Friday, June 03, 2005

Accountant's Don't Know Shit

Retired Accountant Roy Tate Jr. of Reading has a guest column on Social Security today and he makes what I find to be the stupidest presumption:
If past Social Security taxes had been invested in personal income-producing asset accounts, this national debt would not exist, and taxpayers would not be forced to repay what Congress has "borrowed" from taxpayers retirement funds.
First, with all due disrespect, unless this old guy is younger than my mother, which I doubt, then he did not have his retirement age increased and therefore is getting more money back than those younger than us are. So when he wants anyone else to take risks so he can get his higher level check until he dies at age 101, then he can just stuff it.

Second, he wants to say that since we have not had a depression where investors literally lost their shirts since SSA was started, therefore we will not have one tomorrow and that is reason enough to assume that in the future we should put all of the risk on the individual is just idiotic. A bean counter does not know a thing about risk. Yes, I am letting my Business School Rivalry show. Investing is not a science. You can’t predict how the market will be in an hour or a day and surely not 20 years.

In his contention he of course looks at this at a globally collective investment level. Sure Bill Gates would have made money or just not have cared if did or not, but the Stock Market is not a win-win situation. Stock prices just don't rise for everyone; the 10% market assumption is over time and is collective. In that measurement for every guy who made 20% there are plenty more who made 0%. If he instead used a model that had the government investing the money in the market where the losses would be outweighed by the gains and everyone would benefit or lose from both, then he might have an idea worth considering that does not put individuals at risk. It has other problems, but it would not be as lame brained.

Like the rest push to end Social Security he seems to not know the difference between a defined benefit plan and defined contribution plan. Risk matters.

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