Social Security vs 401k

This article is rife with questionable assumptions. The basic premise is that "Hah! Aren't you glad we didn't let Bush privatize your Social Security?" True, people heavily invested in securities had seen their investments decrease by one-third to 40%. But unless you were retiring in the next year or so, then you are still likely to be ahead of the game in your 401k vs. Social Sceurity.

First, the money in your 401k is yours. Unlike SS, which is nothing short of a Ponzi scheme, a 401k or IRA is always your own money (barring some sort of malfeasance on the part of your administrator). You have control over it, and you have resposibility to manage it. Social Security pays out by taking monies from current workers. The SS "trust fund" doesn't exist--rather, it is a pile of IOUs that the Government wrote to itself.

Second, under the Bush plan, only a very small part of your SS "contributions" would have been eligible for self-management. And one of the options for that sliver of money would have been US Treasuries, the only investment that SSA can "invest" their IOUs in--so you could have had the same return as SS, but would have owned the money rather than have it go to pay benifits to current SSA recipients.

Third, and finally, when SSA starts having to pay out more than they take in, they can simply invoke the power of the US Government to extract additional "returns" from taxpayers. So the so-called fragility of the market returns relative to SSA returns are apples and oranges, or rather honest men vs con artists. The 30 year ROI in the market is more than 11%. SSA's rate-of-return is a mere 1.23% by some measures, for the lowest income contributions. Higher-income contributors are less favored, since they pay in much higher contributions relative to what they can legally received. And minorty contributors are pretty much screwed with negative ROI, since they have life expectency that means their SS payout is far less than they were forced to pay into the system.

Socialism for class grades

Snopes.com says that the attributions in some versions of this viral email are wrong and there is no legitimate recorded instance of this actually happening. Nevertheless, this tale seems apropos:

An economics professor at a university said he had never failed a single student, but had once failed an entire class.

The students insisted that socialism worked since no one would be poor and no one would be rich, a great equalizer. The professor then said, "OK, we will have an experiment in this class on socialism."

"All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A."

After the first test the grades were averaged and everyone got a B. The students who had studied hard were upset while the students who had studied very little were happy.

But, as the second test rolled around, the students who had studied little studied even less and the ones who had studied hard decided that since they couldn't make an A, they also studied less. The second Test average was a D.

No one was happy. When the 3rd test rolled around the average grade was an F.

The scores never increased as bickering, blame, name calling, all resulted in hard feelings and no one would study for anyone else.

To their great surprise all failed. The professor told them that socialism would ultimately fail because the harder people try to succeed the greater their reward (capitalism) but when a government takes all the reward away (socialism) no one will try or succeed.