Robert Brokamp has scathingly debunked Six Social Security Myths (free registration). In his article, Brokamp demonstrates more understanding of Social Security than the whole lot of mainstream economists, and a much greater knowledge of social security than any of it’s supporters. Brokamp, however, isn’t critical enough of social security. He also makes one false statement — that SS is insurance — and one extremely dubious one — that you’ll receive any benefits.
Briefly summarizing Brokamp’s list of Social Security myths:
- Social Security is a savings account. Brokamp points out that this is wrong. He says that current retirees are paid for by current tax-payers, and dances around flat-out stating what this is — ponzi extortion.
- These trust funds have money. Brokamp points out, as many Austrians have, that these “fund” are nothing more than IOU’s that the government has against itself (loans against itself), which is meaningless and is not savings. How about, instead of contributing money to my Roth IRA, I just write out an IOU to myself for $3,000 (plus all of that non-taxable growth) when I turn 59?
- Social Security will pay for a swell retirement. Brokamp points out that even in 2003, SS benefits are on average $11,000 per year. Not retirement money, unless you want to live out of a cardboard box.
- Social Security is just about retirement. Here, Brokamp wrongly states that SS also provides insurance. This is incorrect: SS is taxes plus welfare. Social Security is not insurance. Maybe insurance fraud.
- You won’t get anything. Brokamp argues that it’s not true that we won’t get anything, but only that benefits will be reduced. Maybe for those who retire very soon (relative to 2004). But not for those of us far from retirement. SS is a Ponzi scheme, and as such will collapse under it’s own weight. It is highly questionable to say that those currently contributing will get anything. However, if they do, it will only be because of even larger extortion by the government (greater taxes), and even greater inflation.
- You can believe the politicians. Brokamp is at his best here in debunking the myth that politicians are trustworthy regarding SS. Brokamp also makes the harsh statement that it is our own fault for being stupid enough to be conned by politicians (perhaps he doesn’t state it that harshly, but that’s his point none-the-same).
Readers may be interested in this thread I started on Google about the SS Ponzi scam.