social security

Paula Bennett has confirmed that there are less bludgers taking from the taxpayer…29,000 less bludgers.

Social Development Minister Paula Bennett said there were now 29,000 fewer New Zealanders receiving benefits since the last quarter, the lowest number of beneficiaries at this time of year since 2009.

She said more than 17,600 people went off the unemployment, domestic purposes and sickness benefits and into work in the last quarter.

There are now 310,146 people on benefits, including 92,550 sole parents on DPB, 58,208 on sickness benefits and 48,756 on unemployment benefits.  Read more »

In the US and in Europe there is great debate about retaining “entitlements” promised by successive governments.

The same goes for New Zealand…especially with schemes such as ACC, Superannuation, interest free student loans and Welfare for Families. Those programmes all have to be paid for and as Margaret Thatcher once said…eventually you run out of other people’s money to spend.

Sometime soon our politicians are going to have to start being honest with us.

If there were not a single Republican, or none who got elected to any office, arithmetic would still end “Medicare as we know it,” for the simple reason that the money in the till is not enough to keep paying for it. The same is true of Social Security.

The same has been true of welfare state programs in European countries that are currently struggling with both financial crises and riots in the streets from people who feel betrayed by their governments. They have in fact been betrayed by their politicians, who have promised them things that there was not enough money to pay for. That is the basic problem in the United States as well.

We are not yet Greece, but we are not exempt from the same rules of arithmetic that eventually caught up with Greece. We just have a little more time. The only question is whether we will use that time to make politically difficult changes or whether we will just kick the can down the road, and keep pretending that “Medicare as we know it” would continue on indefinitely, if it were not for people who just want to be mean to the elderly.

In both Europe and America, there are many people who get angry at those who tell them the truth that the money is just not there to sustain huge welfare state programs indefinitely. But that anger might be better directed at those who lied to them by promising them benefits that were inherently unsustainable.

Neither Social Security nor Medicare has ever had enough assets to cover its liabilities. Very simply, there has never been enough money put aside to do what the government promised to do.

These systems operate on what their advocates like to call a “pay as you go” basis. That is, the younger generation pays in money that is used to cover the cost of benefits for the older generation. This is the kind of financial pyramid scheme that got Charles Ponzi put in prison in the 1920s and got Bernie Madoff put in prison in our times.

ᔥ The Local

So much for sweden being socialist. It seems they have it all.

Sweden’s national debt office (Riksgälden) stated on Tuesday that the country’s budget surplus from 2011 stood at 68 billion kronor ($9.85 billion).

“Despite increased concerns about the debt situation in the world and an expected slowdown in the economy during the second half, Swedish government finances developed strongly in 2011,” the debt office said in a statement.

While Sweden, with its heavily export reliant economy was hard-hit during the 2008-2009 financial crisis, its recovery “continued to be strong in 2011, which generated higher tax income,” the office said.

The debt office pointed out that the government during the year had also sold off shares worth 23 billion kronor in the Nordic region’s biggest bank, Nordea, and in Swedish-Finnish telecom giant Telia Sonera.

Sweden’s central government debt meanwhile stood at 1,108 billion kronor at the end of 2011, which corresponds to 32 percent of the non-euro-member’s gross domestic product (GDP), far below the 60-percent level allowed within the eurozone.

via Andrew Sullivan

Texas Governor Rick Perry is an aspiring presidential nominee and he has been suggesting that welfare, or social security as the American’s call it is in fact a Ponzi scheme. Since welfare is what the country is talking about then this discussion via Andrew Sullivan is extremely pertinent.

Reacting to Perry’s repeated claims, Zaid Jilani consults the dictionary:

A Ponzi scheme is an economic arrangement where the money paid into the system by later entrants is paid right back out as benefits to earlier entrants. None of these social insurance programs that Perry mentioned fit this definition. They benefit those who pay into them with guaranteed benefits.

Daniel Indiviglio perks up:

Wait — what? Social Security fits that precise definition.

It was created during the Great Depression by President Franklin D. Roosevelt. Retirees began receiving benefits immediately, without having paid into the program themselves. Those benefits were paid by taxing current workers. So, in fact, Social Security is technically identical to the definition of a Ponzi scheme that Jilani provides.

But what about those “guaranteed benefits”? Don’t those make a difference? Well, let’s think about this. Imagine if an investment advisor came to you and said:

“Hi there! I want to sell you a retirement vehicle for which you will be provided a guaranteed benefit of x dollars per year after the age of 65. But the money you contribute will be paid to current beneficiaries, while your money will be paid by future beneficiaries. If there’s ever a shortfall, we’ll just borrow money from China in order to keep the guaranteed benefits coming — or force future contributors to provide more money. Alternatively, we might increase the age at which you’ll receive benefits. And we might even think about means testing your benefit.”

All of those supposed “guaranteed benefits” sure come with a lot of caveats, don’t they? Is it even fair to call those benefits guaranteed? For all we know, the U.S. could continue to run into deficit problems for the next few decades and could feel compelled to do away with Social Security altogether.