Gaming Your Retirement Income

If you’re addicted to the latest hot tip from Uncle Willie
or listen to what your caddie heard whispered during a big-shot foursome last
week, you’re bound to be enthusiastic about George W’s plan to put your future
retirement income on ‘red 33’ and spin the wheel. Sounds like roulette but it’s
called ‘privatizing social security’ and a good many thoughtful economists
think W named it thus because it takes a public trust and puts it in private
pockets.

Wall Street has a trade association, a nifty little group
called the Security Industries Association. They have an opinion about how
little their members will reap from privatization, which is sort of like foxes
having opinions on how little farmers will miss the chickens disappearing from
chicken-coops. Foxes haven’t yet organized trade associations, but that’s just
another sordid example of the natural world’s superiority to man. Getting back
to the SIA, they forecast no more than $279 billion in industry
rake-offs over the next 75 years. A mere three and three-quarter billion a
year. Chicken-feed for chicken coops for foxes and an out-and-out bargain
at just six bucks a month for the current 52 million recipients.

Uncle Willie probably thinks that makes sense. Six bucks?
It’s a glass of wine, for god’s sake.

Yeah! We’re supposed
to collectively give Wall Street $312 million a month for the privilege
of letting them put our pensions on ‘red 33’ and spin the wheel. Wall Street
does not participate in the risk.
If that elusive bouncing ball comes to
rest on black (as in Black Tuesday) they still get their cut and it’s
you and I and even Uncle Willie who get trimmed.

My old daddy used to say that Wall Street consisted of the
sheep and those who sheared the sheep. Old daddy’s gone now, but he’d hear the
clippers warming up if he were here.

Aside from the fact that it makes George W a very popular
man among his peers to be able to deal out a limitless $10 million a day
in their direction, the stock market has shown itself over time to be a
far better investment than money-in-the-mattress, which is what social security
is in its present configuration. Over time is the operative modifier in
this assessment, which is otherwise quite true. The problem is that you and I
and Uncle Willie do not retire over a period of time, we perform that act at a
specific time and the condition of the market at that specific time can
make or break our dream of rocking on the porch or wiggling our toes in the
sand. If such a program had been in place over the past fifty years and had you
retired in any of the sixteen severe stock declines of that period,
there’d be no rocker and probably no porch either. Sand you might have gotten,
but surely not in Miami.

  • The “what to do” conversation over social security is long
    overdue, although the fund is in considerably less trauma than recent TV
    declarations would have us believe. Weaning the trust fund away from
    pay-as-you-go is necessary and expedient, but a better (although less
    glamorous) method is probably by annuity-based government bonds paying compound
    interest. This would

  • offset the imbalance of foreign investment in our government
    bonds

  • force-feed savings in a savings-anemic national economy

  • take advantage of the power of compound interest over
    the working years of future retirees

  • secure social security trust fund capital against
    market fluctuation

  • bolster funds available to research and development,
    the currently starved segment of our most viable growth engine

  • avoid the hyper-activity of an already over-stimulated
    stock market

As to that last issue, “bubbles” in various stock
markets inevitably follow a period of too much capital chasing too few shares
and the relentless impact of floods of social security income upon a stock
market can only tragically and permanently distort market levels. Rational
investment and its steadying influence on stock pricing is only possible with
less instead of more money on Wall Street.

We’re going to see a very intense advertising
campaign on the part of George W and his most slavishly fervent followers to
turn the tides of public opinion. Fasten
your seat belts. Public opinion is not well informed on this issue to begin
with because it’s complicated and the long-term effects of almost any proposals
are at best judgment calls.

But certainly no time to let our president shove all
the chips onto ‘red 33’ no matter what dear old threadbare Uncle Willy thinks.

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