October 30, 2005
From the desk of Mindles H. Dreck:Dreck's Annuity
[UPDATED BELOW - 'WE GET (incremental, complex) RESULTS (back in February)']
I recommend almost all of the NY Times Magazine this week, but the article I spent the most time with was the cover story by Roger Lowenstein on the Pension Crisis. Lowenstein provides a convenient inventory of key hazards that can be generalized to all the components of our retirement systems:
- the moral hazards of government pension insurance combined with the tendency of providers to over-promise future benefits relative to current benefits
Given that pension promises do not come due for years, it is hardly surprising that corporate executives and state legislators have found it easier to pay off unions with benefits tomorrow rather than with wages today. Since the benefits were insured, union leaders did not much care if the obligations proved excessive.
- the problems associated with estimating future liabilities when a variety of assumptions about future events are plausible
Corporations have been gaming the system by using the highest rates allowable, which shrinks their reported liabilities, and thus their funding requirements. The P.B.G.C., when calculating the system's deficit, uses what is in effect a market rate; whatever it would cost to buy annuities for everyone covered in a pension plan is, it argues, the plan's true "liability." The difference between these measures can be extreme. Depending on whom you talk to, General Motors' mammoth pension fund is either fully funded or, as the P.B.G.C. maintains, it is $31 billion in the hole.
- the very human tendency for investors/pensioners to undervalue 'annuitization' or certainty of future income
pensions typically annuitize - that is, they convert a worker's retirement assets into an annual stipend. They impose a budget, based on actuarial probabilities. This might seem a trivial service (some pensioners might not even realize that it is a service). But if you asked a 65-year-old man who lacked a pension but did have, say, $100,000 in savings, how much he could live on, he likely would not have the vaguest idea. The answer is $654 a month: this is the annuity that $100,000 would purchase in the private market. It is the amount (after deducting the annuity provider's costs and profit) that the average person could live on so as to exhaust his savings at the very moment that he draws his final breath.
- the tendency to 'smooth out' times of poor fund performance in anticipation of better market results - combined with the tendency to take back excess gains or take 'funding holidays' when the market buoys pension values.
If the stocks and bonds in their pension funds take a hit (as happened to just about every fund recently), they don't have to fully report the impact. Nor do they have to ante up fresh funds to compensate for the loss for five years. A similar smoothing is permitted on the liability side. And though, in theory, Erisa discourages underfunding by requiring offenders to pay higher premiums, its various loopholes render the sanction toothless. Thanks to another loophole, companies that contribute more than the required amount get to skip future contributions even if they later become underfunded. These companies are awarded so-called "credit balances," which remain in place even if the actual balance is showing red.
- the tendency to make pension benefit increases a political or social engineering tool or, worse, raiding the funds themselves in pursuit of political goals or simple greed.
California is a good example of the political forces that have driven benefits higher. In the 90's, Gov. Gray Davis, a Democrat who was strongly supported by public-employee unions, pushed through numerous bills to increase benefits. One raised the pension of state troopers retiring at age 50 to 3 percent of final salary times the number of years served. (Previously, the formula was 2 percent at age 50, more if you were older.) Thus, a cop hired at age 20 could retire at 50, find another job and get a pension equal to 90 percent of his final salary...
....One of the biggest pension offenders is San Diego, where six members of the pension board, including the head of the local firefighters' union and two other union officials, have been charged with violating the state's conflict-of-interest code, a felony. What is interesting about San Diego is that, juicy details aside, its pension mess actually looks rather commonplace. The six board members are accused of making a deal to let City Hall underfund the pension system in return for agreeing to higher benefits - including special benefits for themselves. Explicitly or otherwise, this is what unions and legislators have been doing all over the country.
The administration's goal of an 'ownership society' deals effectively with many of these hazards, but it does hit a rock with #3 - given control over the 'lump sum' pension amount, many pensioners will run out of money, which will ultimately rebound on the work force. It strikes me that our current tax system provides a variety of incentives to set aside retirement money but is not structured well to address the lack of annuitization. The recent changes encouraging 'Roth'-style accounts allowing earnings on taxed principal to circumvent the tax system entirely are a step in the right direction, but perhaps a roth-style annuity is called for as well. Wouldn't we benefit from allowing workers to buy a certain amount of a retirement annuity (say $50/month, inflation-protected) every year with pre-tax dollars, and pledge to keep the proceeds of those annuities protected from income tax throughout the pensioner's life?
I may be wrong on some tax details here, but I believe presently such an annuity can be bought only with taxed dollars or a retirement account, and the annuity proceeds are 100% taxable after all taxed basis (purchase amount paid with post-tax dollars) has been returned to the investor. They have a slight and under-appreciated tax advantage. On the other hand, they are complex, and sold through the over-commissioned life insurance distribution network, both of which repel the average investor.
My point is that any outright guaranty or government-run system carries lowenstein's hazards, so an ownership society is probably necessary. However, the government can do much more with the incentive dollars it is spending now to promote annuitization and reduce the hazards of these policies.
A congressional measure introduced in mid-June aims to encourage the use of annuities by giving people a tax exemption on 25%, up to $5,000, of the income received from annuities purchased through qualified retirement savings plans. The bill, H.R. 2951, called the Lifetime Pension Annuity for You Act of 2005 and introduced by Rep. Earl Pomeroy, D-N.D., was referred to the House Ways and Means Committee. Another bill that offers a tax break for annuities, H.R. 819, now boasts 64 co-sponsors.
See also some typically poignant commentary from Winterspeak:
It probably has to do with social contracts, animism, and the special glow that money from some sources has but money from other sources lacks. I would also add that the last I checked, private savings is available to both the rich and the poor (although their savings rate may be very different) ...If almost half a trillion dollars is a little moral hazard, I'd hate to see what a lot of moral hazard looks like (although maybe Fannie Mae will show me).
On that first point about savings rates, he may be wrong. I found a fascinating NBER study 2-3 years ago that suggests marginal tendency to save is correlated with factors other than income. I sent it to Jane once but I'm still trying to fish it out. When will people stop calling me 'Jane'?
Here's the NBER study summary (I located my copy on my hard drive):
We show in this paper that at all levels of lifetime earnings there is an enormous dispersion in the accumulated wealth of families approaching retirement. It is not only households with low incomes that save little; a significant proportion of high income households also saves little. And, a substantial proportion of low income households save a great deal. We then consider the extent to which differences in household lifetime financial resources explain the wide dispersion in wealth, given lifetime earnings. We find that very little of this dispersion can be explained by chance differences in individual circumstances largely outside the control of individuals' that might limit the resources from which saving might plausibly be made. We also consider how much of the dispersion in wealth might be accounted for by different investment choices of savers some more risky, some less risky given lifetime earnings. We find that investment choice is not a major determinant of the dispersion in asset accumulation. It matters about as much as chance events that limit the available resources of households with the same lifetime earnings. We conclude that the bulk of the dispersion must be attributed to differences to in the amount that households choose to save.
Lowenstein even says something about the Bush administration that will leave liberals gasping for breath:
Enter the Bush administration: it has essentially declared the era of permissiveness over.
except for steel and autos, of course...
Maybe it is just me, but by the time you are 50 or 60, one should have the discipline to budget--- or at least recognize your weakness and make sure you can't blow your money. One of the two. In any case, I imagine the cost of supporting the irresponsible will be far less than the costs of the problems listed above.
Jane writes: It strikes me that our current tax system provides a variety of incentives to set aside retirement money but is not structured well to address the lack of annuitization.
It seems to me that our current tax system provides one very big incentive NOT to save, period, namely the fact that how much you consume (and how little you save) has very little effect on the tax man's take.
This might be a pipe dream, but throwing the whole mess away (the federal tax code) and switching to a consumption tax ought to do wonders for people's retirement security. If you could give yourself a tax break every time you forego a purchase in favor of putting some money aside, you're likely to become much more frugal. The whole discussion about the lack of retirement security so many people face is really just a sub-discussion about the greater issue of low savings.
P.B. -
Very true about savings vs. comsumption. Nonetheless the tendency to discount income certainty remains, even with a consumption tax.
Are there no libertarians left?
It goes to why I have problems with Medical Savings Accounts or tax-preferred child care, parking at work, or any of a number of things.
The Republicans/conservatives/whomever say that they will get the nanny government out of people's lives and allow them to save for their own retirement, health care, child care, college educations. Why can't people be allowed to save for any goal they want, even if it is a car or a condo for their mistress?
The problem I have is that the government lets you keep your money if you save it for some socially virtuous purpose, but if you just plain want to save your money, you get interest rates below inflation and you get taxed on that interest too.
If we truly want a free market in health care, there should not be any tax preference for health care, be it for health care as an employee benefit or a tax-sheltered medical savings account.
There is such a pervasive fear that those people who are able to save, even a little bit in excess of their consumption, through the effect of compound interest over time, will become rich and will lord it over those people who don't save, even a little bit. Hence there are taxes on dividends and capital gains, death taxes, and so on. Hence if you do permit people to save, it has to be in an account earmarked for retirement, health care, education, etc.
Part of what grinds me when any Democrat whines about President Bush's "tax breaks for the rich" is that the rich always have schemes for deciding what their income is to control their payout in taxes. It is the virtuous non-rich who are able to save in slight excess of consumption who can't afford fancy tax lawyers and money managers who take it on the chin.
Are the tax-preferred earmarked-savings plans because we don't trust people to use some of their savings for nursing care instead of for a cruise to Cancun? Or are the tax-preferred plans a meek attempt to sneak any possibility for the little guy to accumulate wealth past the Democrats?
The fact is we do subsidize a myriad of behaviors and that isn't going to end tomorrow. The 'ownership society' gets a lot closer to libertarian goals while it has the advantage of being...plausible in the near future.
Unless the government takes the route of allowing people to starve or go without any health care at all, our retirement system will have moral hazards. I guess the answer to the last question is 'both'.
The difficulty with annuitization is not principally a tax problem. In fact, the current tax code in some ways favors purchasing an annuity over attempting to achieve the same result by investing on one's own behalf.
The real problem is how to deal with *life extension risk*. The insurance company (or other annuity payor) makes an assumption about the mortality curve, but that assumption can turn out to be off the mark. If realized mortality lags estimated mortality, the annuity payor can wind up out of business and the annuity purchaser out of luck. The problem with life extension risk is that it is not obviously diversifiable -- therefore to underwrite it the annuity payor should demand a hefty risk premium. That risk premium makes buying an annuity less than enticing.
Traditional pension plans and the government both already bear substantial life extension risk. Think about what will happen to pension fund deficits and social security actuarial deficits if life expectancy unexpectedly by, say, 2 years. Disaster. The private annuity market therefore cannot look to the government or the corporate sector to underwrite life extension risk. What about private markets? One natural buyer of life extension risk would be life insurance providers. They make money if life expectancies go up. However, the aggregate life extension risk embedded in term life insurance policies is tiny -- partly due to the relative size of LE policies relative to pensions and partly due to the design of typical term life policies. It is difficult to see where the natural buyer of life extension risk will come from. It has crossed my mind that perhaps it would be worthwhile to try to start up a speculative market in life extension risk. Maybe punters would be willing to take on a certain amount of this risk at a price below that currently embedded in annuities?
We could require 80 year old annuitants to take up skydiving (when not sitting on the couch), smoking, and dining exclusively on fast food.
Until quite recently the Irsih state required that all private pension accumulations be converted into an annuity at retirement. Within the last five years the Irish government was pursuaded to allow retirees to opt for the equivalent of self-directed IRAs, thus opening up the exposure and risk to the retiree in the same fashion as the United States.In this regard Ireland is still closer to Boston than Brussels. It will be interesting to watch how this experiment in making more money for the financial services industry either raises all boats or sinks them.
As was well pointed out, the annuity approach does have its risk, both about the change in life expectancy( there is a table on this, but the risk is in the double delta) and in the stability of the underlying investment. Many may recall what happened to all of the high yield gics when interest rates crashed and what has happened to retirees, both here and abroad, when they invested in the WPPS high-yield bonds or in Argentinean debt. Court action and insolvency can pay hob with the 'risk free' annuity strategy.
But from the point of view of the retiree it is much more risk free than the alternative of being left to the self-directed alternative and the risk of excessive marketing.
The Lowenstein article did not touch as much as it should have on how our system shifted away from annuitization. The push to encourage or mandate the investment in equities, to allow the guess at yield rates, and to limit individual access to risk insurance and credit default protection (consider PBGC) did not occur randomly. Much is made on the current pension and investment structure that would not be made in a pure annuity strategy.
1. Privatize PBGC, and allow competition, to remove funding percentages from the political process.
2. End income taxes on all forms of savings, and
the fruits thereof, whether pensions, IRAs, 401ks,
or garden variety investments.
If you could give yourself a tax break every time you forego a purchase in favor of putting some money aside, you're likely to become much more frugal.
Excuse me? Don't you have to pay the same tax if you use your money later? So how exactly are you giving yourself a tax break by saving?
Creech,
Re; Privatizing the PBGC - interesting idea.
Re; Ending taxes on savings - also interesting, but not sure its a good idea. We keep talking about wanting people to save, but I don't think we really do. What we really want is to keep people on the job as long as possible. Thus taxes on savings and slow but steady inflation.
I propose we stop talking about "retirement systems" and start talking about "responsibility systems".
What's the difference? The idea of retirement is to quit working but remain responsible by means of setting aside funds during one's working years. The assumption is that the individual will remain responsible as an individual. A responsibility system includes many possibilities. Savings yes, social security and welfare yes, but also work, charity, and family responsibility.
Why bring this up? Because life isn't about saving for retirement - and neither is the economy. The focus on individual responsibility in old age is warping our lives and our economic policy.
Example; What's to be done to keep grandma from being destitute in old age? Have the government back her pension plan? Pump up social security and medicare? Or how about this? Grandma should work if she still can. She should raise her children in such a way that they will not hesitate to take her in. She should request assistance from charitable organizations. And she should know that her fellow citizens will pitch in to help out when all else fails.
Bottom line, there is no problem with our retirement systems. There is only a problem with our responsibility system. And even that is all in our heads.
We will always have to deal with the problem of irresponsible adults and incentive compatibility if we are unwilling to let people suffer for their mistakes.
At best, we can agree on a reasonable minimum-standard fallback. But the temptation will be to raise that "minimum" over time so that it comes close to matching the returns of those who invested wisely.
The essence of political economy is No pain means we lose our gains.
Why not eliminate pensions and social security entirely? We would return to the libertarian utopia of the 1890s! Sure, seniors would be destitute and have to work until they croak, but what price freedom!
This is all well and good, but we also can't take our eye off the macroeconomic and demographic ball - if retirees outnumber workers and productivity isn't sky-high, we're in deep trouble no matter how we've finagled the accounting. Cash won't solve a problem of inadequate production.
Wallster,
You're right, in the 1890's, you retired only if you got far enough ahead to allow it. You had to earn the right to retire. Where did we get the idea that everyone has a right to retire whether they've earned it or not?
I propose we stop talking about "retirement systems" and start talking about "responsibility systems".
Sure, and why not start calling our authoritarian overlords 'comrades'? Change the name, change the perception and acquire positive results?
Or not. If you don't take active measures to change what's broken underneath, name games will be merely that.
Mike Earl: "This is all well and good, but we also can't take our eye off the macroeconomic and demographic ball - if retirees outnumber workers and productivity isn't sky-high, we're in deep trouble no matter how we've finagled the accounting. Cash won't solve a problem of inadequate production."
This figure shows the CBO's take on the long-term demographic and macro ball(s). Well, one of their takes, at least. Notice that by 2050, when most of the Baby Boomers are gone, SS payments as a share of GDP have stabilized (at around 6.2% of GDP). That can't happen unless the number of elderly, the number of workers, and the increasing productivity of the workers, has reached an equilibrium of sorts. The SS trustees make similar predictions.
Dang! Why generate highlighted text from <a> tags if you're not actually implementing a link? The URL is http://home.comcast.net/~mcain6925/etc/gdp.cbo.gif
Anony-mouse,
Re; "If you don't take active measures to change what's broken underneath, name games will be merely that."
Agreed. And what's broken underneath is that people think they have a right to depend on the company, the government, etc., to solve their problems. Tell me a better way to achieve positive results than to get people to accept responsibility. Honestly, I can't think of any other way.
I am a low-level actuarial analyst for my employer--I don't have the full picture yet, but in my short time working, this is what I've learned about the pensions 'crisis'. The pension funding problems for private plans versus public plans stem from different causes. Private pension plans are heavily regulated, not so much by the PBGC as they are by the Department of Labor and the IRS--public pension plans do not need to report to these departments.
The matter about companies getting to choose their interest rate is only partly right. Yes, the PBGC does have a standardized mortality and interest rate set of assumptions, but in meeting with regulations, there is a standard RPA 1994(Retirement Protection Act) set of assumptions-which are used for the sake of minimun required and maximum tax deductible pension plan contributions. This all has to be reported in the IRS Form 5500-Schedule B--a publicly accessible form. You can check out what companies like GM report to the IRS by going to www.freeerisa.com.
The credit balance mentioned in the article is a double-bladed sword, in that a plan that may be fully funded as of now may still have to make high contributions to the fund in order to keep the regulators happy, because the credit balance is suffering from prior losses, such as the market not performing as well, or employees accruing more benefits than assumed. Another way that plans can be bit by this is if the plan wants to make a large contribution to the fund in order to have a healthy reserve--the maximum deductible contribution limit will get them, it may even be zero in the right conditions.
While public plans do not have to answer to the IRS and the Department of Labor, they have to answer to credit reporting agencies. States like Utah, Virginia, and Missouri, have almost fully-funded plans, and they also enjoy AAA-ratings from all three major credit rating agencies. They also have to answer to GASB (Governmental Accounting Standards Board), who is no doubt cooking up their own reporting requirements in order to shut the barn door after all the horses have run out.
Privately-run pension plans are on the decline now because they are such a regulatory headache, as compared to the public pension plans, which have very little oversight. For the retiree, a defined benefit pension is a sure thing, and therefore a valuable thing for an employer to use for the sake of attracting and retaining employees
It's always amusing to see the delusional folks come out. By this I mean the libertarians who don't have a clue about why the real world will never meet their expectations. They blame it on the evil lazy folks who just want to shove responsibility off on others while never recognizing the flaws in our businesses and society that will never let people feel that it is possible to do what the libertarians consider to be the right thing.
Randy says that unless they've saved up the money on their own people shouldn't be allowed to retire. How many people who have lost their jobs when they are older have found it impossible to get a decent new one? A lot. How many people have been laid off because misguided bean-counters have decided that a younger less-experienced worker who can be hired for a lot less than the experienced employee? Same. How many people aren't paid enough to set aside sufficient funds to retire on and also work in physically demanding jobs that make it almost certain that they can't keep working past a certain point?
The only political ideology that ignores the real world more than libertarianism is communism.
Don't you have to pay the same tax if you use your money later? So how exactly are you giving yourself a tax break by saving
Taxes don't just tax the money you have -- by denying you the ability to invest the money for yourself, they tax your FUTURE value as well. You're correct that you'll always end up paying the sales tax eventually -- but the longer you put it off, the more inflation-adjusted wealth you'll have to spend.
How many people who have lost their jobs when they are older have found it impossible to get a decent new one? A lot. How many people have been laid off because misguided bean-counters have decided that a younger less-experienced worker who can be hired for a lot less than the experienced employee? Same.
Your problem is that you assume that benefits will be cut while tax rates remain the same. Obviously the average 50-year-old layoff victim is going to find himself in tough financial straits -- over the course of his life, the government has confiscated hundreds of thousands of dollars of his money and squandered it on pointless bullshit!
The government impoverishes people and then insists that its role of providing handouts is vitally important. Hogwash. Even a century ago, few people needed handouts to survive -- and we're a vastly richer nation, collectively and individually, than we were then.
Dan,
Thank you for proving my point about libertarians. This is not a century ago. The economic environment is so vastly different now that any comparisons are utterly worthless. This is a constant thread offered up by libertarians with no proof in part because there was no system to provide actual numbers on the poor back then.
In addition it seems your post is attempting to claim that basically there were no poor, or so few that public assistance was unnecessary. For a bit of a reality check read this:
http://www.ucpress.edu/books/pages/10049/10049.ch02.html
Or these:
http://college.hmco.com/history/readerscomp/rcah/html/ah_070900_poverty.htm
http://www.plu.edu/~poverty/hist/1900.html
http://aspe.hhs.gov/poverty/papers/htrssmiv.htm
Oh, yeah! It was a real paradise a hundred years ago.
This is not a century ago
Obviously not. By the standards of a century ago, there is absolutely no povery in the United States at all.
The economic environment is so vastly different now that any comparisons are utterly worthless
Yes, we're vastly wealthier and enjoy vastly improved employment opportunities. All of the dangers the safety net is supposedly saving us from have been dramatically reduced. Social Security, for example, makes about as much sense today as maintaining a large military force to protect midwesterners from Wild Indians.
Oh, yeah! It was a real paradise a hundred years ago
I never said it was a paradise a hundred years ago. I said that the scenario you left-wing hysterics paint of a World Without Socialism don't even accurately describe the world back then -- when we not only weren't socialist, but were poorer too.
Since annuities are such an artificial construct and probably provide a false sense of security, and since the risk of annuities is hard to diversify as Ben wisely points out, it seems to me that annuities should be abandoned.
I prefer an idea that I first saw suggested by Robert Shiller : GDP linked bonds. Basically, a GDP linked bond would yield a yearly dividend that is a percentage of the principal equal to nominal GDP (possibly plus or minus some percentage).
GDP-linked bonds would be great for retirement savings, since such bonds match resources with consumption better than anything I am aware of. The government is basically set up to take in some percentage of GDP through taxes (and if the government debt were mostly demoninated in GDP linked bonds, there would be an even better incentive to set the tax system to stabilize the government take as a percentage of GDP).
So, if the country is doing very well and producing a lot of desirable goods and services, GDP will rise rapidly and the bonds will pay out more than if the country were not producing as much. The retirees whose portfolio's consist mostly of GDP-linked bonds will be able to consume more when the country is doing well, and will have to tighten their belts when the country is not doing so well.
This aligns the incentives quite nicely. In contrast to the present system, with a GDP-linked bond system people saving for retirement would not try to pay the least amount into retirement as possible, and retirees would not try to rob the workers of as much as the AARP can squeeze out of them. Instead, everyone who has GDP-linked bonds in their portfolios has an incentive to see GDP increase, and will hopefully vote for candidates and policies that will result in the fastest GDP growth (which probably means less government and more efficient government).
If other large countries also offered GDP-linked bonds, then savers and pensioners could even diversify some of the risk that their resident country will do poorly compared to some other country. I would dearly love to have my retirement savings in a portfolio of 50% US GDP-linked bonds, 20% UK, 10% Germany, 10% Japan, 10% Australia. If only it were possible...
JimS,
Re; "How many people who have lost their jobs when they are older have found it impossible to get a decent new one?"
First, define "decent". It doesn't take much to get by. You get a roommate - or two. You live close to the supermart and you walk or ride the bus to work. If you want to define "decent" as a 3 bedroom ranch, two cars in the garage, and a membership at the country club, then yes, it is hard for many older people to find a job "decent" enough to support that lifestyle. Then again, its hard for many young people to find a job "decent" enough to support that lifestyle. Second, what's the alternative? Do you propose taxing young people, who can't yet afford that "decent" lifestyle, to support older people who had their chance, but didn't earn it?
You want to accuse me of being a libertarian? Damn right. I believe our primary responsibility to each other is to leave each other the hell alone.
Could we have learned from the Savings and Loan crisis before we got ourselves into this mess? The PBGC is out of whack because its assets are misaligned with its liabilities. I'm no expert, but it seems that when the premiums the PBGC charges are unrelated to the credit ratings of the corporations it's supporting, there's bound to be a problem down the road. One striking example is UAL, which has paid a total of approximately $50 million in premiums and threatened this summer to claim over $6 billion from the PBGC.
Dreck makes excellent points about the hazards of the ownership system, but I agree that the flaws of the old system are too great to look back.
Randy, my thanks to you as well for proving my point as well as Dan did. Get a roommate? What about those 50 year olds who have that strange thing called a family? You know, I don't know one middle class person who belongs to a country club. The only people I know who have that distinction have assets in the 7 figure range and they're the owners, not the employees. As far as living near the supermarket and walking to work being a cure all, do you have any idea how many jobs are in areas with no public transport? In my part of the central U.S. there's a lot of them. And in parts of the metro area where there is bus service you'd better not be working the late shift because they're not running. What I propose is that people try and think about what's really happening in the world instead of spouting crap that comes from brain-dead, knee-jerk ideological belief systems. You know, like your brand of libertarianism which seems more like sociopathy to me.
JimS,
I'm not a sociopath. I get along fine with people. I simply do not accept the guilt and responsibility you wish to assign to me. Truly, I am amazed by the liberal's assumption of superiority. You violate the most basic of human rights, freedom, and yet consider yourselves virtuous. To you, a human being is a pawn to be used in the achievement of some grand vision. Certainly such behavior is pathological. There should be a name for it.
There is - The "Vision of the Anointed". Except that Thomas Sowell's work always reminds me of my favorite geek joke:
"There are 10 types of people in the world--those who can read binary and those who can't."
Mindles, thanks for the pointer - that is right on. And the joke is good too.
You violate the most basic of human rights, freedom, and yet consider yourselves virtuous
It certainly is amusing how many left-wingers equate "generousity" with "giving OTHER people's money away". You have to wonder about that mentality.
"It certainly is amusing how many left-wingers equate "generousity" with "giving OTHER people's money away"."
This is of course one of the greatest bullshit lines of the conservative movement. It operates under the assumption that "left-wingers" pay no taxes. Well, I pay plenty of taxes. So it's not just "other" people's money that I think should be spent on some things that you don't approve of.
Taxation for something that many people consider to be a societal good that you don't consider to be one is a violation of your freedom? If you want everything to go your way on issues like this I would suggest an empty island somewhere is your only hope.
JimS,
Think of taxation as a range between completely voluntary and completely involuntary. Taxation at the voluntary end of the range is not a denial of freedom. Taxation at the involuntary end of the range is. The question is where to draw the line.
Yes, those who want to draw the line further towards voluntary believe that drawing it further towards involuntary constitutes a violation of freedom - because it does.
Yes, those who want to draw the line futher towards involuntary feel that their vision of social justice will be compromised by drawing further towards voluntary - because it will.
I suggest to you that the success of your vision depends ultimately on convincing the average taxpayer that they should volunteer. Growing stridency from the left and resistance from the right indicates to me that the line has been drawn. You should consider that your stridency can only cause you to lose ground - because people just don't like it.
It operates under the assumption that "left-wingers" pay no taxes. Well, I pay plenty of taxes.
No, it operates under the "assumption" that people who aren't left-wingers also pay taxes.
See, the problem here is that you aren't content with charity -- indeed, you deride people who believe in charitable giving (e.g. libertarians and conservatives) as "delusional sociopaths". What you consider "generousity" isn't charitable giving, but support for a government-run program of robbing people at gunpoint and giving away their money to people you like more.
Silly, illogical, and typically left-wing.
Let me present a hypothetical situation to you, Dan and Randy. Your ideal world comes about. There are no government social programs. It's all voluntary. Only the churches and the private programs exist. Is there any evidence you would accept in that world to prove that it wasn't working? That it wasn't adequate to the needs of the people who live in poverty or near it? Frankly, if you speak to most people running private charities you'll find that they don't have nearly enough resources to meet the current demand. The constant defense that if the taxes eaten by the social programs were in people's pockets were returned to them there would be more than enough money to go to the charities to make it work. Frankly, I think the math involved in that claim just isn't real.
The constant defense that if the taxes eaten by the social programs were in people's pockets were returned to them there would be more than enough money to go to the charities to make it work. Frankly, I think the math involved in that claim just isn't real.Depends what 'it' is. We could redistribute 100% of GDP and not solve every last problem.
Frankly, if you speak to most people running private charities you'll find that they don't have nearly enough resources to meet the current demand.Well, they would never say they did - bureaucratic imperative and all that (and I'm speaking as a board member of one such national private charity). The question is really whether you believe private individuals would ration and prioritize resources better or worse than government. For those of us who lean libertarian, the answer is individuals until proven otherwise.
Jim S,
Re; "Frankly, if you speak to most people running private charities you'll find that they don't have nearly enough resources to meet the current demand."
Here you're on the right track. This is an effort to convince me that I need to volunteer more of my money for a legitimate purpose. To be honest, I'm not convinced. I think the government has plenty of money - I just don't think they make good choices. But you're on the right track.
Re; "Your ideal world comes about. There are no government social programs. It's all voluntary. Only the churches and the private programs exist."
Here you are getting off course, because by stating that this is our ideal world, you are about one step away from name calling. Name calling never convinced anyone.
Keep in mind that those of us who say no to drawing the line further towards the involuntary have the advantage - all we have to do is say no. You, however, must be persuasive.
The early socialists were very persuasive. That's why so many of us volunteered to pay higher taxes. But they didn't keep their promises. We're beginning to see that much of that money went directly down the drain or was used for purposes far removed from the original intent. You're going to have to make a better case now, because you haven't kept your word in the past.
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