Comments (23)

• Aaron Singleton

  Good article. I've written about a similar topic here. Government regulation and the practices of the Fed make them just as culpable as the businessmen who lied or committed fraud. Yet they use events like Enron's collapse to build high profile, public cases to discredit the market and set the stage for public acceptance of more of what helped cause this debacle in the first place.

  Published: June 15, 2006 8:23 AM

• Brad Dexter

  1) It is funny when those who held Enron stock in their retirement accounts, and were getting unimginable gains (some might say economically unreal gains) and creditors were being fleeced for their benefit, no one said a word, but when it blew, they were victims. It is not normal to have a fleet employees in their mid 30's with $2+ million 401k's. At some point willful stupidity has gotten to be taken into account in the "honesty" of a transaction. "...known or reasonably should have known..." is thrown around a lot in our world and maybe it's time to put that on individuals as well. Being a receiver of stolen goods purchased at a ridiculously low price is a crime. I, for one, can impute a similarity.

  2) Finally someone discussing the accrual basis debt. I see so little written about it. It makes one dispair over the double standard between Big Business and Big Government. But I guess the lemmings described above need an escape hatch - ride the tide of Big Business, and when it fails, appeal to the bigger brother.

  3) According to Comptroller General Walker in the 2005 Financial Report of the United States, the burden is $375,000 per full time worker, so most families would have $750,000 of "debt" apportioned to them, and that is just for the $46 trillion accrual debt Walker recognizes. If, with other liabilities tossed in, it is $57 trillion, that would make it about $930,000 per dual worker family. That is without underfunded private plans "insured" by the government that will go bad, the various States' debts, and the massive personal average debt carried by individuals already.

  But lets hussle those baddy CEO's into prison, that'll right the ship. It's all THEIR fault. Unblamable? No, but there is a sickness running rampant that these rogue CEO's are merely one symptom of, not the disease itself.

  Published: June 15, 2006 9:23 AM

• David C

  Seriously, if someone talked an old lady out of their retirement, that is often considered to be exploiting the elderly. And if someone forced a bunch of people to participate in an investment plan, then that is called running a racket - and is a felony in all 50 states. And any investment advisor in the US who recommended an investment scheme where new money paid the interest on initial money, that is called a ponzi scheme and would bring ruin and discredit to anyone who tried it. So now the government does all three, gives it a dishonest name like social security, does it to you twice - both before and after you get paid, and now all of a sudden it's some kind of God given right?!?

  Well at this point it's not even worth arguing, the whole system is already doomed. The real issue now is what is the large elderly voting block going to do when the whole thing goes to hell. I'm, thinking they have a few options:

  1. They might try opening the immigration flood gates to bring millions of new payees into the fold. Possible, but the poor attitude toward immigrants lately isn't promising, but it still has potential.
  2. They might try to sieze oil countries and assets. Possible, but it's not working out in Iraq too well, so enthuiasiam for that will probably be dampened.
  3. They might try to get the government to raise taxes, create government health and retirement welfare system, and socialist infrastructure to support it. Possible, but if the government screwed them on social security and medicare, I doubt they will be enthuiastic about any government solutions. I doubt the elderly well be too enthuiastic about rising up in a peoples revolution at this point in their lives either.
  4. They might try to delay the retirement age, and create a culture where the elderly work and produce. This has potential IMHO, but most elderly are probably going to have a hard time competing with overseas labor and in a high tech market, but it still has value.
     
  5. They might renember the Regan Years and renember how cutting back government and the welfare state just a tinsy bit created an economic explosion. Well, there's always hope. In addition to the hope that they'll renember that when they were kids gold was $35 per ounce and excessive debt was considered bad.
     
  6. They could just sit back and suffer feeling helpless to do anything - doubt it though, this was the 60's generation.

  Well, it seems to me like it could really go either way. It's going to be one hell of a battle, I wouldn't be supprised to see the political system turn on it's head. I have a lot of hope, because some of the forces driving this are that the US is entering the information age and it is becomming impossible to lie to people about the value of their money while radically changing US culture and the US economy and shifting it away from the government controlled media. I also have a lot of hope, because when things went to hell in the late 70's people elected Regan over an endless supply of government freebies. Also, people in the US are used to having more political and economic freedoms than other places and have lots of practice and experience with open markets when compaired to other places like the former USSR - when it collapsed.

  Published: June 15, 2006 10:24 AM

• Vince Daliessio

  David C said, of the elderly;

  "...They might renember the Regan Years and renember how cutting back government and the welfare state just a tinsy bit created an economic explosion. Well, there's always hope. In addition to the hope that they'll renember that when they were kids gold was $35 per ounce and excessive debt was considered bad."

  Sad to say they will probably learn the wrong lesson. While cutting SOME tax rates, Reagan also raised the FICA rate, the retirement age, and eliminated billions in deductions, and doubled the size of the budget and the deficit. They are as likely as any reflexive Keynesian to associate this with a good outcome. They have already been primed to accept things that are against their own best interest.
  

  Published: June 15, 2006 10:39 AM

• Tom Coyne

  I sent you a draft paper which was not welcomed locally....hope you have a chance to read it. I am too old to have a website...barely able to manage e-mail

  Published: June 15, 2006 11:23 AM

• Dave Weilacher

  The problem is that these people we vote for truly do represent our morals and ethics.

  Not one of us has gotten through life without saying "there oughta be a law".

  The problem is that if I want a government to support my agenda, regardless of what it is, that opens the door to everyone else to want the same thing.

  The one piece of this whole Austrian economics perspective that I can't get hold of is this.

  We form governments of all kinds constantly. Church is a government, here by free association, some places, not so free. The NRA, ACLU, local property owners association, labor unions, corporations; all governments.

  Put 2 people on an island, and they will form some kind of government.

  Published: June 15, 2006 12:08 PM

• Brad Dexter

  Dave Weilacher

  Then take a Jeffersonian view and that, while a state is inevtiable, so is revolution as that state stops working in the best interest of its people, and works for its own interests. That process has not taken place for nearly 150 years, and now we've built up a pressure cooker the likes of which has never been seen. We're talking about a present value debt of at least $375,000 per working person! A two party system barely differentiated from each other that actively excludes other parties. We have a government that basically works for itself and is perpetuating fear for its existence.

  The other associations you site are quite voluntary, and likely does not require bloodshed to intiate change. Not so with governments. Most revolutions are bloody. We'll see what happens when they come a knocking on your door and mine for our respective $375,000, or else how many people don't have the means to pay for their own because they bought into the ponzi scheme and the programs go belly up. I don't see how the government is going to get itself through this key whole. A dramatic societal spasm is on the horizon, perhaps a few decades out, but the economic misallocations are massive, and are going to be painful to correct.

  Bowling leagues don't get themselves into such quandries. That is the basic difference.

  Published: June 15, 2006 12:43 PM

• Curt Howland

  Dave Weilacher, I would suggest that you have confused government with governance.
  

  The basic principle of human nature that you illustrate, that voluntary association happens through mutually agreed upon rules, is why I have come to regard government as a toxic waste, exactly like a cancer which consumes its own host.
  

  An-archy does not mean no rules, just no rulers.

  Published: June 15, 2006 1:07 PM

• Yancey Ward

  The government, at the behest of retirees and near-retirees, will probably try raising taxes first to forestall the curtailing of benefits in the future.

  However, I am an optimist about the final outcome. No matter what finagling and flimflammery the government attempts, economic reality will force people to work for as long as physically possible. There is no other option given the demographic reality.

  Published: June 15, 2006 1:50 PM

• Vince Daliessio

  Agreed, Yancey, although the irony here is that we have helped enable these government baboons by putting out the word on how insolvent SS is.

  In other words, those of us who recognized the disaster early and have warned about it have unwittingly advanced the cause of those who want people not to have hopes of retirement at 65 or ever!

  Published: June 15, 2006 2:11 PM

• Chris

  Outstanding work as usual. I am fortunate in that I get to read almost ALL of Mark Pribonic’s work. Mark is a regular contributor to my blog www.ontheborderline.net offering interesting, insightful, and educational material and I am fortunate to call him my friend. If you would like to read some more of Marks work follow this link www.ontheborderline.net/?author=166

  Keep up the good work.

  Published: June 15, 2006 3:49 PM

• quincunx

  "Not one of us has gotten through life without saying "there oughta be a law"."

  Indeed, there ought to be a law against that!

  "Put 2 people on an island, and they will form some kind of government."

  Correct, but can they then force this onto a third party? That is the history of the formation of the state.

  Can their agreement be binding to their offspring (obviously more than 2 people)? This is also the history of the formation of the state.

  There is nothing voluntary about 56 men signing a document that they were not authorized by their states (not that is legitimate anyway) to even consider, and then have this document be binding on all of the current population, and all of the future population.

  Not that it's actually followed anyway!

  Published: June 15, 2006 4:38 PM

• Vince Daliessio

  Quincunx, you reminded me of this article I wrote a while back;

  http://www.libertyguys.org/articles/detail.asp?ArtID=538

  "There Oughta Be A Law!"

  This is one of those hoary old 50's sitcom exclamations that you just don't hear anymore. There used to be a comic strip of that name, years ago. I think the proliferation of new laws during the latter half of the 20th century made that joke not seem so funny anymore, and the strip faded into obscurity. But the laws just keep coming.

  The Advocates For Self-Government, in their bi-weekly newsletter, linked to this article at libertyforall.net;

  "According to politicians, Louisiana faced an ominous threat: the hot water in some laundromats wasn't hot enough. (I'll pause while you gasp in horror.) Some folks complained that their clothes weren't getting clean.

  The solution? It's obvious, isn't it? Let the free market work. If customers aren't happy with the hot water at a laundromat, they'll find a better facility. Eventually, good laundromats with satisfactorily hot water will get more business and bad ones will go bankrupt. Right?

  You must not be from Louisiana. The correct answer is: pass a new law. So they did. Now, every Louisiana laundromat is required to produce 120-degree water for its washing machines. If they don't, the owner must post a sign saying, "Hot water not available."

  The article goes on to note that in 2004, 88 new laws were passed to govern the 1.5 billon people in Communist, Totalitarian China.

  In contrast, the politicians of the liberty-loving state of North Carolina passed 216 new laws, the Commonwealth of Pennsylvania 240 bills, and the great state of Louisiana passed 930 new laws during their regular session. Apparently that wasn't enough, so they then held a special session, and passed 14 more!"

  Feh.

  Published: June 15, 2006 4:50 PM

• Evans Munyemesha

  "If the remedy for their crimes is life in prison and the confiscation of their wealth, then what is the proper remedy for government programs whose deception has far more ominous consequences?"

  
  I have pondered this question on countless occassions and have concluded that the proper remedy is abandoning the entire political system. I do know that there are scholars, libertarians, political activists, etc, etc, out there who still believe in the viability or necessity of a 'limited government'but their reasons have not convinced one bit. I don't believe that we could have a 'limited government' when all government is nothing but an illusion to give hope and entertainment to the superstitious souls. Could we really have a 'limited' illusion?
  

  Published: June 15, 2006 5:47 PM

• Mark Pribonic

  Apparently there is a problem with the link to the USA Today story that I reference. Here is the story http://www.usatoday.com/news/washington/2006-05-24-retiree-taxpayers_x.htm
  

  Published: June 15, 2006 6:03 PM

• quincunx

  "I don't believe that we could have a 'limited government' when all government is nothing but an illusion to give hope and entertainment to the superstitious souls. Could we really have a 'limited' illusion?"

  I think Rothbard said it best:

  "The idea of a strictly limited constitutional State was a noble experiment that failed, even under the most favorable and propitious circumstances. If it failed then, why should a similar experi­ment fare any better now? No, it is the conservative laissez-fairist, the man who puts all the guns and all the decision-making power into the hands of the central government and then says, "Limit yourself"; it is he who is truly the impractical utopian."

  Published: June 15, 2006 6:17 PM

• M E Hoffer

  Is it just me, or is the serious break-point, going to come, between the "Boomers" and Gen(s) X & Y ?

  In other words, when the Boomer-dominated Gov't comes looking for more of Gen X & Y's earnings, isn't that going to spark a fur-fly, at the minimum?

  Published: June 15, 2006 6:55 PM

• Curt Howland

  M.E., I don't think so, because the vast majority of Gen[X,Y] are public schooled.
  

  The simple fact that the "DC Sniper" was a couple of kooks, and the same thing hasn't been happening to police, lawyers, politicians and bureaucrats, demonstrates that this country has become a country of spineless sheep.

  Published: June 15, 2006 7:24 PM

• M E Hoffer

  CH,

  I hear ya about the "Public School" hurdle.

  Not so sure how the other part plays though...

  Published: June 16, 2006 9:38 AM

• Curt Howland

  M.E., I suggest the book _Unintended Consequences_, by John Ross. I doubt very much your library has one, but interlibrary loan can get the "obscure" titles.
  

  It may seem like a thick book, but I know people who have been so engrossed by it that they read it in one sitting, forgetting to sleep.

  Published: June 16, 2006 1:59 PM

• M E Hoffer

  CH,

  I hear ya, many forget, or, now, never learned, that reason d'etre for the 2nd Amendment was to provide for an armed citizenry as the fourth and final on a Tyranical Gov't.

  Amazon book review link:

  http://www.amazon.com/gp/product/1888118040/sr=8-1/qid=1150484592/ref=pd_bbs_1/102-1893771-2922529?%5Fencoding=UTF8

  I'll pick up a copy. Happen to be blessed with many nearby Libraries (funny how the best ones are largely Private...)

  Published: June 16, 2006 2:14 PM

• Scott Stinson

  I remember some time ago working at a part time telemarketing firm working at $7/hr after taxes. About half of the people there were Senior Citizens working to supplement their incomes from Social Security checks. Instead of a revolution taking place, Government will simply print more money and thus make the Social Security checks almost worthless. The old folks will simply have to work past their assumed retirement age, regardless of what the Government does.

  Published: June 18, 2006 6:03 AM

• christopher lingle

  you might have also mentioned the separate retirement scheme available to US congressmen and senators (that also extends to their staffers)...since they are not covered by social security, they have a weak incentive to do anything to fix it given the political risks of tampering with it....

  Published: June 22, 2006 8:41 AM