Obama's Kids to Get Private Education

[nathanm]

quote:Originally posted by cannon_fodder

Nathan, your argument is without merit in this matter.

Folks that were to retire this year would have a higher return on investment in the market than with the Fed.  Even considering the down market (note what DOW number I used) and taking inflation into account.  That's ignoring the ancillary positives of capital investment in our economy.

If given to the government and "adjusted" for inflation (read: tax current income to make up the shortfall), that $144 in 1935 would turn into  $2154.59.  The market, even in this downturn, would yield a return 3 times that amount.  300% greater than the nominal inflationary adjustment.  

Why would a retiree be better off with the government's $2150 than the markets $8500?  True, they lost $4,000 in fictitious wealth, but they are STILL far better off than the other scenario.  If you time it so you cashed out during the worst market year in 75 years you would still be OK compared to the alternative.

HOWEVER, I do agree with you wholeheartedly that government regulation to ensure transparency and to correct other market imperfections is required.  Though I believe most regulation is just a hindrance and serves no real function (sounds good, does nothing... ie. Sarbanes).  Regulators rarely have an idea of what the actual effect of their rules will be.

I think you underestimate the effect (real, not the fudged numbers we're spoon-fed) inflation has on the market. T-bills get you nearly the same return, on average, and are far safer. Or CDs with some banks, much of the time.

http://home.earthlink.net/~intelligentbear/com-dj-infl.htm

Even if you use the government's fudged inflation figures, it still doesn't look nearly as good as you make it out to. (Nor will it, once we give back the 1990s gains thanks to soon-to-be rampant inflation, at least if Bernake has anything to say about it)

Besides, you're being disingenuous. One could have easily earned an average 5% since 1935 (probably more), which would leave you with around $5000 today.

As I said before, market-based retirement funds have their place. So do retirement funds based on treasuries. Having a backstop for times when the chips are down is a good thing. Let's forget that if you entered the workforce in 1945 and retired in 1985 your net gain in the market (using DJIA as a guide, and adjusting for inflation) would be about zero. You'd have exactly what you started with (or less, really, since your contributions would have mostly been at a time when the market was higher relative to inflation)

Of course, dumping all that social security money into the market would do wonders for our 401k performance. That's short sighted, though. I have a feeling that the 90s runup in prices relative to inflation (largely driven by 401k and other retirement fund money which has been increasingly invested in stocks) has colored many people's view of the market.

I think it's a bit funny that you're getting your back up not because I don't believe in markets or am some sort of commie, but because I'm not fervent enough about it to believe that a safety net is a bad thing. I guess you think I have to be a true believer to be rational?

[jamesrage]

quote:Originally posted by guido911

So much for D.C. area public schools for Obama:

http://blogs.abcnews.com/politicalpunch/2008/11/obamas-pick-sid.html

And don't give me that "security" crap. Every parent should have the ability to send their children to a private school for whatever reason. Of course, Obama will having nothing of that.

http://www.nysun.com/new-york/obama-tells-teachers-union-he-opposes-vouchers/81801/

Personally I think it is a security issue and I think his children should be home schooled. The minor children of any president should be home schooled. We got too many whackjobs in the world who wouldn't think twice about kidnapping the children of the most powerful man in the country. It is possible that some terrorist nutjobs would shoot up a school full of children in order to get the president's children and extort the president.


Obama sending his children to private schools with his own money does not make him a hypocrite just because he wouldn't vote for vouchers for private school. If he sent his kids to private schools and the tax payer picked up the cost and he didn't vote for school vouchers then it would make him a hypocrite. I do support vouchers for private schools. I think parents should have that option seeing how their tax dollars are used to pay for schools in the first place. If a public school is doing a crappy job or something the parent disapproves of then the parent should have that option of sending their kids to a decent private school at tax payer expense.

[cannon_fodder]

Nathan:

I did not invent numbers.  I used real data for from 1935 to present for inflation and market performance.  I did not underestimate inflation.

Also my market perspective has not been colored by any short term trend.  I used the entire trend from 1935 to the day I made that post.  

And disingenuous?  I think not.  There are alternatives out there that have a place.  T-Bills could be a small part of the portfolio, but you forget that is government lending YOUR money to itself.  That is what was done, but they decided interest was not payable.  So not only do you not get a fair return, but your money is free floating in a government debt pool (read: dissolves on a government whim).  

Finally, when you pick random low-market retirement dates you are fictitiously pretending you cash out at that point.  NO.  When one retires you merely begin drawing down the fund, NOT cash it out.  Hence, a person who retired in 1985 would have seen the vast majority of their wealth sky rocket in the 1990's.  Retirement does not mean you pull all your money and stuff it in a mattress.  I believe that understanding, which you have repeated thrice, is the core of the misunderstanding.

PLUS... a zero return is exactly what the return on social security is.  There is NONE.  There is no saving involved at all.  It's just gone.
- - -


I am not arguing that all retirement money is better off in the markets.  I keep nearly 20% in cash or commodities most of the time, 50% in the markets, 20% in bonds and 10% in government markers of various kinds.  Luckily I have the freedom to do so.

I understand the market has inherent danger to it.  All of my focus is on the LONG RUN and in the long run the markets have outperformed all other investments.  Retirement is a long run game.

I am also not opposed to a safety net.  Unfortunately social security is no longer a safety net - it is looked at as the primary retirement tool.  Worse yet, it is built as a pyramid scheme:  

Generation 1 did not pay in but got funded by Generation 2.  Generation 2 gets funded even more by Generation 3 (baby boomers).  At this point Generation 3 has promised funding for social security in conjunction with medicaid to serve as a retirement vessel to be retroactively funded by Generation 4 (me).

Unfortunately, the funding promises have grown too large and the pyramid base too narrow to support it.  There has been no saving.  There is no money stuffed away in T-Bills, in a safety deposit box, gold reserves, or anything else.  The government has taken the money in and simply spent it, leaving behind IOU notes that bear no interest.

THAT has colored my thinking.  My money is better have having a shot at a return on investment in the markets than a guarantee of a zero return and possibly no payout with the government.    The entire system is flawed on a massive scale, reflective our too many Americans unwillingness to save (CONSUME DAMN YOU CONSUME!).

So revamp the system.  The safety net concept has been bastardized to mean "I don't have to save" for too many people.  Make it a forced retirement plan if you think you must.

I don't fault you nor think you are a commie, nor have I insulted you personally.  I just think my money would be better off int he markets than with the government.  While my market return has been really bad lately, my government has loaned out 10 times more money than it collects in a year.

Without a significant correction in our nations borrowing habits, we are in a for a shock (can you say currency devaluation?).

[we vs us]

Social Security actually does make a market driven return, and is as solvent as our government is.

All Social Security assets are invested in treasury bonds, which are currently hovering at around %3.0 return, but, of course, which fluctuate with the bond market.  They are backed by the US government, probably the safest investment in the world at this point (and yes, I can appreciate the irony).  

Also, Social Security is not going broke.  It's estimated, that at the current tax rates we will have to reduce benefit payouts by 2042, but that doesn't take into consideration further efforts to increase the trust fund.  

The wikipedia entry made an interesting distinction that I hadn't heard before.  Its analysis stated that the controversy is really over how to interpret the accounting method.   There're two camps, one essentially saying that because SS money has come in and gone out as treasury bonds then there's no real SS trust fund, and it's simply an internal scheme to launder the tax money.  The other camp says that it simply converted the cash in the fund into fungible instruments that are also valued the world round as one of the most stable investment vehicles anywhere.  

Anyway, I hadn't really figured that that was the crux of the issue, but it makes more and more sense.

[buck]

I think that Ken Neals column in the Sunday World is spot on. Vouchers would only be about saving some rich people money on private school tuition. Do you think that Cascia, BK, or Holland Hall would start accepting kids from poor, underfunded schools? When the "scholarship" program was proposed before, a pastor in North Tulsa was quoted as saying "we got a new building and 16 classrooms ready to open up". You would have all these fly by night school open with no accountability.

[USRufnex]

Thanks, Buck...

I would rather Nathan Hale HS become an "underperforming school" than a public high school specializing in restaurant and hotel management... nice bit of trickery there.

http://www.tulsaschools.org/schools1/magnet/hale.shtm

CF.  You've made blanket statements very recently which I can't find right now searching through the dizzying plethora of verbose posts..... you have previously scapegoated the NEA for the perceived failures of the public schools... you post that a 50% plus 1 vote to legally unionize a workplace would be HORRIBLE.... yet we don't even do that for the POTUS....

[USRufnex]

quote:Originally posted by Gaspar


I just want to see a system where we can choose what school our children go to no matter how wealthy or successful we are.

^^^LOL.  Libertarian or Cafeteria Socialist?  

Children can't choose their parents, either... is there a voucher system for that?....
[}:)]

Rule #1.  Life ain't fair.

Rule #2.  See rule #1.

[USRufnex]

quote:Originally posted by Red Arrow

quote:Originally posted by cannon_fodder

Please accept the premise that we both want the same thing and merely differ on how to get there.  

Applies to a lot more than education. I think it is one of the basic differences between non-extremist left and right. There's no accounting for guys bouncing off either the left or right wall (Or falling off the cliff, if you prefer.)

Who knows what's far right or far left these days...

I'd be considered a MODERATE in at least 40 other states....

Funny dat.

[Red Arrow]

quote:Originally posted by USRufnex


I'd be considered a MODERATE in at least 40 other states....

That only leaves 10 states where I'd be willing to live. I guess I'll have to stay here. []

[cannon_fodder]

I have been very clear that the teachers union is not the lone culprit in our schools.  Look no further than this thread for such statements.  As the largest influence on public education they certainly do suffer some of the blame.

[nathanm]

quote:Originally posted by cannon_fodder

I did not underestimate inflation.
...
Finally, when you pick random low-market retirement dates you are fictitiously pretending you cash out at that point.  NO.  When one retires you merely begin drawing down the fund, NOT cash it out.  Hence, a person who retired in 1985 would have seen the vast majority of their wealth sky rocket in the 1990's.  Retirement does not mean you pull all your money and stuff it in a mattress.  I believe that understanding, which you have repeated thrice, is the core of the misunderstanding.
...
Without a significant correction in our nations borrowing habits, we are in a for a shock (can you say currency devaluation?).

The official numbers underestimate inflation. Even so, the Dow keeps returning to the same level, adjusted for inflation, although there are peaks in between. The one in the 60s was pretty sustained. Not like the rocket-ship ride of the 90s.

And no, you don't pull all your money out when you retire, but if you pick the wrong 7 years to live out your retirement, you may not have a great retirement fund after all. Say, for example, you retired without a pension in 1976. Of course, 401(k)s weren't really around then, but that's neither here nor there, unless you think that money infusion is what drove the speculative bubble in the 90s (and, indeed, to this very day)

On that third quoted point, I agree wholeheartedly. We probably disagree on how to go about doing that, but at least we agree that it needs to happen.

On topic, one serious problem with vouchers is that there are no private schools (nor really enough money to fund them) in the places that truly need them. Poor rural districts that can barely keep the lights on and can't afford to pay teachers a livable wage as it is.