Ayn Rand's Don Watkins on Finding a Way Out of the Entitlement Tarpit--03-15-2015

The Financial Survival Network ^ | 03/15/2012 | Kerry Lutz

[appeal2]

Don Watkins and I discuss the unsustainable state of America's Entitlement Society. It is clear that the system is going to collapse; we are certainly at the height of corruption when half the population is allowed to live at the expense of the other half. The geometric growth in entitlement programs and expenditures is also mathematically unsustainable. Therefore, people need to be educated about entitlements, which actually make society more poor and ensure a lower standard of living for everyone.

The alternative to enlightening and raising the population's consciousness will be far worse than ending entitlements programs. While there is certainly a core of individuals who physically or mentally cannot participate in society, the extra wealth created by the elimination of the parasitic class would more than make up for the loss of entitlements. Before the advent of leviathan government, who's sole purpose was to take care of an ever increasing portion of the populace thereby insuring it's own perpetuation, it used to work this way in America.

Listen to the Interview Here

[bopdowah]

Here’s my plan, and we have to think outside the box a bit here:

Housing Debacle: Liquidate and dissolve Fannie & Freddie by selling their assets to banks at auction. Allow current homeowners to bid for their mortgages too for maybe $.25 to $.50 cents on the dollar. This would raise a lot of cash.

Entitlements: Liquidate and dissolve SSA by paying off retirees in a lump sum according to the value of their entitlement, using the cash raised from the Fannie & Freddie asset sale. Slash the taxes that are now levied to pay for SSA.

Benefit: The slate is wiped clean. Gram & Gramps get cash, taxpayers are relieved of their onerous burden, budget problems go away, housing assets are transferred to stronger hands, and taxes are slashed.

Why could this not work? The alternative is that pretty soon the system will collapse and people will start taking matters in thier own hands, and believe me, it will not be pretty!

[William Tell]

bopdowah said: "Gram & Gramps get cash, ..."

The common element between the real estate fiasco and the Ponzi scheme which is Social Security is that the government instituted an unrealistic program to encourage people to do the wrong things with no ability on the government's part to undo the wrongs.

There is no way for the government to pay for future Social Security benefits. Similarly, there is no way for the government to make people whole who purchased real estate at inflated prices and for which they were unprepared to make the loan payments. Nor is there any way to make lenders whole who loaned money to such people.

I like your idea of bribing people to bow out of Social Security. The problem is that the size of the bribe will be obviously less than the present value of the promised future payments.

Irresponsible people will jump at the chance to have instant cash instead of future payments. That is why we have businesses which will lend people money on future paychecks at exorbitant interest rates.

The interesting thing about your proposal is that the government would have to come up with a scheme whereby the solvency of the system improves as more people sign up for early-exit payments. The dilemma is that people might recognize this effect and, as a result, a flood of early sign-ups will be followed by a trickle.

A solution to this problem might be a penalty element which would grow with time so that people who think they might eventually take the buy-out will do so sooner rather than later.

Unfortunately, I fear that what will happen is that "means-testing" will eventually reduce the benefits to people like me to a pittance as a reward for having been responsible with my money. What I lose will be a reward to people who have spent their lives living above their means.

Another possible solution, which I think the government is working on, is to freeze benefit payments and permit hyper-inflation to reduce the burden of making entitlement payments. The phony CPI numbers are the beginning of eliminating increases in benefits. The inflation element is just around the corner.

What we are discussing is, of course, completely unrealistic. As soon as those who have been bribed to opt-out have spent the money, they will be standing in line at the social services offices signing up for government aid. I fear that nothing less than starvation is going to cure the masses of their collectivist notions.