What if Social Security...?

 

There's lots of nonsense out on FaceBook and other social media sites about Social Security.  "I paid into this my whole life!" someone will pout;  "Where's all my money?" and it's followed by claims that SS is old-age insurance or that there's a separate account in each person's name.

None of that is true.

From the very start of the program, SS was a two-pronged piece of legislation.  The first piece was a tax plan whereby every wage earner would be taxed some small amount and their employer would be taxed the same amount.  This tax money (FICA) went into the General Fund from day-1.  There was never a 'separate account', but the Social Security Administration did keep a record of how much was taken and the earnings the tax was based on.  You can still get from SSA a list of how much you earned (that was taxed) from the day you started work.  Mine goes back to 1962.

The other part of that legislation was a welfare plan under which certain persons would be paid money based on certain qualifications: how much you had earned, your age, your health conditions, and a few others.  Under this plan, people who had never worked a day in their life (for wages) still got SS 'benefits'.  If there had been those mythical 'separate accounts', their balance would have been zero.  As a matter of fact, everyone's balance is zero.  You have no contractual right to SS benefits even today.

But listening to various people carp about how unfair the system is got me to thinking about how things might have been had those politicians in the 30s really been looking out for the welfare of the people.  Try this on for size:

Suppose the SS law had been cast something like this:

1. Every wage earner must escrow with a trustee of their choosing not less than __% of their gross taxable wages.
2. Funds so escrowed may not be withdrawn before age ___, except as provided by law.
3. This account is the property of the wage earner and heirs.

As of right now, when you die, your SS benefits die with you (except for your spouse).  Your children and grandchildren do not inherit your benefits, but the scheme above makes your SS account truly yours as many people think (wrongly) is the case now.

There's something else.  There would be other changes that are harder to predict.

For one thing, all that money taken as taxes was used to fund the Social Security Administration, and none of that money would have been needed because there wouldn't have been a SSA.  Our federal spending would have been noticeably lower, our national debt would have been lower, the inflation rate would have been lower, and the general health of the economy would have been higher, not simply because of lower federal spending, but because all that money in individual investment accounts would have been used to fuel the private sector rather than being wasted on the bureaucracy.

The Dow-Jones which now stands at 25,000-something might have been much higher, and the dividends from a more robust economy would have been reflected in higher interest rates paid on your retirement account.  What effect would that have had?  Hard to tell, but I ran a little spreadsheet on my numbers — which were not exceptional — and at 8% of FICA earnings (not including the amount my employers were taxed) accumulated at 6% interest, I would have had almost $400K at retirement age.  In the hands of a savvy investor, that might have been substantially higher.  If that 8% were bumped up to 15% to account for the employer's portion, my balance at age-65 approaches $750K.  That's a substantial nest egg, no?

Beyond that, I'm guessing that those numbers would have been substantially higher given my actual experience with 401k savings accounts.  What little time I did have to pour money into a 401k still provided a nice pile that SS would otherwise not have provided, and that 401k is mine to do with as I please and to pass along to my children when I don't need it anymore.

Yes, indeed, FDR's Congress surely did not do us any favors writing the SS law the way they did, but that probably wasn't their intent in any case.

Regardless, the law is what the law is.  No, you do not have your own personal SS account with a pile of money squirreled away for your retirement.  Stop complaining.

 

The Rule of 72

 

I read an interesting article today on the growth being shown by various economies and it contained this quote:

Concern about Chinese debt is not unwarranted, but with GDP rising by 6% per annum, its economy will be 80% larger in a decade, whilst India’s, growing at 7%, will have doubled.

and this made me recall "The Rule Of 72".  The rule is a handy yardstick used by financiers to quickly estimate the time it will take to double or halve an amount based on an interest rate.  It's very simple, really.  It works like this:

Say you have $1000 and you invest it or bank it at a cyclic interest rate of 6%.  At the end of the first cycle, you will have $1,060. After the second, $1,123.60, with the increase accelerating each cycle due to compounding.  At the end of the 12th cycle, your balance will be $2,012.20, approximately double your original investment, and 6 x 12 = 72.  As to the quote above, the balance at the end of cycle-10 is $1,790.85, about an 80% increase.

Another example: the interest rate is 3%.  After cycle-1, your balance is $1,030, then $1,060.90 (almost 6%).  By the end of cycle-23, you're at $1,973.59, and after cycle-24, it's $2,032.79, so 23-1/2 cycles give or take — call it 24, and 3 x 24 = 72.

As you can see, it's not exactly exact, but it's pretty close for use as a first approximation.  So, someone offering you a 4% rate is offering to double your money in (72 / 4 =) 18 cycles.  India's growth rate (according to the quote) will double its present size in (72 / 7 =) 10.3 cycles.

'72' is a handy number.

 

Brexit and Ireland

 

With Brexit barely a month away, some Americans may still be scratching their heads.  What's all the fuss?

I have to admit to some confusion myself.  My particular confusion arises over the phrase 'hard border'.  At present, both the UK and the Republic of Ireland (hereafter just 'Ireland') are members of the EU, which means that goods may transit freely between Northern Ireland and Ireland.  Post-Brexit, Northern Ireland will not be part of the EU (even though NI voted to remain — the rest of UK voted otherwise) and if there is not a hard border, goods from outside EU will easily flow into Ireland.  The EU is apparently upset over this and is demanding that Ireland and UK fix this.

Now, the border between Ireland and NI is about 160 miles long and there are hundreds of places where people cross willy-nilly all the time.  'Fixing' this means halting the free passage of people back and forth between NI and Ireland.  This is not going to go down easily.  When the two Irelands were plagued by "the troubles", it took a very large contingent of the UK military to police the border, and they were far from effective.

The alternative is to make the Irish Sea the 'hard border' and let NI continue as if they were part of the EU.  I'm thinking that if that's the solution that's settled on, it won't be too very long before Irishmen on both sides of their soft border start thinking it may be time to do what East Germany and West Germany did.

How do you say "wiedervereinigung" in Gaelic?  Athaontú, perhaps?  One can only hope...

 

Recalling Tourist Homes

 

When I was young, my parents, probably in an effort to instill some geographic and historical wisdom (my brother Jerry adds 'around a vivid, touchable place') into their children, took us all on an annual road trip for our vacation.  Before I was in high school, I had been to Cape Cod, the upper Hudson Valley (Saratoga, Lake Placid, Saranac Lake, Lake George, Fort Ticonderoga) and central New York (Corning Glass Works), Niagara Falls, Montreal and Quebec for the Shrine Church of Ste-Anne de Beaupré, Detroit to watch Ford automobiles being constructed on an assembly line, and Colonial Williamsburg.  My Aunt Alice once remarked that I had been to more places in a half-dozen years than she had been in her entire life.

To fund these trips, my father would take a loan from a bank or Beneficial Finance or Household Finance or something similar.  The loan would be for what we now think of as 'a small amount', $500 or $600, but which was then quite a pile of loot.  (Recall that gasoline in those days was 29 cents per gallon and nobody cared that cars only got 12 miles per gallon.  That's only 4½ cents per mile.)  The loan was methodically repaid over the course of the next year so that those lenders were happy to see Dad when he needed his next vacation loan.

Of course traveling as a family meant we needed to be frugal about how that money was spent, and that generally meant our overnight lodgings would be in 'tourist homes'.  Such things are rare-to-nonexistent these days, probably because our over-regulated society makes them administratively infeasible.  A tourist home is exactly what the name implies:  someone with a large house rents rooms to travelers for short-term stays, typically a single night but occasionally for longer stays.  The price was always 'peanuts' — a few dollars at most — for which you got a clean, comfortable bed and a place to wash up before hitting the road again in the morning.  Breakfast was rarely, if ever, included, but there was always a diner just down the road.  While we travelers were barreling toward our next stop, some tourist home owner was doing laundry, making beds, spiffing up the bathrooms, and restocking them with fresh towels and cute little bars of soap, getting everything ready for the next arrivals.  I don't think we ever made reservations.  For one thing, there wasn't any such thing as a national directory of tourist homes.  We just rolled into town and looked for signs saying "Tourist Home — Vacancy", or we asked the waitress at the local restaurant.  My brother, Jerry, adds parenthetically that the more modern tourist homes had their 'vacancy' sign in neon.

Before there were Holiday Inns, before there were Motel 6s, there were only Howard Johnsons'... and tourist homes.

I do recall that the omnipresent AAA Trip-tik was our guide to getting wherever we were headed, and in those days the ring-bound custom-made planner also had pages for keeping track of trip expenses: gas, food, lodging, and entertainment.  My mother kept meticulous records of everything in that regard.

These trips took place (for me, at least) in the late-40s to mid-50s, before there were interstate highways.  The routes were always US highways and secondary roads that bisected every major city and town along the route.  When the Interstate Highway System began in the late 50s, it doomed the small-town mom-and-pop tourist home industry, not least because major highways now bypassed most of those cities and towns.

 

Who's an isolationist!!

 

Those of us who oppose the notion of 'endless war for endless peace' are often tarred with the label 'isolationist' for our desire to mind our own business.  If someone doesn't want to butt into other people's business, that's seen as something vaguely anti-social.  Only those who are willing to send other people's children to foreign countries (or to go themselves) in order to make those places fit for American corporations are immune to being called such names.

In truth, most people who hurl that epithet, isolationist, have no clear idea of what being an isolationist entails.  Possibly, they've heard others use the word and feel it's more appropriate than any they could gin up themselves.  But to be a real isolationist, a true isolationist, involves more than 'supporting the troops' or enlisting to be one yourself.  A real isolationist wants to put alligators in the moat and lift the drawbridge: nobody in, nobody out, I've got mine and you can't have any.

A real isolationist would stop issuing or would severely limit the issuance of passports and visas under the entirely reasonable premise that the world outside is populated exclusively by thieves, rapists, and murderers.  It's too dangerous to let them in, and we must protect our own people by avoiding all contact with those low-class types, including, let's not forget, business contacts.  After all, we have everything we need right here, right?

At this point, you may be wondering who in their right mind would hold such insane views.  I'll tell you: no one.  Calling your enemy 'isolationist' is merely a quick way of discrediting them enough to end debate, and it's often quite effective.  It works to leave 'invade West Wheresoever to depose a brutal dictator who threatens world peace' as the only position a rational person can hold — because it's the only position being talked about on CNN, MSNBC, ABC, CBS, NBC, and most others.  Get your boots on; we're going to West Wheresoever.  Onward, Christian soldiers!  Mine eyes have seen the glory.

So, if those 'mind your own business' types aren't true isolationists, what are they?  Answer:  they're non-interventionists. And they're in good company, too.  George Washington's farewell address warned against 'entangling alliances' without suggesting we need walls at the border.  Thomas Jefferson, likewise, promoted a policy of "peace, commerce, and honest friendship with all nations; entangling alliances with none".  Jefferson, you may recall, was not averse to sending the U.S.Navy to negotiate at gunpoint with the Barbary pirates when they implemented their policy of "tolls and tariffs for all foreigners, enslavement of any who won't pay".

Those non-interventionists who routinely get called isolationists aren't really isolationists because they think we should be trading our way to world peace, something a real isolationist would shy away from.

Almost all of those non-interventionists, by the way, share the opinion that trade is better than war.  Like everyone who gives it even the most cursory of thoughts, they recognize that in all the history of mankind, no nation has ever gone to war with a major trading partner.  Maybe if you give it some thought, you, too, can get yourself called 'isolationist' by those who haven't given it much thought.

 

Affordable

 

I love that word, 'affordable'.  It reminds me of Steven Wright's remark (one-liner, really) that "everywhere is 'walking distance' if you have the time".

I was researching oceangoing catamarans for a short story I was writing, so YouTube naturally automatically subscribed me to The Catamaran Channel.  Isn't modern technology wonderful?  So, what do I find the next time I open YouTube?  A video for Silent Yachts' new e-55, an all-electric, solar-powered, 55-foot catamaran.  55 feet is absolutely 'oceangoing', and it's affordable!

But what does that mean, actually, 'affordable'?

In this case, it means €1.4M, or $1.6M.

Or, as Steven Wright would have said: "everything's affordable if you have the money".

 

Murder By Negligence

 

There is no such thing as an 'accidental discharge' of a firearm.  There are only intentional discharges and negligent discharges.

A St.Louis police officer was killed yesterday (Jan 24, 2019) when another police officer 'mishandled' his firearm.  The more correct phraseology is 'died as a result of a negligent discharge'.

There are rules* for the safe handling of firearms.  If you follow these rules, you will never accidentally kill someone:

1. Every gun is loaded.  "I didn't know the gun was loaded" can never be an excuse.
2. Never point a gun at anything you aren't ready to destroy.  Old Man Thompson, he of 'Thompson submachine gun' fame, considered it a firing offense for an employee to point a barrel blank at someone.  A barrel blank is a piece of pipe that will soon become part of a firearm, and most people would not consider it 'dangerous'.
3. Keep your finger off the trigger until you have decided to shoot.  If your finger is not on the trigger, most modern firearms will not fire.  If a modern firearm "just goes off", it was because somebody "just" had hir finger in the right place.
4. Know what is behind your target, because you will miss.  This seems so intuitive that it shouldn't even have to be said: nobody hits the bullseye with every shot, Hollywood special effects to the contrary notwithstanding.

One or both of the two other police officers who were on the scene when it happened violated at least three of these.  Where were they trained?  Who trained them?  Were they ever taught that their guns were not toys?  What sort of psych evaluation was done before giving them a badge?

Sadly, none of these questions matter, because this incident is not a one-off.  Cops regularly shoot other cops, innocent bystanders, the people they're supposed to be helping, and dogs — especially dogs.  The police, in fact, are beginning to look like the last people you want to call for help in any situation.  At the very least, these officers, having lethally demonstrated exactly how poorly trained they were and are, should be permanently disarmed.  If that means a felony conviction for negligent homicide, I'm okay with that.

It may, in fact, be time to disarm all police.  (What!!  Are you serious??)  Yes, I'm serious.  Today's police are not like the police of yesteryear.  Remember when they were called 'peace officers'?  That's so 20th-century!  Now they're 'law enforcement officers'.  Their charge is no longer 'keeping the peace' but rather 'enforcing the law'.  That's why your local PD has an MRAP (Mine-Resistant Ambush Protected) vehicle in their arsenal.  You don't need an MRAP to pour oil on troubled waters.

And their A-#1 top priority?  'Going home safely at the end of their shift.'  You may not make it home safely at the end of their shift, but you aren't their A-#1 priority.  Isn't it time for the people who pay the bill to become, once again, the beneficiaries of police work rather than its target?

 

* - These rules are generally attributed to Col. Jeff Cooper, but they can be derived from first principles by anyone with half a brain.