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Old 07-08-2010, 06:24 PM   #241
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Originally Posted by samclem View Post
As it happens, we do have a way of taking most of the impact of "access to medical care" out of the equation and seeing if a group of Americans with a "higher" socioeconomic status (which conflates all kinds of factors: income, education, etc) live longer than those with "lower" socioeconomic status.
If we look at US active duty military retirees, all of them have access to the same medical care system. Officers and enlisted personnel both have to pass the same physical exam when they join the military, and for the next 20 years they live under the same medical care system. So, the primary differences between the officer and enlisted retiree populations are income and education levels, but both get about the same medical care. A 60 YO retired officer can expect to live 23.1 additional years. A 60 YO retired enlisted serviceman can expect to live just 19.6 additional years (Figures for 2004, and all for active duty retirees. Link) What accounts for the difference? I can't say for sure, but I'd look to self-chosen lifestyle factors (smoking rates, risky behaviors, etc) rather than any life-extending hygiene tips the officers might have learned in grad school.
Interesting example, but you leave out a few key points.
1) They are not in general selected from the same pools. Recruits are not randomly assigned to be Officers and Enlisted categories. Both genetic and environmental factors prior to military service may be relevant. I agree that these may play out in lifestyle.

2) It would be interesting to prove that the health care for the two groups is the same. On a purely anecdotal level I'm not so sure, but I do not know.
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Old 07-08-2010, 06:30 PM   #242
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I'd prefer to concentrate on helping poor people to live as long as wealthier people--that's the root and more fundamental issue.

The lower life expectancy for lower income people (and for black Americans of all incomes) did come up as an issue during the SS privatization debate about 5-8 years ago. The point was that with private accounts these groups would reap a disproportionate benefit, since the proceeds from the accounts would go to their heirs. It would be a way to help some families out of poverty. But, this point was lost in the screaming and fear-mongering about risking Granny's life savings in the rsiky stock options.
No what killed it was the fact that poor people were worse off with privatization but rich people did much better. DW and I both paid the full social social level for many years. Privatization would be a fabulous deal for us at the expense of low income people for whom the social security system pays a much higher percentage of income. Even the GOP was embarrassed by how negative it was for the poor.

When you added in that privatization destroyed the spousal pensions of GOP stay at home moms it was DOA

It had nothing to do with the stock market
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Old 07-08-2010, 07:09 PM   #243
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No what killed it was the fact that poor people were worse off with privatization but rich people did much better.
. . . .
It had nothing to do with the stock market
Harry Reid's response to President Bush's 2005 SOU Address:
Quote:
But maybe most of all, the Bush plan isn't really Social Security reform.
It's more like Social Security roulette. Democrats are all for giving Americans more of a say and more choices when it comes to their retirement savings. But that doesn't mean taking Social Security's guarantee and gambling with it.
Here's a totally neutral (okay, maybe not) look from the Heritage Foundation at how the Private Retirement Accounts (PRA) might have benefited various groups, based on actual stock market returns for the 40 years prior to 2001.

Quote:
In principle, we looked at three representative workers who were born in 1940 and participated from 1965 to 2004 in a hypothetical PRA plan. Workers' incomes are expressed in real inflation-adjusted dollars. The low-income worker earned $15,000 a year, the moderate-income worker $35,000 and the upper-income worker $65,000.

Their PRAs were funded through Social Security payroll taxes on a sliding scale, with workers at the low end of the income scale allowed to invest 7 percent of their incomes in PRAs and those at the top allowed to invest 2.5 percent. The mythical PRAs were invested in balanced portfolios of large-company stocks and government bonds. With the introduction of these PRAs, traditional Social Security payments would be cut in half, in order to prevent double-dipping.

This approach is novel because, unlike most other research, our analysis uses actual rates of return for stocks and bonds over the course of those 40 years.
. . .
Case 1: Low-Income Worker.
If a worker earning $15,000 per year had set aside 6 percent of his earnings in a PRA, at retirement, the worker's PRA, under this study, would've been worth $111,000, which could be used to purchase an annuity that would provide $640 per month for life. The worker also would receive a reduced Social Security benefit of $419 per month for a monthly income of $1,058. Today, that worker receives $837 per month from Social Security, a difference of 26.5 percent.

Case 2: Low-Income Dual-Earner Couple.
A couple earning $40,000 annually would have been able to divert 6.5 percent of the wife's earnings and 5.5 percent of the husband's earnings to their individual PRAs. At retirement, they would have a combined PRA of more than $288,000, which could be used to purchase a joint and survivor annuity that would provide $1,553 per month for life. Combined with their reduced traditional Social Security benefits of $995, this would provide them with a monthly retirement benefit of $2,548.

Under current law, the couple would receive Social Security benefits of only $1,990 per month. Put another way, the couple's retirement income would be 28 percent higher if they had been allowed access to PRAs 40 years ago.

Case 3: Moderate-Income Worker.
A worker earning $35,000 per year who put 5 percent of his earnings into a PRA would build an account worth $215,000. That could be converted to an annuity that pays $1,244 per month for life. That, combined with $734 in reduced traditional Social Security benefits, adds up to $1,978 in monthly income. That's 35 percent more than the $1,468 per month that worker receives today under traditional Social Security.

Case 4: High-Income Worker.
The high-income earner, the worker making $65,000 per year over that 40-year period, also would fare better. Allowed to contribute just 2.5 percent of earnings to a PRA, this worker still would build a nest egg of more than $280,000 by retirement. That would be enough for an annuity that pays $1,618 per month, which, combined with the reduced traditional Social Security benefit of $955, would give this worker a monthly retirement benefit of $2,572. Under current law, that worker receives $1,909 per month in Social Security. Again, we see a 35 percent advantage for the worker in a PRA.
In these simulations, everybody gained.


Note the use of annuities in computing the monthly cash payouts. If not inflation adjusted annuities, we can assume the advantages of the the PRA would diminish over time. And using an annuity does eliminate the relatively greater advantages (due to lower life expectancy) to low-income people of having a lump sum that can be passed along to heirs.

Still, despite the advantages of limited privatization of SS, I do know that some people are more interested in relative equality than absolute prosperity, and for them the idea that wealthier folks gain more is abominable and far more salient than the the idea of poor folks having a lot more to spend in retirement. These people will find it even more distasteful that Americans would own these funds and be less dependent on the SS teat. IMO, that's what killed the limited privatization of SS, but I'm willing to admit that it's an opinion rather than arrogantly assert that I know absolutely what killed it.
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Old 07-08-2010, 07:25 PM   #244
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Originally Posted by samclem View Post
Harry Reid's response to President Bush's 2005 SOU Address:

Here's a totally neutral (okay, maybe not) look from the Heritage Foundation at how the Private Retirement Accounts (PRA) might have benefited various groups, based on actual stock market returns for the 40 years prior to 2001.

In these simulations, everybody gained. Still, I do know that some people are more interested in relative equality than absolute prosperity, and for them the idea that wealthier folks gain more is abominable and far more salient than the the idea of poor folks having a lot more to spend in retirement. These people will find it even more distasteful that Americans would own these funds and be less dependent on the SS teat. IMO, that's what killed the limited privatization of SS, but I'm willing to admit that it's an opinion rather than arrogantly assert that I know absolutely what killed it.
its not neutral and it is simplistic. Exactly what happened to the non working spouse of the 15,000 a year worker? and the families of those who die.

And what happens to those who get screwed by eh bernie maddofs of the world

not to mention compare it to the return on investment of social security for low income workers

THERE IS NO MAGIC MONEY
you cant take trillions of dollars dump it in the stock market and make simplistic analyses of what happens. You also have to add in the taxes for the higher borrowing cost.

SS has very low administrative costs and the money comes in and goes out. you cant beat it for efficiency. There are no big fees for wall street that is why the Heritage foundation hates it.

for an in depth analysis see

[PDF] Rethinking pension reform: Ten myths about social security systems


psu.edu [PDF]PR Orszag, JE Stiglitz - 1999 - Citeseer
... against the roughly 2 per cent the social security system will produce."25 Similarly, Palacios and
Whitehouse (1998) argue that the higher rate of return under a private scheme "is an important
reason for reform."26 As in Myth #1, this myth conflates "privatization" with "prefunding ...
Cited by 388 - Related articles - View as HTML - All 16 versions
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Old 07-08-2010, 08:02 PM   #245
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Sure, it's likely that poor people get lower quality health care and that this reduces their life expectancy. But the provided graphic by itself doesn't indicate any causation.

True, and "link" does not equal "causation." I suppose somebody might learn something in their higher education that helps them live longer, but I've been to lots of schoolin' and I can't think of any specific facts I picked up in my formal education after HS that falls into this category.

As it happens, we do have a way of taking most of the impact of "access to medical care" out of the equation and seeing if a group of Americans with a "higher" socioeconomic status (which conflates all kinds of factors: income, education, etc) live longer than those with "lower" socioeconomic status.
If we look at US active duty military retirees, all of them have access to the same medical care system. Officers and enlisted personnel both have to pass the same physical exam when they join the military, and for the next 20 years they live under the same medical care system. So, the primary differences between the officer and enlisted retiree populations are income and education levels, but both get about the same medical care. A 60 YO retired officer can expect to live 23.1 additional years. A 60 YO retired enlisted serviceman can expect to live just 19.6 additional years (Figures for 2004, and all for active duty retirees. Link) What accounts for the difference? I can't say for sure, but I'd look to self-chosen lifestyle factors (smoking rates, risky behaviors, etc) rather than any life-extending hygiene tips the officers might have learned in grad school.
Interesting link. Thanks.
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Old 07-11-2010, 04:48 PM   #246
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