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originally posted by: coldkidc
Because I don't feel the government is ever the most efficient way to do something...especially when it comes to money.
I think people would see a lot better ROI if there was competition for their money.
It is plain to see in the preceding chart that the average mutual fund investor has seriously underperformed against a variety of asset classes and has barely exceeded the rate of inflation. The average fixed-income investor has lost to inflation, losing valuable purchasing power. Why does the average investor underperform?
Investors may only have themselves to blame. According to Dalbar’s QAIB, investors make poor investment choices that hurt their investment returns. These decisions, including when to buy and sell, are often driven by emotion.
The simple refutation of alleged government inefficiency is the existence of natural monopolies. The most efficient way to do a number of things is to eliminate competition and do these things by a government-sanctioned monopolistic company or by the government itself. There are many utilities which operate in this way - the infrastructure costs of competition are impractical and inefficient. Ergo, the government being utterly inefficient is a myth.
Consider a single man who earns the average wage throughout his career ($43,100 in 2010 dollars), works every year from age 22 to 64, and then retires at age 65 in 2010. Over his lifetime he has paid $345,000 into the system. But he is likely to get back $72,000 more than that, or $417,000 in Social Security and Medicare payouts, according to recent Urban Institute calculations
Single man earning the average wage ($43,500 in 2011 dollars) turns 65 in...
1960 Paid:$18,000 Benefits:$128,000
1980 Paid:$104,000 Benefits:$265,000
2010 Paid:$352,000 Benefits:$432,000
2030 Paid:$485,000 Benefits:$587,000
originally posted by: coldkidc
a reply to: Greven
The socialist drivel I was referring to was the suggestion that eliminating competition somehow streamlines the process...that is most definitely NOT a capitalistic concept
And as far as the comment about the average investor...
I am positive you haven't taken the time to do the math or you wouldn't have even brought it up.
So you think that 2.6%/year is LOUSY?
Let's compare it to the return the government is giving you then...
Will You Get Back Your Social Security Taxes in Retirement?
Consider a single man who earns the average wage throughout his career ($43,100 in 2010 dollars), works every year from age 22 to 64, and then retires at age 65 in 2010. Over his lifetime he has paid $345,000 into the system. But he is likely to get back $72,000 more than that, or $417,000 in Social Security and Medicare payouts, according to recent Urban Institute calculations
Just to give you some perspective - that same $345,000 paid in over 43 years ($8070/year @ 7.5% ss contrib rate) @ the average individual investor return annually of 2.6% would have been $641,178.17 instead of the projected government return of $417,000...
That's about $225,000 left on the table...that's the difference between "making it" & living well during retirement.
All I'm saying is there's a better solution than we have now...the system as it is...is broken.
You should look at the source of that data(pdf): Single man earning the average wage ($43,500 in 2011 dollars) turns 65 in... 1960 Paid:$18,000 Benefits:$128,000 1980 Paid:$104,000 Benefits:$265,000 2010 Paid:$352,000 Benefits:$432,000 2030 Paid:$485,000 Benefits:$587,000 See some funny things with that?
a reply to: coldkidc
Let me give you a clear example of where the elimination of competition is more efficient: radio. Competition is perfectly fine - as long as no two broadcasters operate too close together. Remember, radio is a spectrum of different frequencies. The problem is that two transmitters operating on/near the same frequency can drown each other out to various extents, leading to interference and a damaged or destroyed product (the broadcast). Thus, inefficiency brought about by competition.
The concept of a natural monopoly is not socialist but rather practical. It exists quite regularly in technology - look at how dominant Microsoft Windows has been across the consumer and business sector in desktops - well in excess of 80% of the market. Other sectors are more competitive - UNIX/Linux are more popular in academia and as servers.
The elimination of competitors is not usually done by force, but rather the cost to enter (or expand in) the market is so steep that few try. Imagine twenty different companies each trying to lay sewage lines to your house. Then another twenty different companies each lay water lines. Then twenty more electrical companies run separate poles and lines to your house, as well. It would be insanity - and that's why it doesn't happen.
Google is breaking into the ISP market because it has so much money and it would benefit them quite a bit. The problem they've had is that private monopolistic companies have created exclusive contracts with existing regulated natural monopolies (power/phone companies) for pole access. Doing without pole access is extremely costly; it still ain't cheap to run lines with pole access, but it's far and a way cheaper than underground.
How did you adjust for life expectancy?
We used actuarial tables to adjust for the probability of living in all years after age 65. So, say the benefit is $20,000 a year. We assume that at age 65, 100 percent of the cohort having lived to 65 gets $20,000. At age 66, say, 98 percent of the group is still alive and receives the $20,000 benefit, and at age 67, 96 percent receives it. Roughly speaking, we multiply the benefit each year by the expected probability of being alive, convert to present value, and add the numbers up for each year to determine the expected lifetime value of benefits. This is similar to what an insurance company would do in determining how much to charge up front for an annuity that would stretch over one’s future life.
The "raw" average wage, computed as net compensation divided by the number of wage earners, is $6,009,831,055,912.11 divided by 150,398,796, or $39,959.30. Based on data in the table below, about 66.2 percent of wage earners had net compensation less than or equal to the $39,959.30 raw average wage. By definition, 50 percent of wage earners had net compensation less than or equal to the median wage, which is estimated to be $26,363.55 for 2010.