Opinion of Forced Savings/Insurance Schemes
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  Opinion of Forced Savings/Insurance Schemes
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Author Topic: Opinion of Forced Savings/Insurance Schemes  (Read 4437 times)
DC Al Fine
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« on: August 16, 2014, 09:02:02 AM »

Governments often force their citizens to save money or purchase insurance. Some common examples are Social Security, Obamacare, and requirements to purchase auto insurance if you own a car. What do you think of these policies?

I used to be against them, but as I've gotten older and experienced people's profligacy, I've changed my mind. Forced savings and insurance are an important part of of any welfare state, reducing its cost and keeping well off spendthrifts from becoming burdens on society. The 90th percentile of household income is about $150 000 but someone in that household can still reach retirement without any savings, or be bankrupted by an at fault car accident. Forced savings and insurance schemes help prevent those situations.

What are your thoughts?
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Simfan34
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« Reply #1 on: August 16, 2014, 09:38:26 AM »

Freedom schemes; see the Singaporean Central Provident Fund.
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Antonio the Sixth
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« Reply #2 on: August 16, 2014, 10:07:06 AM »

Insurances directly provided by the State are much better.
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Mordecai
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« Reply #3 on: August 16, 2014, 10:24:09 AM »

Freedom Policies
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Nathan
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« Reply #4 on: August 16, 2014, 11:25:38 AM »

Freedom Policies, but I agree with Antonio.
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Sol
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« Reply #5 on: August 16, 2014, 01:40:08 PM »

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HagridOfTheDeep
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« Reply #6 on: August 16, 2014, 06:30:24 PM »

I'm okay with them if I'm guaranteed that I or my family will get back every penny that I put in. This has less to do with something like Obamacare and more to do with something like the Canada Pension Plan.
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DC Al Fine
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« Reply #7 on: August 16, 2014, 07:17:40 PM »

Insurances directly provided by the State are much better.

Could you elaborate a little bit? Does something like Social Security or Canada Pension Plan, where the state forces you to pay into the plan which they administer meet your definition of "provided by the state"? Or do you mean this sort of thing should be paid out of general revenues?
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Antonio the Sixth
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« Reply #8 on: August 17, 2014, 06:01:55 AM »

Insurances directly provided by the State are much better.

Could you elaborate a little bit? Does something like Social Security or Canada Pension Plan, where the state forces you to pay into the plan which they administer meet your definition of "provided by the state"? Or do you mean this sort of thing should be paid out of general revenues?

I'm not familiar with the Canadian system, but I'd say that the definition is met if no for-profit entity is involved in the process. I would say a universalistic system paid for through progressive taxation is superior to one based on individual payments, but that's a comparatively minor issue.
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Deus Naturae
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« Reply #9 on: August 17, 2014, 07:06:30 AM »

Forced saving schemes are bad but for different reasons depending on what is being done with the saved funds. If they're just being kept in a safe for the saver, forced saving is far inferior to voluntary private saving because while the former only benefits the saver, the latter benefits all of society. When savings are deposited into a private bank account, the funds can then be lent out and invested in production, which benefits large amounts of people. Forced government saving reduces the incentive and ability to engage in productive private saving, thus denying society the benefits thereof.

If the forcibly saved funds are actually being invested in the economy, that's better, but still bad. There is no specific amount that every person needs to save; people should make their own decisions based on their personal situations and the amount they can reap in the future from different investments. If people received the money stolen from them via payroll taxation right now rather than at the point of retirement, they might want to save some of it, but they might also want to spend it on other things,  like putting their kid through college. Alternatively, they might want to invest all of it for their retirement, but they would prefer to invest it in something that will give them a higher return than Social Security. So, circumstances differ for each person, and it's better to let them handle the money than to treat them like children who needs to have decisions made for them by the state. It's true that that people who don't save can end up on welfare, but that's more of a moral hazard argument against the welfare state than an argument for forced saving.

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ElectionsGuy
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« Reply #10 on: August 17, 2014, 06:28:45 PM »

Terrible policies, what Dues said.
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TNF
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« Reply #11 on: August 17, 2014, 10:11:21 PM »

I'd rather them not cost the user anything, but I'd take them over the private sector any day of the week. Ideally one would retire on a livable income provided without charge to them, subject to no tax, and adjusted with the cost of living.
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Lief 🗽
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« Reply #12 on: August 17, 2014, 11:38:12 PM »

the money stolen from them via payroll taxation

lol
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SPC
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« Reply #13 on: August 18, 2014, 11:35:56 AM »


It is a bit counterproductive to tax earnings if the objective is to encourage savings. Taxing consumption would be a superior method of encouraging savings, and slightly less regressive as well. In any event, I concur with Deus's reasoning that, while the objective of encouraging savings is noble, the implementation of it by its very nature diverts such savings from more productive uses. Of course, it is peculiar that there is overlap between the individuals that advocate Social Security on the basis that it is necessary in order to ensure that people save money for retirement seem to have no problem with a monetary system that is inflationary by its very nature, thus both encouraging present consumption at the expense of saving and robbing Social Security recipients from receiving the full value of their coerced savings.
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Stranger in a strange land
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« Reply #14 on: August 18, 2014, 01:15:40 PM »

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« Reply #15 on: August 20, 2014, 12:41:10 PM »


6.2% taken out of a $7.25/hr worker is morally close to the 'theft' category.
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King
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« Reply #16 on: August 20, 2014, 02:25:48 PM »

Shame all those people who remember how awful life was before Social Security aren't still around to smack internet libertarians across the head.
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Goldwater
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« Reply #17 on: August 20, 2014, 10:30:00 PM »

In general, HP.
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Mordecai
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« Reply #18 on: August 26, 2014, 02:01:11 AM »

Forced saving schemes are bad but for different reasons depending on what is being done with the saved funds. If they're just being kept in a safe for the saver, forced saving is far inferior to voluntary private saving because while the former only benefits the saver, the latter benefits all of society. When savings are deposited into a private bank account, the funds can then be lent out and invested in production, which benefits large amounts of people. Forced government saving reduces the incentive and ability to engage in productive private saving, thus denying society the benefits thereof.

If the forcibly saved funds are actually being invested in the economy, that's better, but still bad. There is no specific amount that every person needs to save; people should make their own decisions based on their personal situations and the amount they can reap in the future from different investments. If people received the money stolen from them via payroll taxation right now rather than at the point of retirement, they might want to save some of it, but they might also want to spend it on other things,  like putting their kid through college. Alternatively, they might want to invest all of it for their retirement, but they would prefer to invest it in something that will give them a higher return than Social Security. So, circumstances differ for each person, and it's better to let them handle the money than to treat them like children who needs to have decisions made for them by the state. It's true that that people who don't save can end up on welfare, but that's more of a moral hazard argument against the welfare state than an argument for forced saving.



It's worked well for Australia.

https://www.youtube.com/watch?v=ILsmaeZxQSk

https://www.youtube.com/watch?v=F6zOn7vjy9s
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politicus
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« Reply #19 on: September 15, 2014, 07:02:12 PM »

Oppose on principle. Its not something the government should decide.
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Franzl
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« Reply #20 on: October 01, 2014, 02:28:58 PM »

Oppose on principle. Its not something the government should decide.

Isn't it though? Assuming we don't want to let people go hungry, the state will have to provide a certain amount of care to ensure a proper living standard. And if people are aware that this will be provided, doesn't that give them an incentive to spend wastefully before retirement?

Seems like the debate on health insurance. As long as we aren't willing to let people die in the streets, it's certainly society's (i.e. the state's) business that people are obligated to have a minimum level of health protection.

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Deus Naturae
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« Reply #21 on: October 01, 2014, 02:31:53 PM »

Oppose on principle. Its not something the government should decide.

Isn't it though? Assuming we don't want to let people go hungry, the state will have to provide a certain amount of care to ensure a proper living standard. And if people are aware that this will be provided, doesn't that give them an incentive to spend wastefully before retirement?

Seems like the debate on health insurance. As long as we aren't willing to let people die in the streets, it's certainly society's (i.e. the state's) business that people are obligated to have a minimum level of health protection.
The state is not the same thing as society. That's an absurd suggestion.
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Franzl
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« Reply #22 on: October 01, 2014, 02:34:19 PM »

Oppose on principle. Its not something the government should decide.

Isn't it though? Assuming we don't want to let people go hungry, the state will have to provide a certain amount of care to ensure a proper living standard. And if people are aware that this will be provided, doesn't that give them an incentive to spend wastefully before retirement?

Seems like the debate on health insurance. As long as we aren't willing to let people die in the streets, it's certainly society's (i.e. the state's) business that people are obligated to have a minimum level of health protection.
The state is not the same thing as society. That's an absurd suggestion.

The two aren't equivalent, but of course the state represents society in a democratic system. The entire welfare state is based upon society making a concious decision to provide protection against life's risks. Or in more comprehensive welfare states, to provide certain services as a right of citizenship because society has collectively decided that those services should be universal and given to everyone.
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politicus
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« Reply #23 on: October 01, 2014, 02:44:59 PM »
« Edited: October 02, 2014, 08:01:38 AM by politicus »

Oppose on principle. Its not something the government should decide.

Isn't it though? Assuming we don't want to let people go hungry, the state will have to provide a certain amount of care to ensure a proper living standard. And if people are aware that this will be provided, doesn't that give them an incentive to spend wastefully before retirement?

Seems like the debate on health insurance. As long as we aren't willing to let people die in the streets, it's certainly society's (i.e. the state's) business that people are obligated to have a minimum level of health protection.


Forced savings is a misfit. You either confiscate income as taxes or let people keep it. Letting the government interfere with how you use income that has already been taxed is a slippery slope where government gets increasing control over the citizens life choices.

I agree there needs to be a minimum standard of living, but government will simply have to pay a meagre "survival pension". Its just not the government's business how you should spend your income after having paid taxes. Lets say you decide you want to live your life in a way that makes it extremely unlikely that you will ever get old, doing lots of extreme sports and other highly dangerous activities. Should the government then be allowed to "confiscate" part of your income to a purpose you knew would never be relevant for you? That would be an unacceptable intrusion in personal freedom in my view.

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Franzl
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« Reply #24 on: October 01, 2014, 04:13:54 PM »

Oppose on principle. Its not something the government should decide.

Isn't it though? Assuming we don't want to let people go hungry, the state will have to provide a certain amount of care to ensure a proper living standard. And if people are aware that this will be provided, doesn't that give them an incentive to spend wastefully before retirement?

Seems like the debate on health insurance. As long as we aren't willing to let people die in the streets, it's certainly society's (i.e. the state's) business that people are obligated to have a minimum level of health protection.


Forced savings is a misfit. You either confiscate income as taxes or let people keep it. Letting the governmet interfere with how you use income that has already been taxed is a slippery slope where government gets increasing control over the citizens life choices.

I agree there needs to be a minimum standard of living, but government will simply have to pay a meagre "survival pension". Its just not the government's business how you should spend your income after having paid taxes. Lets say you decide you want to live your life in a way that makes it extremely unlikely that you will ever get old, doing lots of extreme sports and other highly dangerous activities. Should the government then be allowed to "confiscate" part of your income to a purpose you knew would never be relevant for you? That would be an unacceptable intrusion in personal freedom in my view.



You do have a point there. It's difficult to draw a line once you start. The same argument could be used to ban cigarettes or what not because of public health costs.
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