Dynamic government, mutating law

It’s ultimately a fool’s game to put any trust in a government program because the law, especially when created and enforced by an interventionist government, is necessarily dynamic. That means that you can’t count on the rules which presently influence your decisions remaining static since the rulemakers will change them any time they believe it will benefit them to do so:

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

The Bulgarian government has come up with a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.

A slightly less drastic situation is developing in Poland. The government wants to transfer of 1/3 of future contributions from individual retirement accounts to the state-run social security system. Since this system does not back its liabilities with stocks or even bonds, the money taken away from the savers will go directly to the state treasury and savers will lose about $2.3bn a year. The Polish government is more generous than the Hungarian one, but only because it wants to seize just 1/3 of the future savings and also allows the citizens to keep the money accumulated so far.

The fourth example is Ireland. In 2001, the National Pension Reserve Fund was brought into existence for the purpose of supporting pensions of the Irish people in the years 2025-2050. The scheme was also supposed to provide for the pensions of some public sector employees (mainly university staff). However, in March 2009, the Irish government earmarked €4bn from this fund for rescuing banks. In November 2010, the remaining savings of €2.5bn was seized to support the bailout of the rest of the country.

The final example is France. In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit. In this way, the retirement savings intended for the years 2020-2040 will be used earlier, that is in the years 2011-2024, and the government will spend the saved up resources on other purposes.

How many more places does this have to happen before Americans begin to realize that the same thing is absolutely going to happen with their local, state, and federal pensions, as well as their entitlement programs. The fact that government officials often refer to pensions and entitlements as “sacred obligations” doesn’t mean that they won’t eliminate the payouts or grab the funds, in fact, the need to place a legally meaningless adjective in front of the noun underlines the fact that they do not consider the legal obligations to bind them in any way.

Make that 5 of 8

Or, if you prefer to leave the non-economic prediction out of the equation, 4 of 7. In my review of my 2010 predictions, I noted that there were still two weeks left, the trend was down, and adjusted TOTLL was only $13 billion above my prediction of $6.3 trillion. In the December 22nd report, published today, TOTLL fell another $19.9 billion, ($22.1 billion from the revised 12/15 report).

That brings adjusted TOTLL down to $6.293 trillion, just enough to render the prediction correct if you are willing to remove the one-time $452 billion anomaly for which I have yet to see an explanation.

Book review: The Fuller Memorandum

The Fuller Memorandum, by Charles Stross
Ace (320 pages, $24.95, July 2010)

Charles Stross is the technocratic heir to H.P. Lovecraft. While he is probably best-known for his Singularity-inspired science fiction and has been known to dabble in committing the occasional fantastic indiscretion with his Merchant Princes series, Stross is unequivocally at his best when he combines his techno-savvy competence with unadulterated occultic horror. The Fuller Memorandum is the third of his Laundry series, which centers around the deeds of a British agent named, significantly enough, Bob Howard, who works for a branch of the English Secret Service in confronting evils that are much more dark and dangerous than anything James Bond ever had to face.

Having triumphed over die-hard trans-dimensional Nazis and grandiose villains with master plans, Bob and his wife Mo are forced to confront an evil, world-threatening plan to awake and unleash the demonic Eater of Souls in The Fuller Memorandum. The plot is convoluted and the squamous horror is amped up to eleven, as the strain of being forced to deal with the implacable darkness beyond the borders of our universe as well as the soul-crushing bureaucracy of the agency are beginning to wear heavily on both of them.

Read the rest at Black Gate.

WND column

The Fourth Government

In his dialogue “De re publica,” Marcus Tullius Cicero explained, though the fictionalized voice of Scipio Africanus, that there are three basic types of government. The first is the monarchy, in which the king rules. The second is the aristocracy, in which a select class of privileged delegates rules. The third is the democracy, in which the people rule themselves. Each type of government has its strengths and weaknesses, and through those weaknesses, a cyclical process occurs in which one type of government devolves into the next.