SAVING FOR A RAINY DAY

As I alluded to in a prior rant, Rick Perry recently made headlines by proclaiming something that should have been obvious, that Social Security is a Ponzi scheme. Because the government makes the rules, it can set aside for itself behaviors that would be illegal for the rest of us. This isn’t always a bad thing: Incarcerating prisoners is good; kidnapping isn’t. Killing Ben Laden is good, murder isn’t (let’s not get into the subject of capital punishment; it’s a long detour). Printing money is good, counterfeiting, bad (well, maybe this one needs reconsideration). Anyway, I think you get the idea that some activities on the institutional level serve a valid purpose but can destroy society if left unchecked at the personal level. Other behaviors, however, should be illegal for any entity, official or not, and when they occur should signal the “corruption alarm.”

Social Security is one of those things. Originally envisioned as a lifeline for the elderly (who, at the time, weren’t expected to live beyond 65 years in any large numbers), there were large numbers of workers paying for a small number of elderly (unfortunately, no longer the case). So the government, in its wisdom, decided it didn’t need to put aside the hard-earned cash for these future retirees, recklessly throwing the dollars in the general fund and spending it like it does all taxes. When it overspent, as it always does, it threw IOUs (the only thing we have a surplus of, these days) in the nonexistent box. Basically, it used the money of early investors to pay those that came in later. What does this sound like? (A hint: the first letter is a “P.”) Even as a teenager no one had to tell me this was unsustainable; as soon as I found out, I decided I could never depend on Social Security for retirement funding. As it turns out, I was wrong. The insolvency doesn’t occur until my children try to collect. Sorry, kids.

What should have been done, and still needs to be, is the establishment of a true lockbox. Allow people to invest tax-free dollars into truly protected (from government looting) accounts. I know the objections: you can’t guarantee they won’t lose money, some people won’t save, yadda, yadda. This is the usual nanny-state argument. The truth is, even the government can’t guarantee funding, as we’re learning, especially one that is as addicted to spending as ours. There will always be poor and irresponsible people unprepared for their future that we will have to decide how and when to help. I propose that there will be a lot fewer of these when we expect and allow them to invest their own money and plan for their own retirement. Maybe this will encourage a move back to charity at home and a resurgence of the family.

One can only hope.

Next: The root cause.

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