a mere hundredfold increase in just 70 years.

No, it’s a Ponzi scheme.

And while we’re at it, Ponzi got either a bad rap or more credit than he deserves. States have been running “Ponzi” schemes since their inception.

Government, with its infinite resources and infinite power and the best and brightest and most vicious minds in its service, somehow keeps making the same mistakes over and over, fulfilling Santayana’s prophecy.

Um hmmm.

Cui bono? If the answer makes no sense, check your premises.

This is a very common fallacy exploded by the fact that most people own specific stocks (of companies which can go bankrupt, becoming utterly worthless, or at least severely depress and never recover former prominence) rather than index-funds.

So, your point is that companies go out of business?

People planning for retirement, and not just speculating, won’t have their investments all in one company. It doesn’t take any special genius to buy an index fund.

Lastly, inflation will savage the value of any long-term investment offering such meager percentages as an index-fund.

So, inflation decreases the value of dollar-valued assets over time? I’m not sure I see the point it that observation. Doesn’t the same truth apply to investments besides stocks, including any income one is counting on from the government?

I think that Radley’s point stands: Even unsophisticated retirement investing in the stock market does better than social security will, especially for younger income earners. Keep in mind that SS currently takes 12.4% of one’s income, though it’s hard to imagine that won’t increase during the next decade, though it’s unlikely returns will increase.

It’s a (mandatory) insurance program. The problem is simply that premiums and promised benefits are severely out of line, and the problem will continue to grow until (and unless) the premiums and/or benefits are changed to match realistic actuarial projections.

as for the stock market: All I know is that I invested in the stock market via a mutual fund during the Clinton years, and ended up cashing up at a slight loss in 2002. The loss occurred because of the Bush tax cuts: the cuts kept me from recouping the full amount of capital gains taxes I had previously had to pay on what turned out to be paper gains that were lost by the time I cashed out (although I managed to cash out just at the point that allowed the mutual fund to send me a check almost exactly equal to the check I sent them six years earlier). I own stock now through my 401(k) and the only reason I can claim a gain there is because my employer matches my contributions, so the money that’s in my account is greater than the amount that I put in. But if it were only my contributions in there, I’d be posting a loss in almost every year since 2001.

Most of my money is in bank CDs, adhering to the 100k limit and hoping that if push comes to shove I’ll actually get my money back from the FDIC.

That’s still better than the pyramid scheme and accounting scam that is Social Security. At least with private investment there’s a pretty solid chance that someone who isn’t a complete moron can get out as much or more than they put in.

– This is a very common fallacy exploded by the fact that most people own specific stocks (of companies which can go bankrupt, becoming utterly worthless, or at least severely depress and never recover former prominence) rather than index-funds.

I.e., does anybody here think Google will still be a $600+/sh company five or ten years from now? One or more of the Big Three auto companies may not even exist.

The broad market may improve over the course of time, but at any given moment it’s a composite of some companies which will permanently falter and new releases yet to rise to their prime.

Lastly, inflation will savage the value of any long-term investment offering such meager percentages as an index-fund.

It’s a history lesson I suspect will be lost on most of our politicians.

Our government has displayed itself qute adept at proving that old adage about ignoring history and repeating it…only it’s us that’s doomed.

Yeah, it’s called “socialism”.

Got my fiddle and lots of ammo.

btw, americans should be less concerned about ze terroists; the ghost of an idea that we were threatened by them and warranted full military deployment has catalyzed all of these problems. it’s going to be interesting to see what those troops do once thier government cannot pay them anymore.

Siiiiigh. It’s only a matter of time before Galt comes into this comment thread, so here goes: “Get the hell out of my way!” [note, The "John Galt Plan," in its entirety]

I wonder how much longer the stock market as a long-term good investment can be taken for granted…is it just me or do the last 2 weeks feel like a baaad turning point?

Thus has it always been, and so shall it always be forever and ever amen.

Sebastian Mallaby starts from a false premise: the government has the incentive and desire to act on behalf of the taxpayer. His entire argument dissolves into irrelevance from there. Notice where it is published too, that should be a huge red flag.

Taxpayer = armed robbery victim

Name one armed robber who considers the victim. I’ll wait.

Is there a name for “reverse” socialism where the poor support the rich at gunpoint? Slave state?