Mutually Beneficial Relationships

No matter how safe you believe an investment to be there is ALWAYS potential downside. There is no possible way to predict the future. Do you believe your "Long term divesified and age-adjusted investment accounts" will be immune to a Great Depression? How about a Great Recession? You can theorize how everyone will adjust their investments and live happily ever after but this is not reality. If this could be even close to true then we could say all Americans will voluntarily invest their own cash on a weekly basis during their working career in their own private accounts and don't even need government's help...nice idea but will never work in reality. There is no such thing as high returns and no risks.

Again, SS or whatever retirement program primarily only applies to those with work careers (I'm excluding business owners). Therefore, there will always be a huge portion of the US population outside of these programs that require the assistance of government and others. And many people who work part-time or low paying careers are unlikely to establish much of a retirement portfolio.

Interesting that your program can take people during their working careers who earn 'income below poverty levels' and when they retire they suddenly are earning enough income to be out of poverty...

 

BUT, and I'm talking about an Oprah butt...the government does not collect enough taxes to balance the budget! Maybe someday in the distant future but this is not SOP today. So they steal FICA funds for their spending and on top of that spend $500+ billion in deficit spending every year. Just to balance the budget the government needs to increase taxes by a minimum of $500 billion plus whatever it takes from FICA each year. And it is absurd that the government can steal this money because if there is surplus FICA, and no long-term FICA investment cash fund, then the FICA rates should be lowered today to eliminate the FICA surplus!

Never mentioned anything about 'mandate'? But I will say the deficit spending and FICA stealing is greedy self-serving behavior.

In bold above, not a single person in the US if they were required to pay $100 per year to fund the government are going to go hungry and be evicted?! Not funding government has nothing to do with available funds; it has to do with how we prioritize our spending. The same people you whine about have no choice but to pay applicable state and local sales taxes and paying a federal 2% sales tax would not hurt a single person!

It sickens me that so many people are too lazy or refuse to vote! Likewise with all the excuses of not funding the government which people demand...

 

I actually ran the numbers on what would have happened to a young person (age 25) that lost virtually everything with the Wall Street crash of 1929 and by the time they retired they would have earned about 12% return on investment by 1969 when they reached retirement age assuming all of their investments were in the stock market (i.e. not age-adjusted) with the greatest percentage growth in their assets occuring between 1933 an 1940 during the recovery years after the crash as GDP increased. Of course a person nearing retirement in 1929 would have had only a very small percentage of their funds in the stock market at the time based upon "age-adjusted" investments and would not have been significantly harmed by the stock market crash.

The long term growth in the S&P 500, which include both poor performers (that would be generally excluded from an investment portfolio) and the top performers (that would be included) has averaged over 9%.

All investment advisors I'm aware of recommend a 10% contributions to a retirement account that is diversified and age-adjusted. A person, even with low income, that contributes 15.3% of gross wages (based upon my proposal) is going to do far better than most investors even though their annual contribution is low. Of note the median wage worker would end up with an estimated retirement income of about $150,000/yr which is also significantly more than they would have earned during their working career. The problem for most that invest today even at the 10% level is that they often borrow or withdraw funds from their investment portfolio and that greatly reduces their eventual wealth accumulation. Borrowing and withdrawals would not be allowed under my privatization proposal so all of the investment continue to grow until retirement age.

Excluding investors all business owners (the self-employed) pay the 15.3% Self-Employment tax on net revenue. Only the predominately wealthy investors are not subjected to the full Social Security/Medicare tax but they would be under my proposal. This is necessary both for "fair taxation" (i.e. the wealthy should have to pay the same taxes as the average person) and to offset the private investment funds during the transitional period of 45 years. Of course even the high income earners would have the FICA/Payroll/Self-Employment tax up to median income going to private retirement accounts so even they benefit from the taxation like the average American.

 

That is true but it's not because there isn't more than enough personal income to fully fund the federal government. As my tax proposal shows if we only tax income above median income (i.e. 50% of all income) a flat tax rate would have only been 29% in 2013. That's 25% less than the current tax rate of 39.6% that high income workers pay today and no one earning below median income would have to pay a dime to fully fund government.

Absolutely correct. Politicians rely on large campaign contributions predominately from wealthy investors so they create tax codes that are favorable to these large contributors. It isn't that we can't balance the budget but instead that the greedy politicians are more concerned with election campaign funding than they are in balancing the budget.

About 1/3rd of all federal government revenue is coming from predominately "poor people" today. They have 7.65% of their gross income taken as a tax so even a person earning the federal minimum wage pays almost $1,000 ($980.20) in federal taxes plus their labor also generates matching taxation by their employers. Why is it that people seem to forget that the "personal income tax" is not the only income tax collected by the federal government?

I agree that state taxation is generally the worst from of taxation and that also needs to be addressed. I currently live in the worst state, Washington, (but moving to Arizona this week) when it comes to state taxation. In WA the low income worker has 14-times the tax burden relative to income when compared to our high income households based upon a study from a few years ago. I've also made a proposal on state taxation to eliminate this huge inequity similar to my proposal for federal taxation but for the state it's based upon a consumption tax with a prebate.

BTW - A federal sales tax (consumption tax) is unconstitutional.

 

This is not the thread to go into the issue but the fact is that our "statutory laws of ownership" are, in many cases, a violation of the "Natural (Inalienable) Right of Property" and perhaps I can give you an example.

The "nomad" and the "settler" each have an equal right to the use of the land and so long as there is "enough, and as good (as)" for both there is not a conflict. Unfortunately American history reflects the displacement of the nomad from their lands by the "settlers" so the land acquired by the settlers violated the "Natural (Inalienable) Right of Property" of the nomad. Land secured by the violation of the Rights of another Person cannot be legitimately owned or transferred to another person and yet, under our statutory laws, this violation of the Right of Property was embraced. Statutory ownership of most of the land in the United States today reflects a violation of the Natural (Inalienable) Right of Property of the nomads that were forcefully evicted from their hunting grounds.

 

Yes, I understand that invaders move in and displace earlier inhabitants. Look at England, for example. You've got paleolithic peoples, then Celts, then Saxons, then Danes, then Normans, each invading and taking land from the former occupants.

However, we are discussing politics and the rules that we, as members of a particular society, ought to establish. The libertarian thinks that each of us ought to respect our neighbor's property rights in his own body and in the resources he owns. An English libertarian realizes that his neighbor's garden once belonged to a Celt, but that's not particularly relevant to how he is going to treat his neighbor.

So again, you claim to be a libertarian, but you constantly propose/support laws that violate our property rights in our bodies and the scarce, rivalrous resources we own. Isn't this a violation of your libertarian ideals?

 

I fully understand first hand that investments can provide a payback but on any given day or year or decade the payback might be negative since there is ALWAYS a risk with an investment...always! There is no way possible to invest trillion$ for millions of Americans over decades without having the government involved.

There is no possible way to get 150 million working Americans to volunteer to give 10% of their net income every paycheck for their entire career. So how will you mandate this?

The ONLY part of FICA I disagree with is forcing the employer to pay over one-half the costs...

 

I have no interest in tax policy that places the entire burden on the few.

All campaign contributions are limited and therefore do not benefit the wealthy.

Deficit spending is driven by the voters who make demands on their representatives...it is the voters who are greedy and self-serving.

If a person desires SS and Medicare then let that person pay for these personal benefits.

A consumption tax is certainly constitutional and we have one today called the fuel tax...and excise tax on all fuel consumed...

 

The compromise would be to have mandated private accounts.

 

So like we do with car insurance, government could demand private retirement accounts, and require employers to do all the processing for this as they now do with FICA. So who will be the private companies to invest and hold these trillion$? Will it be 2-3 big dogs or hundreds of small dogs? What will be their commission policy? Who does an employer send the withholding cash to and how is this administered? What happens if one goes out of business? If an account holder needs cash in a down market do they just accept less payout or does government fill the void? What will happen to the equity and bond markets if trillion$ are forced into the system? For those who wish to have a portion of their investment in cash who is going to hold the cash and insure these billion$? Etc...etc...

And, employers will still be required to process FICA withholding to fund Medicare and Disability and administer a second private retirement program.

I'm not saying that everything above cannot be solved but I am guessing it will cost more, be very complex, and carry risks...

 

They could be any company that provides qualified plans. Plans could include disability and term life. I'm guessing companies like Fidelity, T. R. Price and Vanguard, but not excluding other qualified providers. Pension plans already do this. At least mandated plans would be fully funded.

 

No one has ever lost money with a long term age adjusted and diversified investment portfolio. Diversification alone mitigates any individual risks and time is the great equalizer when it comes to fluxuations in the investment markets. Of course there are investments with no risk but they don't have a high return on investment so they are only used when a person nears and reaches retirement age.

Apparently you didn't read the link I provided that addresses this. Should I repeat myself? I will but only briefly. The government is involved in ensuring that the investment accounts, that would be similiar to a 401K, were low load diversified and age adjusted but they accounts themselves would be handled by private investment firms. The same 15.3% FICA/Payroll/Self-employment tax (up to median income) would be sent directly from the employer to the private investment account.

That's because you believe in and support irresponsible employers. There is an inter-dependent relationship between the owners and employees of an enterprise that you consistanly ignore.

 

I don't think we should ignore all the items I mentioned required to administer such programs and the need for government backing and involvement. It would be complex and costly to industry which I don't like...

 

I've never implied that people will lose money. I've stated that there is no way to know the value of an investment in Oct. of 2037 when a person plans on retiring. If that fund is 50% low due to market conditions, what happens?

It would not be 15.3% unless you believe the private sector should also provide Medicare, Medicaid, Disability, etc.

It is not the responsibility of a business, an employer, to pay for your retirement and medical care, etc. There is no possible way this expense makes any sense whatsoever in operating a business. It does nothing to increase the value of the produced goods and services. In a business there are direct costs and indirect costs...all indirect costs have nothing to do with the production of goods and services, therefore, it is imperative to minimize these costs...

 

For the most part the highway is built. The only problem is the transition. The current system is a cluster frick of moral hazard and unsustainable. Private accounts eliminate population swings that cause benefit disparity from generation to generation. Be honest, if our current system were run privately as it is by the government, the company would be bankrupt and managers jailed.

We desperately need to get these funds out of the grasp of corrupt politicians.

 

The point I've been trying to make is when you have a program involving 150 million American workers, and literally trillion$ in transactions/investments, there is no way the government is not going to be involved. The same policies government has today, plus more since regulating private industry, will be in place meaning 'your' corrupt politicians will still be involved. Further, only government can bail out the failures in the private sector...

 

I would rather take my chances in a private system regulated by government than a full blown Ponzi scheme where the government blows the funds.

 

I agree, however, I continue to believe it's far too complex and risky for the private sector to take over a 150 million person program with trillion$ in transactions...

 

The government must be involved in commerce, that is a given fact, but it should overwhelmingly be involved in ensure that Rights of the Person are protected. When we find major failures in the private sector is often due to the failure of government to protect the rights of the person.

We can note that under-compensation that creates poverty is a failure of the private sector and it does require the government to bail out the employers by providing welfare assistance to their employees. That poverty would not exist for working Americans if all employers provided a "living wage" to their employees.

 

But I disagree that it's government's responsibility to bail out financial failures of business and people...this IMO is not 'ensuring that Rights of the Person are protected'...

 

The government should only be involved in protecting the person and property of the people. The law should punish those who violate/trespass against the person or property of others (or make threats to do so), and unless someone has done this, he ought to be legally free to exercise his liberty and rights.

When the government strays from its fundamental protective role, it ends up violating the person and property of the people. This is counter to its reason for existing in the first place.

Minimum wage laws threaten violence against people who haven't violated anyone's person or property, and thus I oppose them on principle.

 

First of all I apologize for being gone for so long. I've moved from WA to AZ and was without internet service for several weeks.

Based upon the writing of John Locke a person has a natural (inalienable) right to their "support and comfort" based upon their physical labor. If they are not receiving enough compensation based upon their labor as an employee to provide for their basic support and comfort then they "right of property" is being violated by the employer. Ensuring adequate compensation for an employee to live on is certainly an issue of protecting the natural (inalienable) rights" of the person.

 

No need to apologize...it's always good to see Shiva_TD on these forums! What part of AZ? I lived in Scottsdale for 25 years.

If you truly believe government has a right or mandate to provide 'support and comfort' to all Americans, then you would have to agree that government has failed miserably in this endeavor? But, I don't see it as failure because I don't see government having this mandate. One example might be that government would be required to give some acreage to every American and this simply does not exist today. Then government would be required to provide materials and equipment in order to work and live on the land? Then government would be required to create markets in order for people to sell their products? Then government would be required to fill in all other blanks like health care and minimum income, etc.?

 

I'm in Cottonwood (between Sedona and Jerome) and it's a much more moderate climate.

I don't believe that government is responsible for providing for the support and comfort of the worker. I believe the employer is responsible based upon the "natural right of property" as established by John Locke. Here's the logic behind the belief.

All wealth is derived from nature. There's an old saying that ultimately all wealth is based upon that which is mined or grown and it's accurate.

Based upon Locke's writing every person, based upon their labor, has a right to obtain from nature that which is necessary for their basic support and comfort. There are caveats to this right. No one has a right to anything from nature that is beyond what they can rationally use. At the same time a person can only secure a right of property for that which comes from nature so long as there is "enough, and as good" as remaining for all other people.

When a person employs another person they're effectively telling the worker that they can provide more for the person than what the person could acquire on their own in nature. In short the employer is promising that they will provide for the "support plus more comfort" than the worker could achieve by directly providing for their own support and comfort. If this promise wasn't being made then no one would logically work for anyone else.

The employer is basically saying, "You do the tasks that I assign to you and I will ensure you're better off for it than you could do on your own." It's the employers job to ensure that the tasks result in more for the employee than what the employee could obtain from nature directly.

Where I see government's role is in ensuring that both the employee and the employer fulfill their individual responsibilities. The employee needs to do the tasks assigned and in return the employer needs to provide for the support and comfort of the employee. From my libertarian perspective this is a matter of contract that is inherent in all employment contracts and it's the only way that capitalism, that depends upon the law of contract, can ultimately survive. The courts have yet to acknowledge this inherent foundation for an employment contract based upon the "natural (inalienable) right of property" but perhaps someday they will.

There is another caveat. Artifical intelligence and technology are replacing human labor and making human labor obsolute but a "machine" doesn't have a "right of property" so that's a different issue to be addressed.

 

Locke only applied the "enough and as good" caveat to homesteading unowned resources. He didn't apply that idea to resources one acquires via trade. You are adding that part.

No, the employer is saying, "Do the tasks I assign you and I will pay you $X." That is the extent of the relationship.

If a person is dissatisfied with the money he makes by working for one employer, he can 1) switch employers or 2) use his own labor to earn an income.