From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Subject: Re: Social Security
Organization: Texas Instruments Inc
Distribution: tx
Date: Sat, 2 Jan 1993 15:38:28 GMT

In <1992Dec29.013344.1691@rpp386> jfh@rpp386 (John F. Haugh II) writes:

>In article <BzyC75.72K@NeoSoft.com> paul@NeoSoft.com (Paul Hutmacher) writes:
>>In article <Bzvw5J.1KEo@austin.ibm.com> curt@ekhadafi.austin.ibm.com (Curt Finch 903 2F021 curt@aixwiz.austin.ibm.com 512-838-2806) writes:
>>>It's a little perverse isn't it?  The richest segment of our
>>>population, the aged, receive continuous handouts from young wage
>>>earners far in excess of their own contributions when those same young
>>>people have not a prayer of ever collecting this freebie themselves.
>>
>>Oh pooh.  That same argument of not having any social security left for 
>>the contributors is the same one used two generations ago.  They're the
>>ones now collecting.
>>
>>I for one am going to hedge my bet and contribute heavily to my 401k
>>though.

>The more frequently that Curt and Co. repeat this tired old line, the
>more I think about Social Security and what the benefit and funding
>implications are.

>One of the items which I recently worked out was the cost of providing
>for "orphans" benefits.  Using the 1958 mortality tables, between ages
>30 and 50 (that's a nice range for people with children ...), there
>will be about 76 deaths per thousand population.  Assuming the mortality
>rate is constant (it isn't, but the discrepancy is in our favor, so I
>don't care to work it out ...), that's an average of 3.9 deaths per
>thousand.  The average benefit payout would be 10 years (20 / 2 = 10),
>and the average amount (using large fudge factor) is about $1,722 per
>month (widow + 2 orphans, assuming grieving widow doesn't work and
>dead husband made about $30K - an average middle class income).  That's
>$206,640 per dead wage earner.  Since this is spread out over the
>remaining 92.4% of the population =without= a dead wage earner, that
>works out to a cost of about $16K per wage earning on a lifetime basis.
>Spread that out over 47 years (ages 20 to 67), and you have a whopping
>$340 per year in FICA needed to pay for those dead fathers.

You're confusing total population (deaths per thousand) and total
workforce (contribution per FICA wage earner).  The required pay in to
take care of those "dead fathers" would have to be about double what
you quote.  Note that this number would be lowered somewhat by your
assumption that ALL the early deaths would involve a man with two
children.  There are a number of other factors that you don't bother
to compute.  

In other words, there is so much 'fuzz' on your number that it isn't
meaningful. 

>Now, let's compare $340 per year to the cost of life insurance that's
>available from private sources.  I pay (age 30, non-smoker, married,
>white male) about $2 per thousand of term life in annual premiums
>(nice round numbers, you milage and rates may vary).  For $206K of
>"coverage", I would pay $412 per year.  Since Social Security is only
>running me $340 for the "same" coverage, I'd say I'm getting a not so
>bad deal.  Again, big round numbers - but they do begin to shed some
>light on the popular myths that Curt is peddling.

Have you adjusted for the future value of money here?  Your term life
insurance is a lump sum payout (usually), while the SS benefits are
paid out over 10 years (to take your average figure), which makes them
worth less.

>I used to make some of the same mistakes I suspect Curt is making.  When

You still seem to be making quite a few of them.

>These sort of analysis are some of what needs to be done to 1) disprove
>the popular paranoia and 2) disprove what Fred claims about how the
>government can do better than the private sector and for less money.

John, you're hopeless.  Another mistake on your part.  If you want to
drag me into it, try saying something true.  Please show us where I
ever said what you claim (without the kind of gross misreadings you so
often do to try to 'prove' how people said something.  Personally, I
think the current SS system is garbage and should be scrapped and
replaced with a new, totally voluntary system (coupled with some sort
of funding out of the general tax revenues in a program for those who
simply can't afford insurance, even if they wanted it).  Now then,
you're going to have to explain how you manage to parlay that into my
claiming that the government "can do better than the private sector
and for less money" in this case.

This is just another case of your braindead rhetoric.

-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
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Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.
Newsgroups: tx.politics