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That all Men are born equally free and independent, and have certain inherent natural Right…; among which are the Enjoyment of Life and Liberty, with the Means of acquiring and possessing Property, and pursuing and obtaining Happiness and Safety. —Virginia Declaration of Rights (1776)
Indispensable to personal freedom is the liberty for each person to choose how to allocate and invest their time, labor and money as well as to own the gains made by these investments.
Recently, public workers have become more aware their pensions and healthcare programs are in very serious jeopardy. Elected city, county and state officials have made contracts with their employees, but are unable to fund their promises. Sadly, this is the great flaw of democracies. Politicians buy votes to get elected - for example promising great retirements to government union workers - but do not tax, invest or provide adequate resources to pay for their promises. [Read: Detroit & Stockton Bankruptcies Expose Democracy's Great Flaw - Short-term Politics Trumps Long-term Planning]
Unforeseen at the time of their elections, government workers in Detroit, Stockton, Chicago and many other cities are learning they have been duped by long-gone politicians. Clearly, this is immoral governance.
Then, compare the plight of government workers in Detroit, Chicago and Stockton to those employees in three counties in Texas, who opted out of Social Security by creating personal retirement accounts. [Read: Three Texas Counties Opted Out of Social Security]. In 30 years, the county workers in these three counties will retire with more money and better death and disability supplemental benefits than the public employees of Stockton, Detroit and Chicago.
Most importantly, the government workers of Galveston, Matagorda and Brazoria Counties own their retirement, and immoral, corrupt governance will not reduce or take away their nest eggs. These Texas counties chose private accounts and used professional money managers competing for the opportunity to invest their money. As a result, the employees are guaranteed a minimum rate of return.
Merrill Mathews in the Wall Street journal cites the better returns provided by professional money managers:
Those who retire under the Texas counties' Alternate Plan do much better than those on Social Security. According to First Financial's calculations, based on 40 years of contributions:
• A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan.
• A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.
• And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security versus $5,000 to $6,000 a month from the Alternate Plan.
As Galveston County Judge Mark Henry says, "The plan works great. Anyone who spends a few minutes understanding the plan becomes a huge proponent." Judge Henry says that out of 1,350 county employees, only five have chosen not to participate.
A saving and investing system has enormous benefits to all Americans, and ownership stops immoral and corrupt governance because investors protect and preserve their property as well as that of their fellow workers. In the three Texas counties, employees are receiving more money in retirement, which is obviously good. However, what's most important to every American is saving and investing – as opposed to taxing and redistributing by government – provides seed money which propels commerce and industry.
Personal accounts for retirement is absolutely essential for personal freedom and a vibrant society. America’s critical task is to end our corrupt political system and create personal accounts.