by Dale Coberly
SOCIAL SECURITY More How They Lie To Us
David Brooks says in a column headlined Where Are the Liberals?
Americans don’t hate government, but “believe the government has been captured by rent-seekers.”
This is the disease that corrodes government at all times and in all places. As George F. Will wrote in a column in Sunday’s Washington Post, as government grows, interest groups accumulate, seeking to capture its power and money. Some of these rent-seeking groups are corporate types. . . . Others exercise their power transparently and democratically. As Will notes, in 2009, the net worth of households headed by senior citizens was 47 times the net worth of households led by people under 35. Yet seniors use their voting power to protect programs that redistribute even more money from the young to the old and affluent.
The lie is that this is a dishonest segue from corporate rent seekers to the implication that “seniors” (as if they were all the same) are rent seekers, and that the normal wealth that “a generation” acquires after a lifetime of work is somehow unnatural and unfair, and worst of all, that somehow SS is redistributing money to the affluent.
SS doesn’t redistribute money except from your young self to your old self, exactly as if you had saved it (and bought insurance against inflation and financial setbacks of various kinds), it does not add to the wealth of the wealthy, it helps the elderly poor live in modest comfort… very modest comfort.
Just to be clear, not all the elderly are rich. Social Security is a way for people to protect themselves from being destitute in old age. It does not make them rich. It does not take money from “the government.” It does not take money from the poor young to give to the elderly rich. Workers simply save their own money in an insurance plan run by, but not paid for by, the government. The plan protects their savings from inflation, market losses, and certain kinds of personal bad luck. It is insurance. At the end of the day part of the premium paid by those who end up not needing the insurance (they did not have the fire) is used to help out those who did have the fire. As it turns out even those who don’t have the fire get all of their premium back plus enough interest to make up for inflation and provide a real return on their “investment” equal to the average growth of wages over the time they have been making their Social Security payments.
And, just in case you missed it, working people normally start out relatively poor in “wealth”, they work all their lives to acquire “wealth” so they will be able to retire when they need to or want to. For Brooks, or George Will to imply that somehow this is robbing the young is not just a lie, it’s a damned lie.
SS does not redistribute money from the young to the old… except in the sense of deferring some of your spending when you are young so that you will have something to live on when you are old. Pay as you go is the mechanism that makes this possible without risk of losses due to inflation or bad investments.
This is no different from what you would do if you saved it on your own… except for the guarantee. It is no more “rent seeking” than any other investment. All investment assumes that when you need to start cashing in your assets there will be another generation of investors out there glad to buy your stocks, or at least buy the products of the company you own stock in. If this be “rent seeking” then the whole idea of capitalism is based on rent seeking.
Brooks and George Will know this. They are highly paid liars, confidence men paid to talk you out of your life savings.
“According to the survey, among Baby Boomers ages 46 to 64, 25 percent have no retirement savings. And among Matures, those ages 65 and over, 22 percent have no retirement savings.”
well-spotted about Brooks’ conflating seniors with “rent-seekers”.
This was particularly egregious:
“As Will notes, in 2009, the net worth of households headed by senior citizens was 47 times the net worth of households led by people under 35.”
“People under 35” have had 0-15 years of productive employment, with a median age of ~26. They’re not going to have their house paid off, in fact they’re probably not going to be paying a mortgage at all yet, while people over 65 have their mortgages paid off and have happened to been able to enjoy the best 20 years of stock market growth we’ve seen, 1980-2000.
“rent-seeking” is a term of art — and it applies to actual economic rents. Social Security has nothing to do with this!
thank you very much. for once we understand each other.
I read excerpts from Brooks’s column with disbelief. Could this guy really think that young people are somehow supposed to have acquired significant assets by the time they’re 35 or so? Took me a while but I guess that in his world, kids do have “wealth” from birth or at least after working a few years.How else can I understand his bizarre pronouncement? I think I’ll stop worrying about what Brooks and Will, fellow-travellers in the austerian community, think about the economy. Absolute drivel. NancyO
Brooks is a bufoon. Though he is seldom totally wrong, he never gerts anything quite right.
But he never refers to SS in this column. His point is that liberals don’t have a visible and respected spokesperson. I’ve seen this argument before, and it has some credence.
The real problem, though, is that the right wing has a near monopoly on information distribution, and they use it to spread lies.
A liar always has the advantage. Refuting takes real facts and analytical skills. Liars speak in easily digestible sound bites. Groking the truth requires real mental effort, and the planted lie already has residence, so the line of least resistance is to deny or ignore the revealed truth.
Plus, by the time you construct your refutation, the liar has moved on to the next lie. So the truth-squad is always playing catch-up.
Of course the lies play right into ignorance and prejudice, and are thus very comforting to those seeking epistemic closure and validation for their shallow pre-concieved notions.
This is also why regressives attack education. People with critical reasoning skills are just a little bit harder to fool.
JzB–I hesitated to use the word bufoon to describe him, but you’re right. Every once in a while I see him on some political talk show looking amiable but somehow eyes-in-the-headlights befuddled. He seems to try very hard to understand what he sees around him but is woefully unaware he’s short of the mark. Thing is he’s not harmless. As you and Coberly point out, it takes time and information to pore over his statements in order to parse out the lies. The problem is that people believe what he and other “very serious people” say. It really does not acquit him of blame that he is sincere in his statements. Arrrrggghhhh!
It’s enough, already! I do wish the upper middle class spokespeople like Brooks would save their self-serving platitudes for their pals in the top 1%. I’ve got better things to do trying to figure out how much cash I have to shell out to pay my taxes this year. Just another year when my lamentable lack of capital gains will cost me dearly. NancyO
“…execpt for the guarantee.” You’ve lost me there. What guarantee?
the very good liar is never “totally wrong.” that’s the art. a really good liar can tell the strict truth and fool you into hurting yourself.
this has been true since the “father of lies” told Eve that she “would come to know good and evil.”
since she already knew good, she would come to know evil.
and of course with the “media liar” the art is to slip the lie over unnoticed. so you never think to question it at all, it just lies there quiet in your brain to assert itself as “everyone knows that…” and make it hard for you to think when you finally try to think.
it is not safe to assume Brooks is “sincere” except of course in the way every con artist is “sincere.”
Conserva-thought for the day:
Rich people are just poor people at different stages of life. So we shouldn’t tax the rich.
But old people aren’t just young people at different stages of life. So we shouldn’t tax young people.
“Brooks is a bufoon. Though he is seldom totally wrong, he never gerts anything quite right.”
No, Brooks is far worse than a mere bufoon. He is a confabulator par excellence. Never quite right is otherwise described as always mostly wrong, but right on the message that his managers want to spread. Remember, “…when the rich and the government stop bribing treacherous pens and tongues to deceive them.” Brooks gets paid a great deal of money to conform to a deceptive line of reasoning, to represent a distortion of facts as the reality of life. He is actually quite good at what he is paid to do and the proof is that only a very sophisticated reader will have sufficient facts at hand to recognize the deception that Brooks is well rewarded to produce.
plus the 47X multiplier is a beautiful way to lie with numbers.
Maybe the average 26 yo has a net worth of $1000. (They’d be lucky, given the cost of education today). 47X that is only $47,000!
“A lie can be halfway round the world before the truth has got its boots on.” — James Callaghan
little john, your Social Security benefit is guaranteed to be safe from inflation and market losses… the guarantee is an automatic consequence of the pay as you go financing, and the legal separation of Social Security from the budget controlled by Congress.
it is true the Congress could change the law. that’s what we are fighting against. but in the meanwhile the guarantee is the best you can get in an imperfect world.
and it has worked for seventy six years.
except in the case of one poor guy who was the victim of a Congressional act that took away his SS because he was deported for being a communist.
this was bad law, but it is an example of what can happen to the rest of us if we don’t make sure Congress understands what will happen to them if they take away our SS.
in America it is one thing to cheat a commie, it is another to cheat the entire population… though it can happen.
If I were King, I’d double FICA to 25% of income, and have the back-end payouts match.
I’m a big believer in “all taxes come out of rents”, so I think payroll taxes come directly out of rents and thus they are almost entirely a free lunch.
The System knows it’s getting closer on being able to skate away from the $2.6T of FICA surplus + its accrued interest.
The System knows that fairness dictates the top income decile repay this back over the next 20 years, but it also knows that with just a bit more bullshit it can convince the masses that that money never really existed.
Well, it existed when those FICA overcontributions came out of our paychecks, 1990-2009, but never underestimate the stupidity of the American people.
$2.6T is a pretty decent scam to get away with. It’s over $130B/yr in tax liability, which is ~50% more than the Bush tax cuts have been worth to the top 2%.
Yeah. that is another big lie – that we have actual economic and social mobility in this country. To a very large extent, we do not.
Thanks. Evidently there is more to worry about than just Congress. I can’t understand why a Democrat is a big supporter of the FICA tax holiday. And I can’t understand why you guys aren’t holding his feet to the fire. BTW, I know Bruce uses IC assumptions, as do most others. Have you guys tried to put HC assumptions into your NW Plan?
i have been yelling about Oboma and the tax holliday since the thing was hatched over a weekend when no one was looking. I have called him a criminal and a traitor. And the Democrats are fools and liars. I am entirely non partisan about this. Both the D’s and the R’s are in on the fix.
Bruce actually likes LC assumptions. I prefer to just use the IC because that’s the Trustees “most probable” and it is what everyone else uses except the hysterics.
The trouble with HC is once you start talking about it, everyone starts to “assume” that’s what we are facing. And while the answer is still the same…. we get what we get, SS can handle it and there is NO OTHER WAY to handle it (guaranteed retirement at reasonable age).. i don’t want to encourage people to indulge in scary fantasies.
From the Book of Tao: “The baby is soft and weak, but able to live a whole long life . The old man is hard and tough, but cannot live a moment longer.”
The under-35’s will not have had time to accumulate wealth, and the way things are going they won’t be able to save much of anything in this economy. The over-65s, in contrast, have a very reduced earning power, similar to the earning power of 16 year olds, though for different reasons.
In every culture it is the 20 – 60 year olds who pay their own way and at the same time support those younger and those older than themselves. Thus, in a stable population each working age person must earn at the very least double what he needs to survive, since he needs to raise a replacement and needs that replacement will care for him (or at least hopes so) once his eyes, knees, hips, heart, spleen and memory fail him. There’s nothing liberal or bleeding heart about this, it’s just how populations persist.
I was listening to a radio piece about aging and a woman, Olga Kotelko, who, in her 90s, is competing at a world level in track and field, shotput and discus. Of course, she is being studied because she is very very unusual in being able to perform at this level as a nonanarian.
But what really interested me was what the researchers said about the usual people. Universally, people begin a rapid decline in muscle strength, physical resilience and cognitive vigor around age 70, and little or nothing can be done to prevent it. For every person like Olga, active and healthy into their 90s, there are a hundred or more who are normal everyday people whose bodies are packing it in.
There’s a reason retirement was set at age 65. To say, “Oh! people are living longer, therefore they should go work at Wal-Mart till they’re 75.” is a disgraceful disservice to our parents and grandparents.
But it turns out it is almost exactly the amount the Bush tax cuts have been worth to the over 100k part of income. It can be paid back, including interest, with about a 3% increase in the marginal tax rate over 100k over about 20 years. I wrote something about it on AB a while back. I think I called it Big Numbers and Mental Hygiene, but don’t make me look it up.
not to mention to our children… who will be old one day.
in my line of work the “normal” retirement age was 58, and early retirement was 55, because after about that age you really can’t do the work any more. of course we paid for it. instead of paying us what we “could have gotten” in private work with “similar” requirements, they paid us about 75% of that and applied, one way or another, the rest to our pensions.
of course that was while they were still honest. since then they have tended to decide that pensions are some sort of unearned gift and they should just pay the 75% while working and give us their best wishes when we can’t do the work any more.
Please, call Brooks a LIAR. He’s not confused. He knows what he is doing. He is, at the very least, defending the destruction of our lives. He is more a threat to me than any 6 drug addicts with knives and guns. If I was robbed, or injured or killed my family could continue their lives. With Brooks we will all go down.
Don’t let your comfort with words and ideas fool you – this man wants me and my children impoverished, hopeless and dead. Please defend our lives.
I see. Thanks.
with a little careful reading you can come up with your own pretty good guess. it will look scary to you. but you need to remember a couple of things. first, it isn’t likely. by Trustees guess no more than one chance in twenty that costs could be that high. second, if they are that high there will be a reason for it, and paying for SS may be the best way to deal with those reasons. Third, it will be possible to modify SS if it makes sense to do so when the time actually comes, or is coming. No need to cut off our heads today because there is a one in twenty chance or hard times a lifetime from now. Fourth, you have to actually think of a way to deal with what might be coming, not just throw away what works very well today in favor of some “sure thing on wall street” that is going to make everyone rich and handsome with a great golf swing.
Under the Constitution Congress can declare war on Switzerland. I guarantee that will not happen in 2012. Is that guarantee backed up by Platonic Knowledge? Or in more modern terms is it an Analytic Truth? No. On the other hand you can’t disprove pure Solipcisistic arguments about ‘really’ being wired into a dream machine in a spaceship orbiting the fourth planet of Alpha Centauri.
Arguments that Social Security is not ‘guaranted’ based on arguments like ‘No Congress can bind any future Congress’ or ‘Fleming v Nestor’ are literally sophomoric, as in ‘good enough to fool that newbie Freshman during Orientation’, at some point you have to bring informed understanding of historical and political realities to the argument.
Congress could defund the Army at the beginning of any new Congress simply by doing nothing. Because that is the default position under the Constitution. On the other hand that same Constitution mandates maintaining the Navy. Yet nobody even vaguely rational believes the USS Lincoln will be sailing the seas in 2013 even as the 101st Airborne furls it’s colors along with the 7th Air Cavalry. The world we live in will not support that particular outcome.
Equally I can guarantee that my Mom will be getting her Social Security check in 2013 (absent tragedy-the Universe is capricious). Now I can’t say the same thing about my Great-Niece in 2067. Because the bad guys are out there and show no signs of giving up. But in neither case is that based on some crap argument about ‘No Congress can bind—-‘ or ‘Gosh maybe I really AM in a dream machine orbiting a distant star’.
Those arguments as applied to Social Security are somewhere between special pleading and pud pulling.
1) I don’t see “Social Security” anywhere in Brooks’s text. I see “programs” which could include, much more obviously Medicare, which isn’t described by your defense of SS.
2) It is incorrect to say SS is just people getting their money back plus a return on investment. People who retired in the last century generally got more out than what they put in plus a return on investment. Those retiring now, likely won’t. So one can understand why they fight to keep this entitlement; it’s not rent-seeking, it’s recovery of principal. That doesn’t explain Medicare though, where generally the payout is higher than the pay in plus a return on investment due to all those factors we hears about in the context of Obamacare.
i think you are confusing yourself.
future workers will get back their SS contributions plus interest. you have been reading a clever lie that obfuscates this by talking about “present value.” well what that means when boiled down is that SS recipients, on average, will not get the assumed interest rate in the present value calculation. but since SS is insurance, some people will get a good deal more than that rate, and a few will get somewhat less… but still a real return on their “investment” and that’s without counting the insurance value.
Medicare can be analyzed somewhat the same way. what you are paying for is your “expected cost” of medical care. in fact to the extent that medicare is pay as you go… and actually that includes the on-budget part of medicare as well… your ultimate medical care costs will be “subsidized” by the higher income of the following generation. that’s not unfair because that generation’s costs will be higher as well, so they are “really” paying in advance for their own higher costs… plus they will get a similar “subsidy” from the generation that follows them.
and, just from my point of view: even if you did not get ALL of your money back, the simple guarantee that you would get “enough” when you need it most is, well, priceless.