On Mon, 16 Sep 1996, Steve Schear wrote:
On Mon, 16 Sep 1996 19:58:25 -0400, Black Unicorn <unicorn@schloss.li> wrote:
Remember the original purpose of social security. A government fund which was self sustaining because it only gave out what was put in and gained by investment.
Not quite. You'll remember that SS was pitched to the masses as such during the Great Depression, but its true purpose was to allow older workers to quickly retire and make room for the largely unemployed men in their prime, family raising, years.
It became this, yes, but the original concept (at least according to the legislative history) was as I represent above.
A social safety net is simply a form of health and life insurance. Statistical arbitrage if you will.
Yes, but not for the reasons you would cite. Social safety nets prevent rioting by the lower classes, revolution and general civil disorder because they appease the masses. Indeed this is a form of health and life insureance for the middle and upper classes.
No doubt. See my previous comment.
[...]
Spreading the risk, by itself, does NOT reduce cost. You must properly PRICE risk.
This is the distinction between insurance and welfare.
Right on!
I forgot to mention that welfare and free health insurance plans do not SPREAD risk either. They concentrate the risk of the entitlement eligable population including those able to pay down onto the smaller group of only those who earn an income substantial enough to contribute. Those who can pay in are effectively burdening the risk of those who cannot as well as themselves, instead of just themselves.
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