly 10 million adults, taking out most under-18s, "probably") in the workforce. That would mean that three-fourths of actual workers (6/8) are participating in the privatized retirement system. I would contend that non-working spouses should in the vast majority of cases be considered "covered" if their spouse is. If two people (and fam) have been living on a given single income, then the retirement benefit arising from that one income has to be thought to be adequate for the 30% (explained above) the Times acknowledges are on track to have OK or better retirement benefits, PLUS their spouses.

So.... if those 6 million covered workers have even 2.5 million stay-at-home spouses, and 60% of covered workers are acknowledged to have at least OK retirement benefits, then there are at least 5.1 million adults (60% x 8.5 million) on track to be OK in retirement, or a little over half (51%) of the adult population of 10 million.

This "conservative" estimate (conservative in that it's probably low) of adults in OK shape for retirement is over 5 times the 10% you claim in your entry. There are lots of reasons to think it's higher. For starters, there seems to be an assumed retirement age for working women of 60, which would make the assumed workforce size smaller, the % of workers covered higher, etc.

This admittedly very suspect link (Lyndon LaRouche), which is an anti-priivatization rant, says Chile's workforce is only seven million. If you re-ran the numbers, it would mean that closer to 60%, maybe even 70% of the entire adult populatiion is on track for an OK or better retirement.

But this, and some other concerns, will have to wait until I have more time to "read more."

You should at least acknowledge that Chile's system is not failing 90% of its people. That is dead wrong.

BizzyBodyBlog needs to read more

staff — Tue, 12 Dec 2006 16:41:40 -0700

BizzyBodyBlog is extoling the virtues of a dictator and using it to laud his efforts to bring privatized retirement to Chile. Trouble is, the Chilean private retirement scheme is a huge failure that even the Chilean conservatives agree.

[E]ven advocates of an untrammeled free market, like Mr. Piñera, the conservative candidate, are jumping in with criticisms, to the surprise of some here. Mr. Piñera is the brother of José Piñera, the former labor minister who imposed the personal account system during the dictatorship of Gen. Augusto Pinochet. [and co-chairman of the Project on Social Security Choice at the conservative Cato Institute] ... "Chile's social security system requires deep reforms in all sectors, because half of Chileans have no pension coverage, and of those who do, 40 percent are going to find it hard to reach the minimum level," Mr. Piñera said ... "This has to be confronted now..." ..

So let's get this straight, Bizzybodyblog thinks a system whereby only 10% (100% -50% with no coverage -40% with less than needed coverage) have adequate retirement is a system we should adopt.

The only reason he mentions Chile is because it was part of the right wing talking points during their immensely unpopular propaganda push to privatize our social security system. I'm not surprised he goes back to this well and ignores the actual facts.

So much of the right's plan to privatize social security is flawed and deeply dishonest, this is just one small component of it. I guess they hope that if they repeat a lie often enough they can bamboozle enough people. aint going to happen. Social Security is immensely popular, and incredibly successful. If it aint broke it doesn't need to be fixed.