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Investing in their social security
Investing in Their social security In 1998 the Nasdaq stock index was riding on a reasonably high plateau, around 2000. It was correctly expected to go much higher after slight corrections, although not to the 7000 -10000 level predicted by dot-com enthusiasts. Along with its stunning climb rose the popularity of proposals to "allow" or to "let" or to "permit" individuals to "invest" their social security withholdings, their involuntary "savings" accounts, in the stock market. In the hysterical rush to the top for bucks, no attention was paid to the sober proposition a few of us were making at the time, that a state social security program should be for the sole benefit of impoverished people who really need it. Such a basic plan can be paid for out of general revenues as we collect them from ourselves, although it is prudent to keep a separately reported "fund" to keep the trustees honest, and to charge "premiums" so that each earner will have an obvious and immediate record of his cost. All savings funds over and above that basic support level should be in private hands to save or to spend as they please, of course with tax breaks for those who want them and who favor the government's reasons for providing them. In fine, once a basic support level is assured, a worker can be socially secure or confident enough about his future to take the private risks that might be requisite but not necessary to an even better future. With that in mind as the indexes rose to stellar heights, it saddened me to see how the gullible public was falling for the absurd pap being fed to it about "investing" social security in the stock market. For example, a hard-working young man in Detroit appeared on prime-time news. A television was flickering in the background of his humble abode. His wife and their squirming baby was by his side. In response to the Sixty Four Trillion Dollar Question, he said, "Yes, we should be allowed to invest our withholdings in the stock market." How sad. I was so chagrined by the public charade, and by the credulity of the innocently obedient people who would be "allowed" to do things, that I wrote several articles on the subject; but to no avail, and not simply because the media had no room for an opposing view, but because, alas, although the public was extremely interested in the stock market, it was not very much interested in abstractions about social security schemes, or in common-sense articles about their future just in case they might come up short - the majority of them most likely will be short-changed. Short dream-clips and sound-bites are preferable to such tedium. And an audience was then even harder to find on the wild, woolly Internet than it is now, for users were desperate to get to the next click lest they miss the latest thing posted, and therefore they had no time for an article that would take an average 1964 high-school graduate ten minutes to fully comprehend. However that may be, now that the Nasdaq index has dropped to where it probably belongs in two or three years, many are those who are still hoping for its full recover to its previous height, for then they would be socially secure once again. They took the foolish advice of commissioned sales consultants - not to sell. The market had become volatile - signifying an imminent threat to the current trend. They could have had reasonable gains. But on the advice of experts they bought more and more probable losers - the ones with high PE's - on the dips. The dismal stories we heard after the biggest dips was old hat to clever old hands; that is, the tragic news about the enormous sums of money "lost" with the decline of the market. Of course the money was lost to the buyer when he bought the stock from the seller. That reminds us of the fellow who was the only one buying a particular stock as it rose; he kept buying and buying on each recommendation; when he wanted to sell, the broker asked, "To whom?" Go figure. Who has the bulk of the money now? Do you trust them with your social security? More on this later.
