23 May 2011

More Funny Math

I'll skip the humorous tut-tutting Professor Krugman does in this post about another person's lack of civility. I'll disregard his almost pathological need to misrepresent facts and insult the intelligence and good faith of those not smart enough to agree with him. Par for the course.

I'll focus on one tidbit, Krugman writing: "He repeats the idea that nobody collected benefits in the beginning because life expectancy at birth was only 63 (life expectancy at age 65, which is what matters, was almost 80 for women and 78 for men)." emphasis added.

Retirement was set at 65 when Social Security was started because you were expected to die by then. Yes, it was well known that if you lived to 65, which you weren't expected to do, then the actuaries did account for the fact that you would live a few years longer. Good genes, non-risky behavior, diet and, again, good genes all played a roll in deciding how long after 65 you would live had you made it. But, and here's a very important point that Professor Super Genius* not only knows but purposely and maliciously misrepresents, you were not expected to live to see the age of 65. A majority of people would live (to 63), working usually 2/3 of that time and having a percentage of their wages taken from them and given to those lucky enough to keep going past the median mortality rate. This number has gone up significantly over the decades since it was instituted while we have only nibbled around the "retirement" age.

Why? Because it is politically risky to mess with a program where you take a little bit of money from a whole lot of people (via the payroll tax) and give it to others, but under the guise of the federal government "saving" it for you. An idea that was known all to well by the man we have to thank for this poorly run Ponzi scheme, Franklin Delano Roosevelt:

"I guess you’re right on the economics, but those taxes were never a problem of economics. They were politics all the way through. We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my Social Security program."**

Krugman knows he is full of blarney (trying to keep it clean). And FDR knew he was creating a system that would be impossible, politically, to fix. It was established to create a political class of citizens who would then be beholden to and dependent upon, the federal government. The workers will feel trapped into continued support because of the money already taken from them and "invested" into the system.


**Arthur M. Schlesinger, Jr., The Age of Roosevelt, vol. 2, The Coming of the New Deal (Boston: Houghton Mifflin, 1958), p. 308-309

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