[Marxism] Greenspan, How do you set up a system that works?

Barry Brooks durable at earthlink.net
Thu Jul 20 14:12:34 MDT 2006


What will cause capitalism to collapse? Could we ever 
count all the ways? One high on the list is by 
listening to the likes of the AEI.

http://www.aei.org/include/pub_print.asp?pubID=24092 

A Plan to Replace the Welfare State
(...) 
Consider retirement. Let's say that we have 
a 21-year-old man before us who, for 
whatever reasons, will be unable to 
accumulate his own retirement fund. We 
accumulate it for him through a yearly 
contribution for 45 years until he retires 
at age 66. We can afford to contribute 
$2,000 a year and invest it in an 
index-based stock fund. What is the least he 
can expect to have when he retires? We are 
ridiculously conservative, so we first 
identify the worst compound average growth 
rate, using constant dollars, for any 
45-year period in the history of the stock 
market (4.3% from 1887-1932). We then assume 
our 21-year-old will be the unluckiest 
investor in American history and get just a 
4.0% average return. At the end of the 
45-year period, he will have about $253,000, 
with which he could purchase an annuity 
worth about $20,500 a year.

That's with just a $2,000 annual 
contribution, equivalent to the Social 
Security taxes the government gets for a 
person making only $16,129 per year. The 
government gets more than twice that amount 
from someone earning the median income, and 
more than five times that amount from the 
millions of people who pay the maximum FICA 
tax. Giving everyone access to a comfortable 
retirement income is easy for a country as 
rich as the U.S.--if we don't insist on 
doing it through the structure of the 
welfare state.
 (...) 

To some people perhaps the AEI seems 
to be flirting with thought, but they haven't 
figured out that we can't save hamburgers 
to eat during retirement. They must be 
produced fresh, and the right to eat them 
is political rather that a matter of compound 
interest. Well, compound interest is also 
political.

The real investment we need to make for our 
retirement is in a functional economy, one 
that it capable of producing physical goods. 
Paper and gold are hard to cook, however 
gold might buy the last hamburger. Better 
yet, when we give-up on making the world 
function, get a gun. Don't bet on being one 
of the few to survive when the physical 
world is trashed. We don't really want to go 
there.

Greenspan agrees, below, but he is too 
polished to use the hamburger example.

The following is from a interview with 
Chairman Greenspan:

RYAN: "Do you believe that personal 
retirement accounts can help us achieve 
solvency for the system and make those 
future retiree benefits more secure?"

GREENSPAN: "Well, I wouldn't say that the 
pay-as-you-go benefits are insecure, in the 
sense that there's nothing to prevent the 
federal government from creating as much 
money as it wants and paying it to somebody. 
The question is, how do you set up a system 
which assures that the REAL ASSETS ARE 
CREATED which those benefits are employed to 
purchase?"

Could he really believe that capitalism is capable 
of setting up such a system? He implies that 
it has yet to set one up, after all this time. 

How do we set one up? See
http://home.earthlink.net/~durable
If you don't my like suggestions remember that 
the capitalists like them even less, and try to forgive 
me for posting this to my favorite list. 

Barry Brooks 
















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