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Neal Boortz Swings and Misses on Social Security

"The time will come, though, when these people who today are preoccupied with the grossly unimportant will suddenly realize that they've been robbed blind."

Neal Boortz correctly identifies the important issue in the Mandated Government Retirement Fraud:
You do know, don't you, that there is absolutely no legal guarantee that you will receive one single penny of the money that is taken from you. No guarantee at all. The congress can vote tomorrow to end the system and keep every dollar that has been paid in Social Security taxes. There would be nothing you could do about it. Nothing except, that is, to vote against the jerk who stole your money.


This is absurd, folks. We're supposed to be living in free country that recognizes property rights. You own you, not the government. You work for you, not for some stranger. In a free country your government should not seize your money by force and put it into a phony "retirement" fund that earns you a sub-par rate of return and to which you have no legal right beyond what politicians are willing to grant. When you die the money you earned during life shouldn't be seized by government to be transferred to another individual you don't know while your family scrambles about looking for a way to keep their home and pay for your funeral, but that's exactly what the AARP is fighting for.

Good stuff and entirely accurate. But what does he propose to replace this nationwide fraud?
Chile used to have a Social Security system that was a virtual copy of ours. Chile, however, didn't have an AARP. What Chile did have was politicians who realized that their system was doomed to collapse, and who did something about it. Chile privatized every individual's retirement benefits.


Today in Chile workers pay 10% of their pretax earnings into their own retirement plans. They can elect to pay an additional 10% in pretax earnings if they wish. The companies who manage these funds are prohibited by law from engaging in any other type of business. The sole business purpose of these companies is to take these privately owned retirement accounts and grow them.

Stop. Just...stop.

What the fuck is this obsession with people who want the government to force us to save money? Mr. Boortz is on record barely five paragraphs above with a firm statement in support of property rights and self-ownership. The corollaries to these statements are available to those with functioning mental faculties. Unfortunately, the collapse begins and he jumps right into upholding what he just said he opposes. The Fuck-Me-This-Is-Crazy moment arrives at the end:

If they die before the retirement age the money goes to their families. If Chileans live to retirement age they have three options:
  1. Purchase a family annuity from a life insurance company.
  2. Leave their funds in a personal account and make monthly withdrawals adjusted to match their life expectancy.
  3. Any combination of 1 and 2.

The government steps in to guarantee a "minimum pension" for people who have worked at least 20 years and who's benefits don't meet the minimum monthly amount required by the Chilean law.

So...rather than a system that allows us to own our money and do with it as we please...Mr. Boortz wants instead to have a system that forces us to save, limits our options with that money, and subsidizes (through theft) a certain chunk of this "privatized" pension market.

Here's another way of putting this: the man said he likes cheeseburgers and he doesn't like the cheese or the burger.

If you read this Mr. Boortz, I hope you come to your senses and realize the gross error you've made. This kind of disjointed and contradictory commentary is what friends of liberty don't need in the fight against the government and its idolaters.

Link and image via Billy Beck.

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Your operation was a resounding success, Charles.

Well done.

Question is: How many know this?

Do you think partial privatization is worse than no change at all from the status quo?

Objectively speaking, the additional marginal freedom a partial privatization of Social Security would entail is better than the current system. But I'm also of the opinion that going only half way (and the most popular reform being debated doesn't even approach that mark) will merely create different perverse incentives from what we're stuck with and cannot eliminate the problems created with government involvement. In addition, once you enact "reform" with a limp-wristed change in the name of private property, you release the pressure to do what I think actually needs to be done: complete government divestiture of the whole affair.

Do you agree that is the ideal endpoint, the full privatization of everyone's retirement? If so, what happens after these partial measures are taken and the inevitable system crash is merely delayed a few decades? "Privatization has failed!" they'll say. And the masses will simply swallow the lie that it was privatization at all.

I don't want partial, graduated, or half-measures in this matter, as in other matters. I want it to simply stop and get out of our way. Politically, that is exceedingly unlikely to occur. As you know, that doesn't deter me from advocating it anyway.

I see this as similar to education vouchers. I'm not positive if it's really an improvement, and if it will make longer-term complete privatization more or less likely.

I agree with you that the preferred end-state is no government involvement in either education or retirement savings, but I don't want to let the perfect be the enemy of the good.

I have an idea about how privatization of Social Security might work:

A worker could have an account ("ISSA") like an IRA-- choose his own brokerage (or other financial institution(s)) at which to hold it, choose whichever investment vehicle(s) (except certain high-risk ones) he wanted, and pay the brokerage fees for making the investment transactions in the account. However, the brokerage would merely be holding the funds for the Social Security Administration of the government. The worker would retire and start collecting Social Security, and take distributions, just like from his IRA. The government would still continue to calculate the amount to which the worker would be entitled every month, and the SSA (through the brokerage) would pay it out. There could be special rules for a worker who bankrupted his ISSA, like by buying all stocks that went bankrupt-- there would be some formula whereby his Social Security check would be reduced propotionate to his losses.

Frieman, there are many plausible ideas on how to privatize Social Security and some of them even make sense on their face.

But in my world, if we are going to "prviatize" something, what should happen is the government should step 100% out of the deal and let us manage the affair as we see fit. No regulation, no laws, and no coercion to get us to do what the state thinks is right.

Some of my ideological cohorts have been calling these schems "forced savings accounts" and they are entirely correct. I don't need or want the government to manage my retirement for me in any way and I don't want it to do that for anyone else. A retirement account would therefore be just another offering from a financial firm who wants to sell something to people who want that service.

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