Every time I read “y combinator” I think “Cy Twomblinator”
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So what’s the accounting of it.
Person A pays in. His accounts are that he given up the cash, and has an asset, his pension.
The state has the asset, but owes the pension.
So far I can’t see you complaining about that. It’s double entry, according to the book.
Next, what does the state do with the money.
It pays someone a pension. Some of those in the beginning got a pension without paying in. So the money is spent, the assets go down, the liability in the original case still stays.
However, if there is an excess of money coming in over going out, that would in normal parlance be a profit. Governments don’t use dirty words like that. They instead use the word surplus. They then lend themselves the money and spend it.
Notice the critical part. If they were accounting properly, they would record the liabilities. They don’t. The omit that.
So when you look at their accounts, what do you see.
Income and expense accounts? They will be accurate, to the penny.
Assets and liabilties? The ‘assets’, the money the have loaned themselves will be recorded. What won’t be recorded is the liabilities. Omitted.
So for the US, come back with the 4 numbers. Income and expense. “Assets” and liabilties. You’ll have a problem on the liability front.
A challenge for you.
Correct. You could lose all your money. Possible. However if the stock market all goes bust, you really need to be a prepper. The state isn’t going to help.
But what about the alternative? There are no assets. You’re at zero at most. Then you have a share of the government’s pension debts. That puts you into negative territory.
Here’s the exercise. For your median wage earner, work out the value of their pension. Then work out the total value of all pensions SS owes, for past payments only, present value. Pro rata that. Now total up the two. That’s what you get for your money. You’ll have a problem with the total that is owed.
Then get historical median wages, percentage of SS payments, and invest that in an index tracker like Vanguard. ie. Low cost. Each year, add money, get dividends, make or lose on the capital. Repeat until you retire.
ie. Two approaches.
First the redistribution current system. Second the capitalist based approach.
Compare the outcomes.
I totally agree with O’Reilly that stock options are the cause of many of our current woes.
The idea that companies must maximize profit is a recent invention that has plagued our society. Before stock options executives had to be paid real dollars from a profit stream (or investments) and typically had real consequences for failing to perform. The decisions made would be typically for the good of the company (even if painful in the short term) due to wanting that company to survive and grow.
These days decisions are based on what raises the stock price. Why? Because that increases the value of the stock options. Once those are vested they can cash out and 2-3 years later when the company tanks because all possible value has been wrung from it and the resulting monstrosity is unsustainable the CEO is long gone while the workers get the shaft.
See Caterpillar for recent results of this strategy.
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I’m inclined to let people who are making assertions do their own math for themselves rather than put effort into trying to prove their point for them.
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How should we compare the outcomes? The current redistributionist system has its flaws, but none seem nearly as flawed as the endless string of libertarian failure.
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I was going to reply too, but it really seems like the financial equivalent of freeman on the land legalese. And I’m not sure it’s worth bothering.
The scam which is the private pension industry and the notion that the stock market always outperforms the actual economy in the long run is a large part of the ongoing problem of financialisation which really seems to me to be leading the west into a period of decadent collapse.
Which is a shame as I really enjoyed the ride.
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Empirically, it seems a free and fair market well regulated by a government that wishes the nation’s people to prosper is the best form of capital allocation and wealth generation that has ever existed. That’s what history says.
Too bad we don’t have any of that any more.
Now our government handsomely rewards people for putting other people out of work, for polluting the environment, for destroying public education, etc. etc. etc…
And you’re part of it. Yes, you, dear bOINGbOING reader. You spend your money in ways that make this happen. When you buy products that put people out of work, when you don’t bother to vote in favor of higher school taxes or for school board members because you don’t have kids, when you play Candy Crush, you cast a vote more powerful than you do in any polling place.
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Because they spend it to survive?
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Surely guilty, I don’t always know what EvilCorp does when I buy their things (though I try not to buy from EvilCorp when I do know they’re horrible, sometimes I suck there too).
Always have voted in favor of tax increases for schools and infrastructure. Can’t remember the last time I voted against any tax increase, really.
Wait, what!? I don’t play Candy Crush, but is there something evil in doing so?
I’m sure I could do more, but how does Candy Crush fit in here?
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So how can they pay social security and fund someone else to survive as well?
One of the linked articles translated the market value of Candy Crush into human lives. It made the point that since we are no longer strongly regulating markets, but instead are allowing mostly unregulated markets to determine relative value of all things (which Paul Graham celebrates), pretty much all our economic activity has become guns .vs. butter. If you pay attention to something (like Candy Crush) it gains market share, while the things you aren’t paying attention to (like poor people) lose share. The particular article I’m misparaphrasing is here.
In re: your voting for education, well done! It’s true that the tax money is often ill spent, but having money ill spent on education is better than having it ill spent on police oppression at home and military adventuring abroad.
I try to buy from little guys, personally, rather than EvilCorp. I get my EvilCorp products from dumpsters as much as possible. Sadly, our system does not really let me completely boycott insurance companies, big pharma, or petrofuels, or many other socially destructive forces… although the superrich, of course, can easily avoid those three.
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The poor should buy gold instead of paying their bills on time. When disconnect notices arrive, they can just sell the gold, pay their bills, and pocket the inevitable profit. Win / win.
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ftfy 
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I don’t want to make you sad, but your idea of forced retirement savings will literally never happen in the future history of the United States. Feel free to share your fantasy, but it’s both a terrible idea and politically unworkable, so don’t be shocked when your brilliance isn’t recognized.
Future Soc Security issues are interesting for what they are, but the problems that program may face if Congress maintains its current shocking irresponsibility are what they are. Your pipe dream will neither help Soc. Security, nor do anything to help future Soc Security beneficiaries/the poor/the retiring even if it were implemented which it never ever will be.
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Probably not.
So you are going to be left with the current system where you get forced savings, social security, but your savings are automatically given to someone else.
You end up with the worst of all possible systems.
But that’s the nightmare, not the fantasy, and its real.
That’s why I’ll ask you a simple set of questions and perhaps you can supply the numbers for the US? I’m interested. I’m not in the US.
For SS
- Annual income [contributions]
- Annual expenses [payments to people]
- Assets [you can include the treasuries, the loans from one part of the government to another part]
- Liabilities. [just for past payments in, present value. Please don’t inflate and add up future values]
I’m pretty certain I can find the first 3. The 4th I suspect you and I can’t find.
The difference between 3 and 4 tells you the most. The annual rate of increase even more.
If you don’t want to pay social security, say it’s against your religion, and fill out IRS Form 4361, which is the Application for Exemption From Self-Employment Tax for Use by Minister, Members of Religious Orders and Christian Science Practitioners.
I am not a financial advisor, I am not your financial advisor, and this is not financial advice.
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SSI is named as, managed as, and treated as an insurance program, not a pension or savings program. Like virtually all other insurance systems that have ever existed, or exist today, it’s managed as a pay as you go system. Currently there is a future point around 20 years down the line where if the Congress doesn’t raise the cap or make a few other small but manageable changes there could be a revenue shortfall. I expect that some day the GOP will lose power again, the grown ups will be in charge, and this will be managed.
Because it is a pay as you go system, the most foolish and dangerous thing you could do would be to treat it like a savings program. That confused and ignorant model mismatch ensures problems, as the CBO projections of the financial impact of Paul Ryan’s completely unhinged SS privatization scheme illustrated. Given that SSI is what it it, it can be managed for what it is effectively once the current gaggle of incompetents leave the Congress, and if managed by responsible people will run fine. Your fear mongering doesn’t really sway me since it’s based on very deep and fundamental misunderstandings of what you’re talking about.
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The poster has acknowledged that they don’t live in the United States. Going to go out on a limb here and guess it’s Russian Intelligence’s brightest agent who also seems incapable of composing any but the briefest of paragraphs tasked to trick us into dismantling our Social Security programs. Nice try Putin, but you will have to file your return pretty early to fool the US.
Also if they aren’t spooks then I would like to send this open message: Hello, you live in a country with less income inequality and a lower incarcerated population. Have a great day!
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