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Notes -
(tagging @jeroboam as well)
It gets even worse when we consider nerdy economist concepts like marginal utility and opportunity cost.
Those of means who contribute more to social security than they will receive from it are also not using their monthly payroll contributions to social security to invest in other areas. Likewise and conversely, those who do not contribute much to social security during their "careers" but then receive disproportionate benefit should they make it to 65+ are often - date I say - engaged in activities that may be net socially negative. This ranges from the pleasantly degenerate (drinking to excess, casual illegal gambling with friends, other high risk activities) to the actively and proudly felonious (violet semi-organize criminal activity).
We take meaningful amounts of money out of the hands of the pro-socially engaged and demonstrably more capable in capital allocation during their highest earning years in order to subsidize the poverty-lite elderly years of people who have had a rocky relationship with society and community for, perhaps, decades.
I'll admit I'm painting with broad strokes here and will further confide that I spent too much time this past weekend looking at how taxes, transfers, and social programs actually shake out in the US. I, therefore, am still riding a hell of a rage high on this particular topic.
Still, the basic (and good!) arguments against social security still fail to adequately capture just how perverse it has become. It is no longer a "help out the small amount of old folks who make it to such an advanced age" program. It's a multi-generational ponzi scheme complimented by a massive DEFECT, DEFECT, DEFECT incentivized prisoner's dilemma. Throw in the deadly sisters of housing, education, and healthcare costs and the picture gets even more grim.
The economic tragedy in America is that, today, the dutiful "middle class" career person or family who pays all of their taxes, saves responsibly but without being monkish about it, and tries to setup a self-sufficient future is actually the RUBE. The equity owning elites use the various tax loopholes to keep cash that isn't income but "dividends" and the devotees of social degeneracy simply enjoy a taxpayer subsidized orgy of irresponsibility from their earliest adult years all the way through silver years' death, if violent calamity does not land on them in the intervening decades. The government pursues monetary and fiscal policy that inflates the dollar to oblivion and takes yet more of those dwindling dollars out of the hands of the earnestly, albeit naively, pro-social.
Wait what? You more or less described me, but I don't see how I'm a rube. I know that social security is basically stealing money from me, I don't have a choice whether or not to pay it. I know that the uber-rich have ways of making money that surpass my wildest dreams, but also they require seed capital I don't have. So, I put money into my retirement account because that's all I can really do as far as I can see. But I'm not doing this because I've been fooled into thinking it's an amazing option... it's just the one I have available to me.
I was being deliberately hyperbolic using the word "RUBE" (hence, the capitalization).
It's not that you and people like you are stupid or being tricked, it's that you're paying the freight on those who defect socially (degenerates) and paying more than your fair share when considering that the elites shield themselves from taxes.
I should note that I am not in favor of some communist Elizabeth Warren style "wealth tax." That's confiscation by the government, clearly unconstitutional, and would also destroy markets overnight. Mostly, I'm in favor of cutting both corporate and individual income tax and making new capital and business formation easier. You say that hypothetical businesses require "seed capital [you] don't have" - yet you say you're investing in ETFs / Mutual funds (presumably). I'd love to a scenario in which you and a couple buddies, over the course of a few years, collectively save maybe some level of money and are then allowed to make a bet on a new startup or something. Right now, setting up an investment firm to do that is cost and regulatorily prohibitive if you aren't starting with at least $20 million or so (and that's a micro amount). If you're investing personally, you literally have to be rich enough to be allowed to do that (see "Accredited Investor"). This in the same country that allows any adult to literally gamble on their cellphone 24/7.
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