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April 26, 2005

John Tierny Is On F'n' Fire

Don Luskin gloats that after years of Paul Krugman "lies" lies (let's not pussyfoot) on Social Security, NYT libertarian columnist just beat him with the ugly-stick:

After an endless parade of lies from Paul Krugman about how bad reform with personal accounts has been in Chile [cite deleted; hit the link if you want to read Krugman's insane howlings], Tierney actually got on a plane and checked it out himself (Krugman, of course, never leaves his office in Princeton; he gets all the facts he needs from radical leftist websites).

And what did Mr. Tierny find when he dared to venture out of his comfy climate-controlled office?

As it happened, our countries have required our employers to set aside roughly the same portion of our income, a little over 12 percent, which pays for disability insurance as well as the pension program. It also covers, in Pablo's case, the fees charged by the mutual-fund company managing his money.

...

After comparing our relative payments to our pension systems (since salaries are higher in America, I had contributed more), we extrapolated what would have happened if I'd put my money into Pablo's mutual fund instead of the Social Security trust fund. We came up with three projections for my old age, each one offering a pension that, like Social Security's, would be indexed to compensate for inflation:

(1) Retire in 10 years, at age 62, with an annual pension of $55,000. That would be more than triple the $18,000 I can expect from Social Security at that age.

(2) Retire at age 65 with an annual pension of $70,000. That would be almost triple the $25,000 pension promised by Social Security starting a year later, at age 66.

(3)Retire at age 65 with an annual pension of $53,000 and a one-time cash payment of $223,000.

You may suspect that Pablo has prospered only because he's a sophisticated investor, but he simply put his money into one of the most popular mutual funds. He has more money in it than most Chileans because his salary is above average, but lower-paid workers who contributed to that fund for the same period of time would be in relatively good shape, too, because their projected pension would amount to more than 90 percent of their salaries.

By contrast, Social Security replaces less than 60 percent of your salary - and that's only if you were a low-income worker. Typical recipients get back less than half of their salaries.

Hmmmm... Paul Krugman is always fretting about the US devolving into some South American banana republic.

If only we were so lucky.

Big props to the National Journal's Blogometer. No URL-- they're like an exclusive nightclub you can only find if you're being brought by friends who've already been there. And if you've got a lot of money.

One problem with the Blogometer: It continues to be seriously deficient in Ace content. I'm quite sure they get a lot of letters about this outrage.


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posted by Ace at 01:02 PM

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