Shock Therapy: “Ideas That Are Lying Around”

Part 4

Here’s where we come back to Klein’s thesis. In her book she quotes Milton Friedman, the capo di capi of the Chicago School of Economics: “Only a crisis produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”1

Within certain circles of power, the Social Security “crisis” has been lying around for a very long time. In his 1936 campaign against FDR, Alf Landon called the new program a “fraud on the workingman,” and continued:

“Every month they bring 6 per cent of their wages…so that he may act as trustee and invest their savings for their old age….the day comes…What do they find? Roll after roll of neatly executed IOU’s.”2

Those damned IOUs again.

FDR won that election. It was the Great Depression, the poorhouses were full, and for some the threat of starvation hit all too close to home.3

During the war and after, booming profits kept the rich folks busy for awhile, but by the end of the 50’s things had started to slow down and Social Security crisis was back on the agenda.

St. Reagan, in his nominating speech at the 1964 Republican convention, suggested privatization.4 Goldwater, the nominee, echoed the call.

He lost. Too many folks still remembered the Depression and the poorhouses. Social Security had put those institutions out of business, but in their day, the overwhelming majority of their residents were over sixty.56

Today Social Security is a bulwark against penury for the elderly. It provides 50% or more of retirement support for 2/3 of beneficiaries, and 100% of support for 1/3.7

In 1978, a young Congressional candidate picked up the theme of crisis. Stumping at the Midland Texas Country Club, George W. Bush said:

“[Social Security] will be bust in 10 years unless there are some changes…The ideal solution would be…[for people] to invest the money the way they feel.”8

Like the WMDs, the 1988 Social Security bust never manifested. You’d think Bush would be embarrassed, but 20 years after the crisis-that-wasn’t, he’s still banging the privatization gong.

There’s plenty more scary talk where that came from, a steady stream of policy papers and opinion pieces, dutifully parroted by the media. The think tanks that produce them are funded, not by any grass-roots demanding Social Security reform, but by a handful of big private fortunes, some well-known: Mellon-Scaife9, DuPont10, Coors.11

Other funders are less famous, but their fortunes are equally large. The Koch brothers, inheritors of one of the world’s largest private oil fortunes, fund what’s probably the most important source of privatization propaganda: the Cato Institute.12 Incidentally, George Bush’s sister Doro Bush Koch, is reportedly married to a Koch cousin.13

In 1983, in the wake of another failed attempt to gather public support for privatization, Cato published an influential paper titled “Achieving a Leninist Strategy.”14

The authors start by acknowledging that Social Security is a popular program, so head-on approaches to dismantling it are

unlikely to be successful. Instead, they recommend the “Leninist Strategy” of the title. Strange to find libertarian free-marketeers so enthusiastic about a reviled communist, but politics does make strange bedfellows.

Lenin was a political strategist known for super-pragmatism, a proponent of stealth tactics, alliances of convenience, and sleeper cells. He advised a secretive vanguard to help create the conditions for revolution, while lying in wait for the “revolutionary moment” when power could by seized by virtue of the same vanguard’s superior organization and discipline.

This is exactly what the Cato authors recommend in the way of a long-term strategy to take Social Security private. To help create revolutionary conditions, they suggest:

1) Mobilizing a coalition of folks who’d benefit from privatization (banks, investment houses, and other financial institutions).

2) Continuing public “education” aimed at discrediting Social Security and talking up privatization.

3) Creation and promotion of financial savings alternatives (e.g. 401Ks, IRAs) to get people accustomed to using them.

4) Splitting potential coalition supporters of Social Security, such as current and future recipients: “…the strategy must be to propose moving to a private…system in such a way as “to…neutralize…the coalition that supports the existing system.” Thus, older folks would be told their benefits wouldn’t be cut, making them less likely to mobilize to help protect benefits for the young.

All this has happened in the years since.

At the end of the paper, the authors say: “The next Social Security crisis may be further away than many people believe…it could be many years before the conditions are such that a radical reform of Social Security is possible. But then, as Lenin well knew, to be a successful revolutionary, one must also be patient and consistently plan for real reform.”

Read Part 1, Part 2, and Part 3.

  1. Milton Friedman, Capitalism and Freedom, 1962. []
  2. Alf Landon, “I Will Not Promise the Moon,” Speech of 1936. []
  3. Ronald Edsforth, The New Deal: America’s Response to the Great Depression, Starvation deaths, pp. 84-87. []
  4. Ronald Reagan, “A Time for Choosing,” Speech of 1964. []
  5. Michael B. Katz, The Shadow of the Poorhouse, Social Security as “the end of the poorhouse,” p. 132. []
  6. Abraham Epstein, Facing Old Age: A Study of Old Age Dependency in the United States and Old Age Pensions, majority of residents elderly, pp 28-29. []
  7. Economic Policy Institute, “Economic Snapshots, Social Security and Income, Figure 1, Importance of Social Security Benefits to Those Aged 65 and Older.” []
  8. For Bush, A Long Embrace of Social Security Plan,” New York Times 2/27/05. []
  9. Mellon-Scaife helps fund Cato, Heritage and other anti-Social Security initiatives through Scaife foundations. []
  10. The Dupont think tank is the National Center for Policy Analysis. []
  11. The Coors family helps fund Cato, Heritage and other anti-Social Security, initiatives. []
  12. Media Transparency, Koch Family Foundations; Cato Institute Project on Social Security Choice. []
  13. Kicked in the Koch,” American Politics Journal 8/4/00. []
  14. Stuart Butler and Peter Germanis, “Achieving a Leninist Strategy.” []
Hannah B. is from the Pacific Northwest and works in healthcare. She can be reached at: bbhannahb@yahoo.com. Read other articles by Hannah, or visit Hannah's website.

41 comments on this article so far ...

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  1. John Greenwood said on November 11th, 2007 at 11:45am #

    Hannah B., please, please keep defending Social Security. It is a marvelous program. It transfers money from unassuming poorer and younger working people, many of them minorities and transfers it to richer retired (mainly white) folks. This allows these retirees to enjoy more vacations, second homes, gas guzzling SUVs, etc. This has the added benefit of contributing to global warming, so the old folks won’t have to turn up the heat as much in the winter. As a white guy in my mid 50’s, I can’t wait until I retire and fleece the poor saps of the younger generation who believe in Social Security.

  2. hannah said on November 11th, 2007 at 12:17pm #

    John:

    I think it’s interesting how contentless your post is, how you attempt to pit old & young, white & minority, against each other, & how you use loaded words (“fleece”) with no supporting evidence.

    The fact is that 2/3 of SS recipients rely on it for 2/3 of their income in old age–hardly “rich seniors”. That some rich folks get Social Security income is what makes it a fair, universal program rather than demeaning “charity”. Every worker pays in, every worker gets something back.

    The fact is that while some minority groups (statistically) die younger than whites, they also become disabled at a higher rate & thus benefit from Social Security’s disability provisions at a higher rate than whites. Disability provisions–which, BTW, aren’t included in any of the leading alternatives.

    And the fact is that the numbers used to hype the Social Security “crisis” are fraudulent, as I’ll show in Pt. 5.

    These are facts that can be demonstrated empirically.

  3. hannah said on November 11th, 2007 at 12:20pm #

    Sorry, that should have read “2/3 rely on it for 50%” of their income.

  4. John Greenwood said on November 11th, 2007 at 1:17pm #

    I think it’s interesting what a feeble response you’ve made. I am not attempting to do anything other than point out a problem with your argument. Is it not a fact that Social Security is a transfer payment from younger people to older people? Does that not in some sense pit one group against the other? As for the “loaded word” fleeced, what term would you use to describe a situation where one person is coerced to hand over money to another person without receiving anything in return from the recipient? What would be the difference if I mugged you on the street and took your money to pay for my grandfather’s retirement? The difference would be that you wouldn’t be expected to thank me, the mugger. You use the loaded word “fair”. Who gets to decide what fair is? What guarantee does one have that any of the money they put into Social Security will be returned to them.? Could someone do better for themselves if they were allowed to keep their money instead of handing it over to the government to give to someone else? Is that fair? I say it is not, you think it is. You prefer it to demeaning charity. In my mind, Social Security is worse because not only is it coerced charity, but it is passed off as something noble. I have no problem supporting people who are disabled , but to make it easier for able bodied retirees to spend their money on a comfortable lifestyle is not what Social Security was supposed to be about. Finally, when Social Security began, how many workers were there to support one retiree? How many are there today? How can that be sustainable? It still holds that a fool and his money are soon parted and there is a sucker born every minute.

  5. hannah said on November 11th, 2007 at 3:10pm #

    ” Does that not in some sense pit one group against the other? ”

    Since old people were once young, young people will become old, & everyone pays into the system & receives something back — no.

    Only those who want to make enemies of the generations would make a claim like yours. Our parents aren’t our enemies, our children aren’t our enemies.

    “Divide & rule” is a tactic of the rulers, not the ruled.

    ” what term would you use to describe a situation where one person is coerced to hand over money to another person without receiving anything in return from the recipient?”

    I’d describe it as a situation with no relevance to Social Security, a system where all workers pay in, & all workers get something in return.

    “Who gets to decide what fair is?”

    We all should, and that’s what the ongoing debate is about. But that debate shouldn’t be conducted on the basis of divide & rule scare tactics & phony numbers.

    ” What guarantee does one have that any of the money they put into Social Security will be returned to them.? ”

    Seventy years of uninterrupted operations, the longest-lived and most effective retirement security program in history, & the fact that we live in a democracy, where we have the right to remove leaders if they engage in such fraud, & change rules if we don’t like the ones we have.

    It’s not perfect, but better than, say, relying on the stock market where a day’s trading can decimate our retirement savings & there’s no recourse at all.

    “Could someone do better for themselves if they were allowed to keep their money instead of handing it over to the government to give to someone else?”

    Some would, most wouldn’t, as shown by pre-Social Security experience, when most old people died in poverty, dependent on their families or in poorhouses.

    “to make it easier for able bodied retirees to spend their money on a comfortable lifestyle is not what Social Security was supposed to be about. ”

    Social Security was, & is, about providing universal security in old age. No one knows who’s going to become disabled, rich, poor or middle-class when they start their working life, but every working person pays into the system when they’re young & healthy & gets something back
    when they’re old or disabled. The well-off aren’t penalized without return, the poor aren’t left to suffer “charity” after a working life.

    “Finally, when Social Security began, how many workers were there to support one retiree?”

    I’m glad you bought this up, as it’s a point that once worried me, before I considered the “miracle of productivity”. In 1950 there were about 16 workers for every retiree. By 1965 there were about 4. How is it the system didn’t crash then, when the transition from 16 to 4 was so rapid? How is it that Germany & Japan don’t crash, when they’re already at the 2:1 ratio you think is so dire?

    Because today’s workers produce more wealth per working hour: more food, more durable goods, more consumer goods, more knowledge.
    In the same way that today one farmer today can produce the food 60 used to, today’s workforce produces many times the wealth of the workforce of 1950–which means it takes fewer working people to support retirees.

    If there’s a production problem, it’s not in the ratio of workers to retirees, it’s in the fact that workers’ wages have lagged their productivity for 30 years (unlike the period 1940-1970, when wages tracked productivity), & the off-shoring of productive capacity.

    “there is a sucker born every minute.”

    If so, I’d say the suckers are those who believe think-tanks funded by transnational corporate interests disseminate information out of concern for ordinary working people or ordinary local American businesses.

  6. John Greenwood said on November 11th, 2007 at 4:50pm #

    “Only those who want to make enemies of the generations would make a claim like yours”.

    How silly of you to think you know my motives and that that is the only reason to make the claim I made.

    “Our parents aren’t our enemies, our children aren’t our enemies.”

    Thats right and rather than shirking our responsiblities and expecting a faceless government to take care of our parents, children should be taking care of their own parents.

    You didn’t answer this question: What would be the difference if I mugged you on the street and took your money to pay for my grandfather’s retirement? Your answer would be that you would go and mug somebody else, it’s only fair.

    Your argument regarding the guarantee of Social Security is silly. Is there anything in writing that guarantees anything about Social Security? Who are you going to sue if the rules are changed and you think you’ve been cheated out of what you are owed, even if the majority people think it’s fair? The Soviet Union experienced about seventy years of uninterrupted operations and look where that is,

    You say, “How is it that Germany & Japan don’t crash, when they’re already at the 2:1 ratio you think is so dire”? Where do I indicate that Social Security is so dire and that it is going to crash? Like us, they are going to have to face up to reality. Also, do have any idea how well they treat their disabled in Japan? All, I am saying is that Social Security is a bad deal for future generations and that like any Ponzi scheme, the most gullible and least likely to afford it will be left holding the bag. My circle of friends and I will certainly benefit from it, however, so again, please keep up with the good work.

  7. D. R. Munro said on November 11th, 2007 at 5:41pm #

    John, you’ve lost this – just give it up man. She chewed you up.

  8. hannah said on November 11th, 2007 at 5:59pm #

    A faceless government isn’t taking care of our parents. They paid into Social Security during their working life, & they take out during their retirement.

    Yes, I’ve lived in Japan, so I have an idea of how they take care of their disabled: much the same as we do.

    Social Security isn’t a Ponzi scheme. In a Ponzi scheme, people are conned into “investing” in a fraudulent business that creates nothing and so generates no real wealth & profit to pay returns. Instead, the earlier investors are paid with the money of the later investors, & more and more “investors” must be found to keep the pyramid from collapsing.

    In the case of Social Security, it’s exactly the opposite. Each generation of workers creates more real wealth & profit than the one before it, and pays for a retirement security program out of that increasing production. Far from needing an ever-increasing number of workers to maintain the stability of the system, fewer are needed.

    The recent repackaging & multiple reselling of risky mortgages–reselling the same assets over & over & pretending new value is created with each reselling–is more akin to a pyramid scheme than Social Security.

    What would be a bad deal for future generations would be to bet their retirement on that kind of casino economics.

  9. John Greenwood said on November 11th, 2007 at 10:40pm #

    You are unwilling to adress one of my main questions, what is the guarantee that you will get what you think you deserve? Where is it written? What contract was signed? Who can you sue if you feel cheated? What is the guarantee that the new generation of workers will be able to create enough of the real wealth & profit to be able to pay for a retirement security program of the large retiring baby boom generation? I suspect that you sneer at the entities that actually create wealth and profit anyway. You think most people are too stupid to invest wisely and want to restrict people’s ability to participate in that wealth creation. Additionally, you seem to be assuming that the only alternative to Social Security is to invest speculatively in the stock market. Can you not think of other investments? How about this one, what if rather than being coerced into sending money to Social Security, I invested the money in my own education so I could earn more and save more for my own retirement? That would be an adult way to create wealth. Finally, as a physical therapist who has mentored Japanese physical therapists, I can state that you are categorically wrong about the treatment of the disabled in Japan relative to those in this country. In Japan the treatment is inferior and I have received that information from the professionals who work directly with the disabled. There are trade offs that eventually have to be made with finite resources. What is fair? Are the needs of the disabled equal to those of the comfortably retired? Should the comfortably retired have their vacations subsidized at the expense of people who truly can’t take care of themselves?

  10. Deadbeat said on November 11th, 2007 at 10:52pm #

    What Mr. Greenwood fails to consider is that Capitalism itself is a transfer program. The rich own the means of production and prevents ALL workers access to resource whereby if he or she had access would be able to organize in a manner of sharing and cooperation. Capitalism requires coercion in order to maintain itself and to crush all other competitors. Therefore Capitalism is the best known Ponzi scheme there is. Workers time, labor and wealth are expropriated to the rich. Mr. Greenwood certainly doesn’t have any problem with this type of arranged theft.

    The reason why Social Security works and is popular is that it is universal but once again we do have to consider RACE in the history of Social Security. The original Social Security legislation did not consider certain domestic labor worthy. This was deliberate to win over the southern voters who wanted to exclude BLACKS from SS benefits. Thus Social Security for many years was an affirmative action for whites. It wasn’t until the Civil Rights movement that blacks win certain right that expanded Social Security benefits. Unfortunately black early on were excluded from SS benefits.

    I hope Hannah considers in her analysis the racial discriminatory history of Social Security and how racial rhetoric of races is ironically being used by opponents of Social Security.

  11. Lloyd Rowsey said on November 12th, 2007 at 10:15am #

    Thank you, Hanna B, for your work on this difficult problem.

    Perhaps instead of expending the brainpower it takes to even approach the project called The Shock Doctrine, I can put up here a post of mine to the article, “The Shocking Disaster of Capitalism,” written by Susan Rosenthal for Dissident Voice, dated October 29, 2007:

    “Two months or so ago, Dissident Voice printed an excerpt from the Introduction to Naomi Klein’s The Shock Doctrine, and in reaction to it I posted, “We are all Kleinists now.” After reading on the book subsequently, I am less enthusiastic, and I share Susan Rosenthal’s reservations. Especially Rosenthal’s reservations about Klein’s compulsive liberalism.

    Plus I have an additional reservation or two of my own.

    Klein repeatedly indulges in historical superficiality and oversimplifications, both of which alert the reader to her lack of specific knowledge or her lack of a concern for it. For example, on page 58 of The Shock Doctrine, Klein writes: “In 1953….when large portions of the globe were turning to Stalinism and Maoism…” Now, if Klein is referring just to the USSR and China, Stalin was dead and so the statement is meaningless; if she is referring to the “large” portions of the world outside of the USSR and China, the statement is patently false. Another example is on page 56, where Klein characterizes Milton Freidman as “a brilliant mathematician.” In fact, the hallmark of Freidman’s brilliance (if there ever was one) could only have been his Nobel Prize, and it was for Economics. There is no Nobel Prize for Mathematics; the Economics Nobel has long been a source of controversy if not outright embarrassment to the Swedes and to the world; and no Economics Nobel Prize has ever gone to a brilliant mathematician.

    Still, I have great admiration for The Shock Doctrine, and I was enchanted by the author’s prose as well a by her astounding synthesis of so many elements of a truly radical critique of contemporary capitalism. We have sorely lacked such a critique.”

    I’ts my intention to continue reading The Shock Doctrine, and someday to finish the book review of it I’ve started. In the event, Dissident Voice will certainly be a (the?) recipient of that review.

    Lloyd Rowsey

  12. A Mohit said on November 12th, 2007 at 10:45am #

    John, I hope you are fat cat CEO, CFO .. or one of its like, who survives with the support of a manipulated support group and is rewarded for failures with golden parachute. If not, however hard you try to be His Master’s Voice, you will live on handouts if there were no SS.

    Overreach yourself beyond your small shell, you will realize you are the guarantor for your father, and your child is your guarantor, and if you do not have a child it will be mine.

  13. John Greenwood said on November 12th, 2007 at 11:28am #

    Dear Deadbeat,
    I guess you find it more palatable to have the government mug you than a greedy capitalist. “Capitalism requires coercion in order to maintain itself.” Where did you learn such illiterate piffle? I bet you think Mao and Stalin had the right approach instead. Secondly, why do you support a system that takes money from younger and less wealthy minorities and gives it to rich white retirees to subsidize their vacation homes? Are you insane?

    As for Social Security, you and others faith in it is just so cute. In 1907, E.J. Smith was quoted as saying: “In all my experience, I have never been in an accident…of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort.” E.J. Smith was captain of the Titanic.

    My I suggest reading the work of Eugene Steurle Senior Fellow of the Urban Institute, for a more reasoned treatment of the Social Security issue then that given by the dilettantes here.

    By the way Deadbeat, your pseudonym fits you well.

  14. John Greenwood said on November 12th, 2007 at 11:46am #

    Dear A. Mohit
    I am a physical therapist. I work at a county hospital that specializes in the rehabilitation of neurological disorders. I have spent my own money to provide better service. I will not be living on handouts.

  15. Lloyd Rowsey said on November 12th, 2007 at 1:32pm #

    John G. That E.J. Smith quotation is the funniest thing I’ve read or heard in a long, long time. And A. Mohat, that “and if you do not have a child it will be mine” is the second funniest. Thanks, both (and may you often trade insults in places I read). I needed that.

  16. Lloyd Rowsey said on November 12th, 2007 at 1:59pm #

    Hanna B. In your post at 5:59 pm above, you wrote:

    “Social Security isn’t a Ponzi scheme…..it’s exactly the opposite. Each generation of workers creates more real wealth & profit than the one before it, and pays for a retirement security program out of that increasing production. Far from needing an ever-increasing number of workers to maintain the stability of the system, fewer are needed.”

    Are you mad? If so, I’ll take any bet you want to make that in an increasingly globalized world economy — which itself assumes global conflict hasn’t relegated increased worker productivity in this country into the garbage can of military expenditures — even one future generation of American workers will come into being producing “more real wealth and profit than the one before.”

  17. hannah said on November 12th, 2007 at 3:40pm #

    “Are you mad?”

    No. The ability of the US economy to produce a living for its citizens is its own question. If it can, then SS is viable. If it can’t, no other retirement scheme is viable.

    If there’s fear that the US economy can’t produce enough wealth to sustain its citizens, then best deal with that problem directly & honestly, rather than the phony problem of Social Security.

    I see that comments here have devolved into personal insults. I wish folks wouldn’t do that.

  18. Lloyd Rowsey said on November 12th, 2007 at 3:55pm #

    well, Hanna, compared to the personal insults exchanged between the posters, “are you mad?” is rather mild, if not to say theatrical. I wish folks had thicker skins.

  19. Lloyd Rowsey said on November 12th, 2007 at 4:07pm #

    Also, Hannah (excuse my mispelling), I never implied that the US economy would not be able to “produce enough wealth to sustain its citizens.”

    I also hope you don’t consider this question a devolved one: what is it you had in mind when you wrote that such a catastrophy could be dealt with “directly & honestly”?

  20. hannah said on November 12th, 2007 at 4:24pm #

    I was talking bout the general tenor of the latest exchanges, not yours in particular. The problems of our times are difficult enough without personalizing discussions of issues.

    I think our economy, & the larger world economy, has serious, but not irremediable problems. To deal with them directly & honestly means to identify & correct the real problems–which all, in one way or another, revolve aound power.

  21. A Mohit said on November 12th, 2007 at 4:43pm #

    Sorry John, I should have understood your class (that you are not a CEO material) from your gutter language.

    You are just a paycheck away from poverty in the event of a major illness (I pray for your health).

    Best wishes.

  22. John Greenwood said on November 12th, 2007 at 8:01pm #

    Dear A. Mohit,
    Gee, if I had feelings , they would be hurt right now. You have an endearing habit of making a fool of yourself with your off the mark assumptions. The fact is I have have invested and planned well in the event of a major illness or disability, say tetraplegia for instance. Sorry to disappoint you.

    Dear Hannah,
    You say that you see that comments here have devolved into personal insults. You wish folks wouldn’t do that. Why then did you insult me initially by assuming I had evil motives to pit one group against another? Could I not have different motives? I questioned this in a previous post, but there was no answer. There are plenty of intelligent well meaning people with far more credibilty than anyone posting here, who have adressed this issue with far more detail and thought and disagree with you. Are their motives bad? My I again suggest reading the work of Eugene Steurle Senior Fellow of the Urban Institute, for a more reasoned treatment of the Social Security issue. He is no ideologue. I’d like to see you address his points. I think that would be be honest and direct.

  23. hannahb said on November 12th, 2007 at 9:13pm #

    Whatever your motives, your comments about greedy seniors funding vacation homes with their SS & (implicitly) taking money from the disabled do, in fact, pit the generations against each other & pit seniors against the disabled. I don’t think it serves anyone to divide ordinary people against each other or scapegoat one group at the expense of another.

    I can only repeat: everyone pays into SS, everyone gets something back. The rich, the poor, the middle, the healthy, the disabled, black, white, Catholic, Jew, atheist. To my mind it’s the most successful social program we have, & one that embodies the best of American values.

    In fact, I did look up Mr. Steurle. He supports private accounts. Since there is no SS crisis, there is no need to change the system. If there were an SS crisis (which could only happen if there were a meltdown of the larger economy), private accounts would be no remedy.

    There’s no case I’ve seen where private accounts would provide the universal safety net SS does. There is no case where they’ve been instituted that there haven’t been grave problems. The only case where they might have merit is where they’re an addition to basic retirement security–not the whole hog.

    Personally, I don’t care how well-educated Steurle is or how long he’s studied the issue, & I see no reason why ordinary people can’t form their own opinions by looking at the data themselves, instead of taking their opinions wholesale from pundits & think-tanks. If you look at the historical record & the assumptions the SS administration projection are based on, it’s almost impossible to come away believing in the “crisis”.

    Steurle’s recommendations aren’t made in the interest of people like me or for the good of the nation; they’re made in the interests of the class of folks who pay for his nice office.

  24. Lloyd Rowsey said on November 12th, 2007 at 9:38pm #

    John. If you didn’t already have the sort of job a very intelligent, compassionate person would die for, excuse the expression, I’d suggest you consider writing single-page comedic pieces — about the length Woody used to put in the New Yorker with some regularity.

    On the other hand, when I got my Purple Heart on the NYT’s political forums several years ago, and experienced exchanges with persons about as appreciative of debating niceties as The Chipmunk is of Fred Astair, my mind would turn to mush after about three hours; and for some reason I’ve been relentlessly posting to DV — off and on — for about the last three hours.

  25. John Greenwood said on November 12th, 2007 at 9:57pm #

    Lloyd, I appreciate the comments. Humorless people seem to misunderstand me. I suppose that’s my fault.

  26. Kim Petersen said on November 13th, 2007 at 1:21am #

    Lloyd,
    There is no Nobel Prize for economics either — not conceived and funded by Alfred Nobel’s intention. It is a prize put up and funded by a Swedish bank to which they affixed the name Nobel.

  27. Lloyd Rowsey said on November 13th, 2007 at 7:26am #

    Noted and thank you, Kim. I read your “A Presidency” piece very briefly yesterday and will give it a more time today. Preliminarily, I think it doesn’t approach the standard of dispassionate, radical reporting you set with your Struggle Against Colonialism trilogy. But then, nothing I’ve found on the internet of comparable length, does.

    Speaking of the trilogy. What in the world does “Overhoved ikke forbløffende” translate to?

  28. Lloyd Rowsey said on November 13th, 2007 at 8:22am #

    John, it’s not your fault.

  29. John Greenwood said on November 13th, 2007 at 8:35am #

    Dear Hannah B.
    Your analysis and logic are so simple minded. Answer my this, If I am able to fund my own retirement without expecting a younger person to pay for it; how is that pitting myself against the youger person. However, if the rules are changed and the age is increased at which one can draw on SS or payroll taxes are increased or the benefits are decreased, one group isn’t going to like it and they are going to fight to keep what they have. That’s pitting one group against the other, which is what you are actually supporting. You are a crypto-fascist and you don’t know it. (Ha, ha, a little poetry).

    If one dies before retirement, that person doesn’t get anything back. Additionally, there are many who don’t pay a dime into the program and receive benefits.

    Mutual funds are required to state that past performance doesn’t predict future performance. SS should be treated the same way.

    You dismiss Mr. Steurle out of hand because he supports private accounts. As a result, You obviously didn’t take much time looking at what he says. This demonstrates what a dilettante you are. I might be wrong, but since you didn’t dispute me regarding the treatment of the disabled in Japan, I assume you had no first hand knowledge of the subject, yet you responded as if you did. This doesn’t reflect well on your ability to make or pass judgements.

    Of course ordinary people can make their own decisions. Does freedom only apply to opinions? You spport coercion to get what you think is right. Your recommendations aren’t in the interest of people like me, nor are they for the good of the nation. (I only make a modest income by the way and I don’t belong to the class of people you reference. You again make a simple minded assumption about people).

    You state “The only case where they might have merit is where they’re an addition to basic retirement security–not the whole hog.” Actually if you had been paying attention, you might have relized that I (I belive Mr. Steurle also) agree with that statement, not in degree, but in kind.

    I leave with this quote from C.S. Lewis: “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

  30. Buck said on November 13th, 2007 at 11:21am #

    Lloyd,
    I’m not going to enter this fray too far. I would like to point out that most posts miss the point of the third word in “Social Security Insurance” – in fact, I hardly ever hear it called that anymore. Seems to be a preference for “Account” or such.

    However, I thought I’d go back to the Nobel Prize question. The prize for Economics is actually the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”; and, it was won by a brilliant mathematician – John Nash, Jr (of “A Beautiful Mind” fame) won the prize (actually 1/3 of it) in 1994 for his work on the applications of game theory to economics.

  31. Kim Petersen said on November 13th, 2007 at 11:40am #

    Lloyd, translation: “Not at all surprising.”

  32. hannah said on November 13th, 2007 at 5:37pm #

    “If one dies before retirement, that person doesn’t get anything back. Additionally, there are many who don’t pay a dime into the program and receive benefits”

    If one dies before retirement, one’s spouse & dependent children get benefits, + a small burial benefit. Those are the only categories of people I’m aware of who get a benefit without paying in, but as their spouse/parent paid, they still get benefits. The spouse, for life; the child, until s/he becomes 18 (if memory serves).

    You may be confusing SSD & SSI. Social Security Disability, SSD, is paid to workers who’ve paid into the system & become disabled.

    Supplemental Security Income, SSI, is paid to people who’ve not paid into Social Security/didn’t work enough to vest and are blind, disabled, or old.

    It’s a welfare program, NOT paid out of Social Security taxes, but out of the general budget. It’s administered by the SS administration, but has nothing to do with SS.

  33. Lloyd Rowsey said on November 13th, 2007 at 8:41pm #

    Buck. You are entirely right. Nash was a brilliant mathematician and he won the Nobel for Economics. I would correct the sentence above, where you caught the error, to read: “…; and only one Economics Nobel Prize has ever gone to a brilliant mathematician, who was not Milton Friedman but John Nash, Jr.”

    I read the other paragraph of your comment to be saying that discussions of social security in this country no longer even pretend that it is insurance. However, I have to plead inattention to the entire issue of social security in Hanna B’s series of articles; I read it for the author’s take on The Shock Doctrine by Naomi Klein.

  34. John Greenwood said on November 13th, 2007 at 10:43pm #

    Well Hannah, do you have any idea what happens to your SS taxes. These taxes are spent on all kinds of present government programs. In exchange, SS trust fund bonds are issued . These bonds are not tangible assets, they are simply promises to pay from money collected from future taxpayers. These bonds do not make the country one dime richer, unlike private investments which create wealth such as apartment complexes, diagnostic medical equipment, etc. Additionally, these bonds are considered assets for the SS “trust fund” in the Alice in Wonderland world of the federal government, whereas reality based entities treat this as a LIABILITY.

    I was trying to restrain myself from saying this, but alas I find myself succumbing to my brain stem reactions. You state, “I can only repeat: everyone pays into SS, everyone gets something back. The rich, the poor, the middle, the healthy, the disabled, black, white, Catholic, Jew, atheist.”

    How about a little thought problem? For the sake of argument and simplicity, let’s say I only contribute $1000 to SSI the first year I start working. 30 years in the future, let us hypothesize various payments to me for my retirement. 1. I get $500 back. Is this good? Is it fair? You put something in, you get something back don‘t you? 2. What if I get $1000 back. Is this good? Is it fair? You put something in, you get something back don‘t you? 3. What if I get $2000 back. Is this good? Is it fair? You put something in, you get something back don‘t you? What is the rate of return for each of these scenarios. Do you even know how to figure it out? What is the rate of return expected for a 30 year old contributing to SS right now. How do these rate of return compare to what one might reasonably expect if they put the money into Treasury bills or bank Cds. What is the possible rate of return, if instead, one invested in their own education vs. putting it into SS.

  35. hannah said on November 14th, 2007 at 12:23am #

    Mr. Greenwood:

    In fact, I discussed the fact that SS tax collections, since 1983, have been consistently in excess of current retirees’ needs, & that these excess collections have been dumped into the general fund, & that this new source of funds was used to justify tax cuts. Most of which went to the very wealthy.

    The solution to this problem isn’t to keep collecting the excess taxes & put them into the stock market–it’s to stop collecting the excess taxes & return to the original program design: stop generating increasing surpluses that can be dumped into the general fund.

    “These bonds are not tangible assets, they are simply promises to pay from money collected from future taxpayers.”

    Yes. Like every other US government bond, historically considered the safest investment on the planet. Perhaps you’d better tell folks like Warren Buffet & Bill Gates bonds aren’t safe, since they’re the kind of folks who purchase the majority of government bonds. There’s no meaningful difference between a SS bond & and any other type of US government bond.

    There’s only a difference in what class of people the money’s owed to.

    ” unlike private investments which create wealth such as apartment complexes, diagnostic medical equipment, etc. ”

    The majority of “investments” in the stock market create no new wealth, they just transfer shares of existing wealth from one owner to another as people make bets on what shares will or won’t appreciate.

    The alternatives to SS aren’t proposals to build apartment buildings, they’re proposals to put SS taxes into the stock market, so we can pump up price to earnings ratios even higher & keep the bubble going.

    Nice deal for insiders, not so nice for ordinary folk. Lots of room for pump & dump there. Lots of juicy fees for Wall Street.

    “let’s say I only contribute $1000 to SSI the first year I start working. 30 years in the future, let us hypothesize various payments to me for my retirement. … What is the rate of return for each of these scenarios. ”

    Since no one knows how things are going to turn out when they start their working life, or even when they’re in the middle of it, the “rate of return” will vary wildly, depending on how long a person is able to work, how much money they make, whether they become disabled or die young, etc. But it’s sure that everyone who pays in gets something back.

    And, as an earlier poster noted, SS is an insurance program, not an “investment” program. The object is to provide universal, guaranteed basic security in old age. SS has succeeded in doing this for nearly 1/3 of the history of the United States. No private investment program has touched its success.

    “How do these rate of return compare to what one might reasonably expect if they put the money into Treasury bills or bank Cds.”

    You want to put your money into T-bills? Government bonds! What guarantee do you have that the government will pay it back?

    Bank CDs? Why, it’s the government who guarantees those, too. How can you trust that?

    You can compare idealized rates of return all you want, but it’s not reality. If you get disabled & have to quit working, if you get sick & have to draw down your 401K, if you put your kids through school & they can’t make enough to pay you back, if the market dumps & takes half the value of your “investment” halfway through your working life–
    you’re SOL.

    There are a lot of “ifs” in life. Most people won’t get the idealized returns. Historical experience is that before SS, most people died poor & dependent. In Chile private accounts have been a disaster. In Sweden & England they’re already performing substantially below projections.

    Privatizers can’t win the argument on the facts & the historical record. That’s why they have to lie.

  36. hannah said on November 14th, 2007 at 12:43am #

    “You spport coercion to get what you think is right.”

    In fact, a strong majority of the population supports continuing SS in its present form, despite a 30-year disinformation campaign.

    Those doing the “coercing” are the folks funding the disinformation: folks like the Waltons of Walmart, our nation’s biggest employer: e.g. P. 27:

    “http://www.usatoday.com/money/perfi/taxes/2005-04-05-waltons-usat_x.htm”

    If they could win an honest debate, they wouldn’t have to lie–or spend so much money buying propaganda & Congresspeople.

  37. John Greenwood said on November 14th, 2007 at 7:49am #

    Ha, ha Hannah, I knew you couldn’t do the simple math. Another glaring example of what you don’t know. I concede that your win the argument with people who can’t do the math either. I salute you! Fortunately for greedy baby boomers like me, there are enough people out there who can’t do the math slaving away at miserable low paying jobs, trying to pay the rent, feed their kids, maybe saving to buy a house, etc. Rather then spending their hard earned money on these needs, they send it to people like me so we can have nice vacations. Don’t think I’m not grateful.

  38. hannah said on November 14th, 2007 at 11:39am #

    John:

    I can do the math. But the idealized math is irrelevant. In real life, it doesn’t turn out that way.

    http://www.tcf.org/list.asp?type=NC&pubid=1155

    “In Chile, a large proportion of the workforce has entered and left employment repeatedly, accumulating little in private accounts. Coverage of private accounts has settled at about half of the workforce. In Britain, the government projects that the proportion of retirees on public assistance in 2050 will reach 70 percent. Without a continuing public safety net, half of retirees or more would face poverty in Chile and Britain.

    Second, one of the principle reasons for the poor record of private accounts is that these accounts proved very costly to set up and manage. Just as critics had warned, small accounts of low earners lose a large part of any accumulation to management fees.

    Third, the fact that the residual anti-poverty program in place today in Chile and Britain is means-tested creates a powerful incentive for low income workers not to save. After all, if private account balances simply reduce public assistance, why save for retirement? A universal system, in contrast, does not punish savers by reducing their basic pension.

    So Britain and Chile are now studying how to reintroduce universal minimum retirement benefits combined with incentives to accumulate private saving.”

    This was exactly our experience before SS. More than half of workers died in poverty, dependent on their families or the state.

  39. John Greenwood said on November 14th, 2007 at 7:09pm #

    Hannah, if you can do the do the math, prove it. You state: “But the idealized math is irrelevant” That is a very foolish statement. People need to be able to make these types of calculations to weigh the relative benefits of various alternatives, always keeping in mind that there is uncertainty. Your way of thinking is what keeps people poor.

    You state, “In fact, a strong majority of the population supports continuing SS in its present form, despite a 30-year disinformation campaign.” What if the minority doesn’t want to participate and are forced to . I call it tyranny of the majority. You have an Orwellian use of words.

    You talk about private accounts as if they are the only alternative. You still haven’t answered this question: How would you describe people slaving away at miserable low paying jobs, trying to pay the rent, feed their kids, maybe saving to buy a house, etc. Rather then spending their hard earned money on these needs, they send part of it to SS and ultimately to people like me so we can have nice vacations. I know what I call it, EXPLOITATION. What motivates you to advocate the exploitation of poor working class people in this manner. Are you in fact a secret agent of folks like the Waltons of Walmart as part of a devious plot to exploit the poor working class?

  40. hannah said on November 14th, 2007 at 11:29pm #

    John:

    If I felt obliged to prove something to you, which I don’t, I could easily look up how to compound interest & discount inflation if I didn’t know, which I do. It doesn’t matter if, ideally, if my investment quadruples every month if, in real life–it doesn’t.

    as for your “exploitation”: the day the waltons, the mellons, the rockefellers & kochs, & the political class as a whole get behind a movement to allow people to vote on every item in the federal budget, i’ll take you seriously. until then, i see no reason why SS should be a special case.

    Somehow, the only budget items their good citizenship extends to are social programs. They somehow never want to let people choose whether we want to fund wars & corporate welfare. Forcing people to pay for those programs is never described as “exploitative”.

    Their outrage, & yours, is selective.

  41. John Greenwood said on November 15th, 2007 at 1:11am #

    Hannah, of course you don’t have to prove anything to me, besides, it’s now quite obvious that you can’t do the math. You’re just too much of a coward to admit it.

    “as for your “exploitation”: the day the waltons, the mellons, the rockefellers & kochs, & the political class as a whole get behind a movement to allow people to vote on every item in the federal budget, i’ll take you seriously. until then, i see no reason why SS should be a special case.” Ha, ha, then you concede that there is at least an element of exploitation in SS. We’re making progress here.

    “Somehow, the only budget items their good citizenship extends to are social programs. They somehow never want to let people choose whether we want to fund wars & corporate welfare. Forcing people to pay for those programs is never described as “exploitative”.” This is a non sequitur (you might have to look that up)

    “Their outrage, & yours, is selective”. This is another non sequitur. We were only talking about SS here. What makes you think I’m not outraged by these other things. Again, you continue to make erroneous assumptions.