The implications of this idea look a little less attractive when one considers who has the power to impose fines on people and corporations for publishing news they don't agree is true...
Yes, obviously we should keep all retirement funds in the private sector, where clearly no one like Donald Trump would ever be in a position of authority.
Of course that really only works out for you if you happen to be a relatively wealthy white person. You see, the poor tend not to go to college so they pay into SS for longer. They also tend to die earlier so they don't collect for as many years. So the poor black person who dies in their early 60s gets a -100% return on their investment. But an upper middle class white person who lives to be 90 will do alright. Oh, and of course the poor black person was robbed of their potential to create generational wealth, further exacerbating that issue.
If Trump serves as a cautionary example of potential governance issues in the public sector, he serves better as a cautionary example of potential management issues in the private sector, given his long career there.
There are better ones, of course. If we're picking tail events like Trump, one might just as well say the risks of having the private sector manage retirement funds are accurately characterized by the various market failures surrounding the 2008 crash (which were, however private, hard to avoid the effects of even with a surfeit of personal choice).
On top of that, since you wanted to talk about personal choice... of course there's choice and accountability in public institutions, it just works differently: you have to select management cooperatively, and the collective decision might be different than your choice. That really has a fair bit in common with a number of private sector retirement vehicles (which are likely enough selected by your private employer), but there are others which are more individual and it's nice to be able to take your ball and go elsewhere. But even there, you don't necessarily get a clear signal when someone whose competence is as limited or anyone whose incentives are as misaligned with yours as Trump's are gets involved with your retirement fund's management. In fact, I'd go so far as to say in most cases you'd have less scrutiny and fewer journalistic resources to turn to in order to make that assessment than you would in the typical selection process for public office.
Now what you often would have are claimed/recorded rates of return. But since we're thinking about that question, maybe we should talk about how a typical 401k compares to returns for Social Security:
Social security is a regressive program that redistributes wealth from the poor to upper middle class. The poor tend not to go to college, so they start paying earlier. They also work hard labor so they die earlier, meaning they collect for fewer years. Want to know who lives a really long time? Upper middle class and upper class white women. Want to know who dies early? Poor black men. Yes, a person who lives to be 90 years old will do pretty well. But a person who lives to be 62 will have a -100% return on investment and have nothing to pass on to their children, harming the potential for the poor to create generational wealth.
Both of these issues would exist with any retirement vehicle, public or private, so singling out a public retirement vehicle for criticism doesn't make much sense.
(The astute might even notice that singling out the problems in public institutions without considering their private analog was the same blind spot in your original comment.)
That said, it is worth noting that as a flat tax (with a ceiling), FICA taxes are in fact a regressive tax scheme (as are sales taxes) -- something to keep in mind the next time flat taxes are floated as a good idea for income taxes in general. Whether that means the overall tax burden (vs program benefits) is regressive is less clear, given the somewhat progressive nature of the rest of the income tax structure. But I might well agree that problems with a public retirement vehicle would be worth addressing in public policy, so to the extent that it can be established that the overall burden is regressive, sure, I'd be supportive of changes that would make it more progressive.
Maybe we could look at capital gains tax rates, which I'm sure you're also concerned about, given how important regressive redistribution is to you.
In a private system they have the capability of accumulating generational wealth. In the public system they do not.
> sure, I'd be supportive of changes that would make it more progressive.
Are you going to be supportive of the types of changes that would allow poor people to accumulate private wealth that they could pass onto their children so that their children are less likely to follow the same fate of hard labor and early death? Or is your goal to keep them under your thumb, poor, and beholden to the state?
>Maybe we could look at capital gains tax rates, which I'm sure you're also concerned about, given how important regressive redistribution is to you.
Short term capital gains tax rates are the same as income tax rates. You just don't pay FICA (SS, Medicare). My preference would be to remove the FICA from the rest of your income, bringing income taxes and capital gains taxes into parity. Long term capital gains are lower. I'm open to bringing that into parity with short term capital gains and regular income tax. The result of that would likely be more retail stock speculation by the relatively uneducated investor. But I'm not particularly concerned about that.
How sure are you about this?
"Social Security already provides an inheritance benefit in the form of survivors benefits, which account for nearly one-fifth of all benefits that Social Security pays. When a worker dies, Social Security pays survivors benefits for a number of years to the worker’s minor children as well as to the worker’s spouse if the spouse is raising children who are under 16 or the spouse is 60 or older.[1] The Social Security actuaries have reported that for a typical family with two young children in which a worker dies before reaching retirement age, the survivors benefits can be the equivalent of inheriting $400,000, a much larger sum than most workers could accumulate in a private account."
https://www.cbpp.org/research/social-security-and-inheritanc...
> Or is your goal to keep them under your thumb, poor, and beholden to the state?
Do you really want to bring questions about our motives into the scope of discussion? I don't usually find that a productive line of conversation. And at this point, looking back over the discussion, what do you think a perceptive audience is more likely to believe: that my goal is sinister enslavement via social security check, or that your championing of an entirely privatized retirement system owes more to some other motive than concern for the struggles of manual laborers?
> My preference would be to remove the FICA from the rest of your income, bringing income taxes and capital gains taxes into parity.
FICA taxes don't have to be gospel. The question is how you're going to replace the revenue they provide for Social Security and Medicare, or if not that, with the opportunity that revenue funds. Perhaps you could do it by raising long term capital gains taxes. But if the line of discussion points towards elimination of those programs, well, so far, I haven't seen any credible evidence or argument that if we eliminate SS+MC, the people for whom those specific taxes turn out to be regressive would have the opportunity to get a hold of a vehicle that would provide better benefits/returns, not to mention the balance of incentives to put money into it.
I think it's likely enough concerns about any regressive side to those taxes are better addressed by considering how the rest of the income tax code is (or might be) progressive and in the quality of the public benefits. Or bringing the bracket system to that side. Or holidays like the one in Tax Relief Act of 2010. Really, there's a lot of tools in the box.
>that my goal is sinister enslavement via social security check, or that your championing of an entirely privatized retirement system owes more to some other motive than concern for the struggles of manual laborers?
How a reader is biased before coming into the conversation is irrelevant. I'll ask again, since you dodged it. Are you open to plans that would allow the poor to accumulate private wealth that they can pass onto their children? I'll give you a pass that you probably don't think your actions are part of what's keeping them poor. However, keeping them under your thumb and beholden to the state is simply an objective fact of the system if you won't allow them to opt out.
>The question is how you're going to replace the revenue they provide for Social Security and Medicare
Why would I want to replace the revenue? There's lots of ways to handle phasing out the program, but you could simply freeze the nominal value of the payouts and let inflation eat away at it until it's cheap to just pay off any remaining outstanding benefits and shut it down. While that's going on you can issue a dividend refund for however much excess the program collects.
>I haven't seen any credible evidence or argument that if we eliminate SS+MC, the people for whom those specific taxes turn out to be regressive would have the opportunity to get a hold of a vehicle that would provide better benefits/returns, not to mention the balance of incentives to put money into it.
Buying a bunch of useless shit that your kids sell at a yard sale after you die that makes a few hundred bucks is a better return on investment than the 100% loss many of the poor get today because they die too early to receive any benefits at all. Your answer to that was that if the 60-year old who dies has a 5 year old they'll get a payout... I mean seriously...
A person/family making $35k/yr from 21 to 65 needs to only put away 6% of their income and earn the historical 401k average of 5% to have 100% of their working years annual income in retirement income to the age of 80. The bottom 40% of US income has a life expectancy of 80 or less. And that's putting under half their current FICA (15%) into a retirement account. Also incidentally, that's nearly 50% better than than the SS payout in your James Russel article.
Will there be some unfortunate people who were disabled or spent an inordinate amount of time with a household income of less than 2/3 the median household income? Or perhaps some low income people who beat the odds and live to 90? Absolutely. If 90% of us want to pitch in to help the bottom 10%, I'm happy to do so.
Similarly, if my wife were a murderer, she could easily kill me in my sleep, but this doesn't mean I'm against the general idea of sharing a bedroom with my wife — it just means that marrying a crazy person is bad.
>Similarly, if my wife were a murderer, she could easily kill me in my sleep, but this doesn't mean I'm against the general idea of sharing a bedroom with my wife — it just means that marrying a crazy person is bad.
This is a perfect analogy because you are 100% in control of who you choose as your wife. You may make a bad choice, but you choosing a bad wife doesn't kill everyone. It just kills you. Meanwhile, less than 1/5 of us chose Trump and now he is managing your healthcare, your retirement, and your military.
Don't I wish. You're 100% in control of who you don't choose as your wife; you have substantially less control over who you do choose.
Let's make this a thing.
It's an almost childish view of the world to think that the fact that sometimes your side doesn't win means people should or will abandon faith in the ability of government to provide services. The very point of democracy is that you accept that sometimes you're not going to win.
Your analogy is poor: I wouldn't want Trump running the fire department, but I want that as a government function. We know what privatizing a fire department does.
Trump is a symptom, not the cause. The cause is a set of people willing to swallow propaganda and fear, uncritically.
This is not an either or proposition.
>We know what privatizing a fire department does.
Half of Denmark's population is served by private fire departments. What has it done, exactly?
For the record, I'm not opposed to public fire departments, but this illustrates the benefit of pushing the power of government as locally as possible.
Let's consider the 'face punch' theory of political discourse. If your county commissioner is really fucking things up, there's a fair chance you'll eventually run across them at the local coffee shop and you can punch them in the face. Maybe you wind up in jail for a few days, but enough face punches and things will start to change. If you try that on the President, you'll probably be killed before you ever lay a finger on him. Now, I'm not actually advocating violence here, just illustrating the differential of influence in a hopefully comical way.
Suddenly the idea of punishing people for wrongspeak/think becomes a hell of a lot less attractive.