As we discussed in part one of this mini-series on the excesses of the modern welfare state, we’re all facing more taxes and potential cuts to pay for mandatory welfare programs such as Social Security. The latter, of which I once wrote a small history ( has been sold to citizens based on a shakey proposition: The welfare state’s crown jewel program will take care of all of us. And, by implication, since the government will take care of us in old age, why should we save?

So savings, which are heavily taxed, have dramatically declined over my lifetime (I’m 61). More worrisome, the generations behind us are being raised on the philosophy of the government must take care of all of us as embedded in programs such as Social Security and Medicare. But these programs, as Kerrey-Danforth warned, are unsustainable in their current forms. That is unless taxes are raised again—they have already been raised dozens of times over the past forty years—-or services are reduced.

Doing the latter would raise the hackles of millions of Americans who have been raised to believe that the government has a moral obligation to take care of them. That is even if the government is still trying to figure out how to do it without debasing the currency some more and running up even bigger deficits that will be passed on to generations unborn (I believe one of the principal problems with advanced welfare state democracies is that there are countless groups, that want the government to spend and spend. Their votes represent raw political power that can spook almost any pol.

Unfortunately, there is no special interest representing overlooked groups: Fetuses, the next generation of taxpayers, or today’s “Forgotten Man.” The latter is someone who doesn’t belong to a special interest group. He or she quietly goes about his or her business. This person only asks to be left alone so he or she can make a decent living.

Who is this person?

He is my father, mother and grandparents. He or she is your apolitical neighbor, too busy working to support his or her family and with little or no time to play the grand game of boodling, the great game of the modern democracy. That game can be summed up in one phrase: “Where’s mine?”

And that is the key to getting out of this welfare state mess that is plaguing most nations with declining births, slowing growth rates and increasing obligations to an older population that’s living longer. It is also plaguing large parts of a younger generation raised on the idea that the government will take care of them. Many of these young people are jobless.

We must move from a “the government will take care of me” philosophy to a society in which people control more and more private property, especially their retirement assets, which become more and more important as people, on average, live longer.

It’s not safe to trust a government to take care of your assets. History has proven that, when billions and trillions of government retirement assets are laying around for future use, governments—-both left and right—will use them for today’s political needs. That means paying off special interests so they can win today’s elections. It also means passing on the problem to the next generation. I detailed this sleazy political model in the in the first part of this series as I discussed the disastrous Social Security deal of 1972.

Americans, and Europeans and others in advanced welfare states, must have control over their retirement assets. That means when they “contribute” to their retirement plans they should have the option—-not be required—of investing their money. I would emphasize that people be allowed to privately invest their retirement money, but not be required to do so. There will always be some who want to continue with trusting the government to control their retirement savings. They should have that option, egregious though I believe it to be.

Although I believe that Social Security in the United States is an outdated, badly run system—one that overtaxes and never provides good returns—no one should be forced out of it. But, at the same time, no one should be forced to be part of it. That’s because many of us believe that, even with minimal study, that we would be better managers of our retirement assets than governments, which come and go and aren’t too public how taxpayers dollars are spent.


The effective rate of return of Social Security payments—what you will end up getting—is about one to two percent a year. The long term rate of return of the stock market is about nine percent. Over the long term, that makes a tremendous difference. (I have written elsewhere that even just getting one percent extra a year makes a huge difference over the long term. In seeking to achieving financial independence at any age, it’s very important to obtain the best returns).

More important than just better money management skills, the average investor is more concerned and careful about his or her property than any government can or ever can be. I’d rather trust myself, make mistakes and learn than allow any group of bureaucrats to make critical decisions about my life.

Again I emphasize, in my attempts to unravel the mistakes of the runaway welfare state, the model should be a voluntary one. Social Security, as poorly run as it is today, should continue to be available to everyone who continues to want it. However, a private model, in which people who want to run their own money because they earned it, should be able to invest their own money as they please.

In Chile, that’s what they did. The system ended up with most people investing their retirement money privately. It also greatly increased savings. And increasing the savings, the capital pool, is how economies improve and how living standards rise.

For many people managing their money is a frightening prospect, even though the government gives them back so little in their golden years. Nothing should change for them. However, for the rest of us, who resent being treated like children by parents who can’t properly manage their finances, we claim the right to run our own lives.

Please leave us alone and let us save for retirement. In most cases, I believe, we’ll do a much better job than those who insist that they know how to run our lives better than we do. But even if some of us don’t, our lives, our liberties and property belong to each individual. They don’t belong to the government that says it is well meaning but runs up trillions of dollars in bills that we and our children and children’s children will have to pay forever.

I don’t want a near bankrupt running my financial life, no matter how well meaning he says he is. In the words of the great W. C. Fields, who hated the income tax, “include me out.”

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Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post. The eBook version of his latest book "MoneySense" is available now for Free Download by clicking HERE

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