"Social security [state pension] operate on a basis that would send the owners of any private insurance company to prison: it expects to repay your 'contributions' with money it will take from somebody else later. As the years pass, it becomes harder and harder to keep this pyramid scheme going."
-- Fail-safe Investing by Harry Browne
(Recommended by Through The Lens.)
12 comments:
Mr Browne is quite clearly an idiot. 'nuff said.
This year's contributions to social security are not saved for your retirement, they are paid to this year's pensioners.
anonymous: "Mr Browne is quite clearly an idiot. 'nuff said."
Thank you for your valuable assessment. Mr. Browne, however, is no longer with us. He died last year.
FRD was a genuis and trustworthy President who cared about people's retirement. Social Security is still widely in use. It will always be this way.
PS, Browne is an idiot and fool.
What do you think will happen when:
1) The big baby boomer generation retires?
2) The income is being generated by the much small younger generations?
3) People will have to live on social security for 20 years or more, instead of the 3-5 years they did in the thirties?
The math is easy: if it is -or becomes- a pyramid distribution, it can't hold.
France intends to solve it by having people work longer. Meaning, you'll contribute more, and cash in the benefits years later, reducing the amounts required. To quote the newly elected President: "We have managed to balance the system until 2020. This buys us time to make reforms for later. We've got work ahead of us."
It makes a lot of sense, considering people aged 65 today are far less "at the twilight of their existence" than in the Thirties. Life expectancy isn't the only thing that's dramatically improved, its quality also has. We're as healthy today, at a given age, as our ancestors were when 10 to 20 years younger. This counts. A lot.
Of course, I see a major flaw in that system anyway: unemployment! What's the use of letting people work and contribute for a longer time, if they can't find jobs in the first place?
The economy is a whole. An eco-system, in a way. It is all connected. If there is too much waste and pollution, and resources are insufficiently distributed, everybody loses in the end, because the whole contraption will crumble.
I see another Catch-22 in the problem of unemployment: jobs are being drained toward the poorer countries. There, the vast majority of the profits go to an even smaller minority than in the West. So, riddle me this, Batman: if average working people in the rich West (who are the vast majority) have less and less jobs, and less money to consume goods, what happens to the market for which these goods are being produced? What IS a Market? You cannot sell your stuff to some abstract mathematical entity!
I feel this amounts to sawing the branch you're sitting on, perhaps hoping it'll just last longer than your own life expectancy. It can work... if you're an 80-something billionnaire. But the safety margin is vanishing faster than an iceberg in the Sahara surrounded by a flock of thirsty camels.
Maybe this IS a good thing in the long term. If the economy crumbles, the plundering of natural resources and accumulation of greenhouse effect gases like CO2 and bovine-made methane would slow down, maybe saving us all in the long term. Maybe.
And then also, maybe I'm being overly optimistic.
P.S.: Mr Browne IS dead. He was killed in the dining room with tha candlestick, and I suspect Miss Violet is involved...
Yes, state pension is clearly a faulty idea. In this country more or less everyone (including the politicians in power) agree about the imminent pension bomb. But it is somehow a topic which it is not kosher to talk about. As if they were hoping that the problem would just go away on its own. In reality, the only known solution is to start gradually taking the system down, starting now. And yet, absolutely nothing is being done.
What bugs me even more about it, though, is how it violates the rights of the individual. People who die early never get anything back. It's a form of slavery, making you work part time for others against your will.
As they say, it's not a crime when the government does it.
Pascal: "Mr Browne IS dead. He was killed in the dining room with tha candlestick ..."
No. He died from amyotrophic lateral sclerosis (Lou Gehrig's Disease).
"As they say, it's not a crime when the government does it."
Who says this?
It's something I realized a few years ago. If you kill a man, that's the worst crime you can do. But if the government sends you to war, you will kill or you're a traitor.
Eolake: "Who says this?"
It's an often recited phrase. I have no idea who said it first. Must be very old.
Eolake: "But if the government sends you to war, you will kill or you're a traitor."
True. However, the Nurenberg trials showed that "I was just following orders" does not always get you off the hook. You may be tried as a war criminal even if all you did was follow the orders from your government.
For example, Roedy Greene maintains that U.S. troops fighting in Irak are all war criminals and that history will prove his case. Not surprisingly Greene has received several death threats after communicating this position of his.
"No. He died from amyotrophic lateral sclerosis (Lou Gehrig's Disease)."
Darn, THAT's not one least bit funny. Nasty stuff, ALS.
To my excuse, I previously didn't have a Clue about it.
"But if the government sends you to war"...
An arabian poet wrote long ago:
"Killing a man in a dark forest is an unforgivable crime;
Killing thousands in broad daylight is a matter to be considered."
Definitely not a new notion. :-(
"Not surprisingly Greene has received several death threats after communicating this position of his."
Death threats to Greene??? I say it was Congressman Blue, in the gothic chapel, with the double-edged crucifix. Now, show me your cards, mister! (I already know it wasn't the poisoned pen dipped in holy patriotic water.)
Oh, wait... *I* am playing Congressman Blue in this game. Should've chosen Colonel Mustard, he was only following orders. Ah well, at least I'm not the clueless guy, in the bush, hiding behind his finger.
Hey, anybody for Monopoly? Dibs on the oil wells and weapons factories!
There may be a vague translation there: what does he mean by "a matter to be considered"?
It's a deliberate vagueness, present in the original text. In other words, if it's profitable, it'll be done and nobody will dare think of criticizing it. Irony over the delectable euphemism "we shall consider the option". Starting a war is not treated as a crime, but as mere normal politics.
Other, less literal translations:
"Assassination is ignoble, war is all noble."
"Kill one, you'll be a bandido. Kill ten thousands, you'll be a grand hero."
Who was it that said "A profitable war becomes a legitimate one"?...
Mencken?
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