I had the pleasure recently of attending a brilliant lecture put on by Dick McDonald of the Ownership Society Institute. The Plan is called “Rise Up America.”
http://hstrial-rmcdonald1.homestead.com/
http://hstrial-rmcdonald1.homestead.com//the–usa–revolution.html
I did not take notes when Dick McDonald spoke because I was hanging on every word.
Mr. McDonald was a tax attorney for wealthy celebrities. As he said, he spent 30 years helping the rich get richer. Now he is older, and he wants to help everybody get richer. He truly believes that the same tools the wealthy use to protect and grow wealth are available to us all. More importantly, the numbers back him up.
Mr. McDonald is offering a financial plan for America, and for Americans. The plan is so simple, yet it requires accepting some basic premises that many people refuse to accept.
The first premise is that the stock market works.
Liberals can claim until they are blue in the face that the stock market is a “risky scheme,” but this risky scheme, even counting bear markets and the 2008 financial crisis, is the best long term investment in existence. Treasury Bills give people a safe haven. Yet for young people, T-Bills are a dead end. Inflation eats up any potential returns. The stock market is a better hedge against inflation.
People like to point out that 2008 is a perfect example disputing concepts such as asset allocation and “buy and hold.” These people are “cherry picking.” Talk to me in several years before declaring a new way to reinvent the wheel.
Money is taken out of my paycheck every two weeks to be put into Social Security. Social Security is the Bernie Madoff of investments. It is a government pyramid scheme.
When FDR set up Social Security, it was a brilliant program and a money maker. To give people payments at age 65 when the average age is 63 is what life insurance companies have done for decades. FDR simply studied the actuarial tables. Yet now the average life expectancy is 78, and the retirement age has barely risen. The program is a money loser.
If anybody doubts the ability of the private sector to function better than government, look at insurance companies adapting their actuarial tables to fit changing conditions. Companies that are beholden to shareholders have a beeter incentive to succeed than governments that occasionally face voters.
The second concept to accept is that Supply Side Economics works. Mr. McDonald was very close with the late Jack Kemp. He has lived and breathed Reaganomics, or to be more accurate, Kemponomics.
Supply side in practice gets attacked because it is not always carried out properly. Tax cuts in marginal rates are to be offset with spending cuts. In the 1980s, liberal congresses enacted the tax cuts immediately while delaying the spending cuts, before canceling them altogether. Supply Side Economics works brilliantly when it is carried out properly. President Reagan and President George W. Bush both enacted the tax cuts, only to face congresses that spent into the stratosphere. Mr. Bush in particular had to face a pair of wars, but he did not veto enough bills. Nevertheless, the tax cuts worked perfectly.
The third and most important thing to remember is that people take care of what they own. A home owner will take better care of their home than a renter. People take better care of their home furniture than their office furniture. I am more cognizant about turning lights off in my home now that I am paying the electric bills. I am also neater.
In 1992, in the wake of the savagery of the LA Riots, it was pointed out by more than one writer that people do not burn what they own.
Ownership gives people dignity. Beyond money, it provdes a feeling of self-worth.
America is the land of entrepreneurship and owenrship. Whether it be owning homes, businesses, or even the tiniest slice of this world, that slice becomes a valuable piece of the world pie.
The government does virtually everything wrong. Outside of the military, what does government do well?
The Post Office, while often unfairly maligned, cannot match the efficiency of Fedex.
The Department of Motor Vehicles and the Internal Revenue Service may be vastly improved, but they were so far down that up was the only way to go.
From the agricultural revolution to the industrial revolution to the third wave of the technological information revolution, America has always been about individual ingenuity.The business of America truly has been business.
Yes there have been downsides, but Bernie Madoff is the aberration in a culture that includes Jack Welch, Bill Gates, Michael Dell, Andy Grove, John Chambers, Sam Walton, Henry Ford, JP Morgan, and so many others.
Investing in the stock market is patriotic. It shows a belief in corporate America. Yet this is not blind altruism. Corporate America gets maligned during bad times, but provides more during good times than any government could.
Dick McDonald is not offering anything lofty. The concepts of compound interest and the time value of money are not new. Yet so many people are afraid.
Benjamin Franklin once said that “those who sacrifice liberty for safety deserve neither.” He was speaking about the right to own guns. Yet those remarks are just as truthful when choosing to invest in T-Bills over stocks.
Seniors can keep their current plans under the McDonald plan. Yet young people today can start investing in mutual funds. They have to.
Otherwise there will be nothing left to grow, as inflation renders T-Bills useless.
People can still have their other investments. Yet as other countries continue to out-save us, they will then have more money to spend. They will overtake us.
The ability for America to remain a military superpower requires that we remain an economic superpower.
We need to unleash corporate America, and invest in corporate America. We need to be corporate America on an individual level.
We need to become an ownership society.
We need to Rise up, America.
Our children and grandchildren will thank us.
eric
“Money is taken out of my paycheck every two weeks to be put into Social Security. Social Security is the Bernie Madoff of investments. It is a government pyramid scheme.”
Our good host obviously doesn’t know what a “Pyramid Scheme” is. Perhaps he’s just been lied to about it so much, he just doesn’t know any better. Conservative pundits and pols lie about Social Security all the time. Please allow me to educate you on the subject (though I really shouldn’t have to educate a man who works in the financial sector on such a commonly known subject).
A Pyramid Scheme is basically a fee-for-particpation scam in which people recruit other people into an ostensible scheme with the promise of returns or products that do not exist and will never come. The fees trickle up the pyramid toward the top with those at the very bottom never receiving any recompense. This scheme is limited by the number of people who participate.
Social Security is a transfer of wealth welfare program in which young people constantly pay a tax for a stipend to old people. It’s pretty cut ‘n dry. The program was instituted after the stock market, as it’s known to do once in a while, crashed and millions of pensioners and other investors lost their retirement income. Prior to Social Security the elderly in America were among the poorest demographics in the developed world. They are now comfortably among the most secure. Without Social Security, millions and million of elderly people would be so poverty stricken as to be indigant – literally out on the streets, or burdening already stressed working class families beyond their resources.
Suffice to say, calling Social Security a “Pyramid Scheme” is completely, inanely inaccurate. And ridding society of Social Security would be a disaster and lead to the sort of social upheaval we saw in the 1930’s, when communism and fascism became popular cuases in America in direst reaction to the failure of the Invisible Hand to fully secure a stable society. Just. Plain. Stupid.
As for the program being a “money loser,” that is simply a non sequitor. It does not exist to make money. It exists purely to prove security to the society (hence the name of the program). As for it’s actuarial tables and it’s future, the only problem with the program is the way the funds are accrued: a regressive, flat tax on a limited amount of income. If the FICA cap were removed, let alone if the tax was progressive, Social Security would be solvent for as long as we are a developed nation.
“If anybody doubts the ability of the private sector to function better than government, look at insurance companies adapting their actuarial tables to fit changing conditions.”
Oh riiiiiight! Let’s look at them! AIG is doin’ great! State Farm STILL hasn’t paid even half the Katrina moneys! Insurance companies regularly get caught committing crimes to deny claims! Great example! The overhead of private health insurance is TEN TIMES the overhead of public health programs! Great example! Completely idiotic.
“The second concept to accept is that Supply Side Economics works.”
LOL!!! Every time you cons employ “supply side economics” (Voo Doo Economics) the economy collapses within a decade. The 1920’s, 1960’s, 1980’s, 2000’s… You guys just never learn. Conservative “economists” are all liars and morons. Supply and innovation, enterprise and entrepeneurialism are all driven by DEMAND. 2/3rds of our economy is CONSUMER SPENDING. We are living in a DEMAND SIDE ECONOMY. And this is why “supply side economics” always fails. Anyone who thinks otherwise is macro-economically illiterate.
The rest of this post is even more disappointing. The post office is a huge success. It’s efficiency is proved by it’s popularity. The stock market is a PART of our economy – not the be all and end all. And forcing public money into it, as would be done by “privatizing” social security, flies in the face of basic Smithian capitalist principles. Only those people who knowingly and wisely invest in the stock market should do so. The rest of the economy is small and/or privately owned businesses and it is certainly just as “patriotic” to engage in that sector as any other – including and especially the public sector.
The IRS was doing fine until Reagan and the sleazy cons of the ’94 “revolution” came along and gutted the agency, rendering it unable to keep up with tax cheats. DMV’s vary from state to state, region to region, but are a necessary public function.
“Ownership” is fine, but we can’t force it. Again, it contradicts Smithian principles. Ownership will come with a society that invests in and protects rights and the promotion of opportunities. A society that invests wisely as much as possible in it’s physical and institutional infrastructure, that promotes equal opportunity and class mobility, will naturally become an “Ownership Society.” But there’s not much we can do to force the issue. If this recent mortgage meltdown is any clue, anyone should see that. Loose credit a unegulated markets will only promote an ownership society to a point – and then it will crash: LIKE A REAL PYRAMID SCHEME.
JMJ
Like Madoff, the SS I recive in 12 years will be paid by my son. Its not the money I put into it 40 years ago. Nor do I collect any appreciation or interest on it.
Participation for anyone with a printed paycheck is almosyt always not an option.
Owning my own house and business changes everything, Those who insist on living off the government teet are no doubt going to defend that teet with any logic available, no matter how ridiculous.
The bottom line is that government screws up just about every buck it touches and if it werent for a viable private sector that actually multiplies money in real dollars there would be no teet to suck on.
Liberals are so apt to eat themselves
In 1980, I invested heavily in the stock market. I averaged down,
thanks to the poor advice of my broker. The rest is history. Interest rates
were through the roof. Eventually, the US instituted price controls on most everything, including retail items, and rents.
After price controls were taken off, guess what happened to prices.
It doesn’t take a rocket scientist to understand why.
Stocks were at 14,200 just 2 years ago…they dropped thousands of points in one year. Trillions in paper profits were lost to investors. 401Ks
were crucified.
But, as I told a friend, these were not paper profits or losses, they were actual losses.
Since then, the markets have bounced back somewhat, for anyone
who didn’t panic and sell earlier.
The stock market, and I disagree with Eric here, is a crap shoot.
It has no history. It’s investment benefits are speculative.which is
what it is all about. Or as Oprah said, I’d rather put my money into
real estate, having some control.
Control? The truth is, other than death and taxes, nothing is definite.
It’s all risk.
As far as the government, I agree with Eric, that other than the military
(and paying civil servants a guaranteed salary), the govt sucks.
Let’s take the post office. I understand that it may only operate 5 days week. Three cent stamps are now..well you know. Hundreds of post offices are being closed. Perhaps it’s just competition from the Internet?
I send emails often..and save that postage..but do pay for my ISP. Soooo, maybe I should add that in to my costs? Hows about it?
The IRS is the most efficient run Federal agency in the country, with
over 125,000 employees, and over 30 service centers..and the largest
computer anywhere.
But get this: the tax gap is 15% of the budget. In 1994 (see Tax Gap
on the Net), it was 350 billion, ( of 2.4 trillion budget).
This is tax never collected, that the IRS would have been paid had:
everyone filed tax returns, paid their taxes shown on their returns,
AND not filed fraudulent returns.
Of the 350, the IRS, through it’s activities, (collections, audit, taxpayer service, bankruptcy, estates, etc.), collected 50b. I failed to mention
the CID people, (criminal investigation division), which scares tens of thousands and puts into federal prisons about 3,000 yearly.
Sooooooo, roughly 300b never gets paid, or enough to pay for 3 times
the cost of health care for the uninsured, most of whom are illegals or
simply don’t want to see doctors under qualified plans.
It was pointed out that a former President is responsible for the demise
of the IRS, not true?
The GM Leasing Act, is responsible. That was the result of several Federal
agents violating a person’s 4th amendment rights, to search and seizure.
Eventually, the Supreme Ct decided with the IRS, but did place a restriction on searches and seizure. They needed a warrant. Sound
familar?
For years afterwards, the IRS management was in a quandry, they simply didn’t know what to do? Should they levy and lien more, seize more..what?
Eventually, it was apparent that this confuson was motivating people NOT to file and paper, or file proper tax returns..so, the IRS started
becoming more aggressive.
The fault is also with Congress., which doesn’t want the IRS to get too
tough..it’s bad publicity for the govt’.
Tracking money earned beneath the table is also difficult, or nearly
impossible.
The IRS, while basically efficient, has built in faults.
For example, when affirmative action was ruled illegal within the agency, it continued to promote and hire based on race, etc. It openly violated
the law.
The IRS also disciminates against taxpayers. Ask any agent (who is willing
to tell the truth) whether some groups are more aggressively dealt with than others?
“Its those darn immigants”.
However, with all it’s faults, the IRS does influence the collection of
that 85%, mainly out of fear. It’s an irrational fear, but fear notwithstanding.
And what do many former IRS agents do, they go out and work in private industry, taking the “sting” out of collecitions, and becoming the taxpayer’s advocates (at whose detriment I ask?).
Social security is just that, social security. It is not the end all.
I am going to assume that the original planners looked 30 years down the road and understood that average life expectancy would increase.
I mean, give me a break.
SS is not a problem. A slight increase in the payroll tax would solve
the problem, OR, stopping the revenue from going into the general fund.
While ownership is important…renters do care for their property, and PEER pressure ( home owners on the block).
I was a registered Democrat..and saw the light. I am against socialism
in any form. Socialists, liberals, leftists…they are all “Liberal Fascists”, in one way or another. They take form the successful, and give to
the cheats..people who cheat themselves, cheat everyone else,
and yet pontificate about civil rights and equal opportunity. Or as
one liberal said to me..”How can I avoid paying taxes?”. Sure!
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I agree with most of what Dan Lev said, except I think he contradicted himself a little when it comes to the castration of the IRS by the GOP over this past generation, and – NO ONE IS “AGAINST SOCIALISM IN ANY FORM.” You want cops? You want firemen? You want a military? Then those are forms of socialism you want. Then there’s social sanction and reward. Social conservatives want all sorts of socialism to maintain that. Beyond that, true, secular conservatism is basically economic anarchy, but there is still SOME socialism that you most certainly and vociferously want.
JMJ
Economics. Every one has knowledgable arguments. Except me. All I know about economics is what I have experienced in my 63 years in job and consumer markets. If productive people have money they will spend it on the goods and services they need to operate their households and other concerns. If they have enough money to save and invest they will do so in the areas that appeal to them. When the productive people have money the economy is good and the economy grows. What ever puts money in pockets of the productive people is good for the economy. The producing people are the heart of the economy. If these people don’t have the money then…well, you get the picture.
Any thing that henders the producing segment of population from producing and exchanging is bad for the economy.
The so called leadership doesn’t understand this or they don’t care, I don’t know which is true. Either way the so called leadership is drowning us.
Toma
Toma, what do you mean by “productive people?” I think I know what you mean – you mean “wealthy people.” Many, many wealthy people are not “productive” at all. Is the factory line assembler not productive? The teacher? The fireman? The receiving clerk? The lumberjack? The short-order cook? Most people are quite productive, and their would be NO wealthy without them. The wealthy are a small minority of the world. They invest to produce some things, yes. But, like all people, being risk-averse, they actually contribute much less to the overall productivity of a society than they could. This is easily proven by looking at the second half of the twentieth century. Back in the 50’s and 60’s, when income tax brackets on the wealthy were up as high as 90%, the middle class expanded exponentially, the standard of living rose above most all our competitor nations, as did the real, tangible, productive, physical growth of the United States. From the 70’s on, the middle class stagnated, class mobility fell behind Europe, the tangible growth opf the nation came to a virtual halt, and all this even though the GPD kept rising. So, the truly “productive” class, the workers, kept working more and harder than those of other developed nations, but their rewards stagnated – even lessened. The wealthy became much, much wealthier, but their “productivity” stayed about the same, even lessening itself because of Free Trade and the ability of the wealthy to invest more abroad, import that production here, and then sell that product here to people who used to make those products domestically. Of course, the prices of those products fell, but so did the buying power of the working and middle classes. The two aspects are mutually dependent: if you take away the earning power of the domestic worker and give the production to the foreign, cheaper worker, the foreign cheaper worker gets a little richer but not richer enough to actually buy what they’re making, the domestic worker gets a little poorer, the price of the product goes down, but the buying power of the domestic worker goes down as well, thus the only real beneficiary of this policy is the wealthy invester who invests abroad. In every sense, non-progressive taxation and free trade are destroying the American way of life. In the distant future, when we are a third world country, no group will be hated more by Americans than todays wealthy neoconservative class.
JMJ
“Toma, what do you mean by “productive people?” I think I know what you mean – you mean “wealthy people.””
This is why I choose not to debate you.
I’m trying to stay away from this kind of dishonest debate. I’m getiing there, i’m not perfect, sometimes I take the bait and lower myself to this kind of discourse.
Jersey. TOMA DID NOT MEAN RICH PEOPLE !!!!!
I clearly understood that he “IN FACT” meant blue collar paycheck to paycheck Americans who actually make a tangeble physical product.
But you tried to switcg it on himas if its only you who sees those people and conservatives only care about wall street and investment moguls.
Bullsh*t jersey, grow the hell up !
Its unproductive, it pi$$es people off and it insults the intelligece of those who want real answers and solutions.
But as soon as someone excercises their right to voice an opinion other than yours you get all condescending and call them stupid.
I got news for you bub.
Theres a lot of really smart people out there that have been right and are smarter than you that hold opposite opinons.
Thats said it reneders the rest of that posting absurd and ludicris