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| The Basics | Social Security flunks the fairness test
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When Social Security is put to a common ethical test, it fails on all four measures, including the inherent unfairness of increasing future generations tax burden by raising benefits now.
By Scott Burns
We're going to hear a lot about Social Security -- probably a lot more than we want to hear. We'll hear dozens of sophisticated arguments from major think tanks of the left and right. Some will argue to continue the largest and most important social program in our history unchanged. Others will argue that it needs a drastic overhaul.
Few will begin, as Charles Ramsey does, with a fundamental idea -- that Social Security fails a widely known ethical test.
4 big questions
The test is called the Four-Way Test of fairness. If you're a member of Rotary International, you know all about it. If you aren't a member of Rotary, this is a good time to learn. The Four-Way Test of fairness is a vital part of Rotary International, having been created in 1932 by Herbert J. Taylor. Taylor was also a business leader who wanted Rotarians to practice the highest possible ethical standards in their professional lives. He believed that high ethical standards were the key to business success -- and to the survival of a nearly bankrupt company he was asked to manage.
The test is remarkably simple. We would do well if every business in America replaced overwrought "mission statements" with these 32 words: "Of the things we think, say or do:- Is it the TRUTH?
- Is it FAIR to all concerned?
- Will it build GOOD WILL and BETTER FRIENDSHIPS?
- Will it be BENEFICIAL to all concerned?"
Charles Ramsey is a member of the Rotary Club in Athens, Texas. Now semi-retired, he was educated as a petroleum engineer and rose to become president and CEO of May Petroleum, a publicly held Dallas oil company that was acquired by another company in the mid-'80s. You don't have to talk with Ramsey very long to figure out that he combines the best analytical skills of engineering with the priority sense of a good executive.
I called him after he sent me a copy of his Rotary speech, wanting to learn how club members had reacted. Ramsey told me his main goal was to spur people to want to learn about the issue. "They were truly amazed by the numbers. That was the main reaction," he said.
And what about the Four-Way Test?
"No one thought it (Social Security) passed any part of it."
Social Security doesnt measure up
Here is how he posed the Four-Way Test:
On truth: "How many of you feel that the federal government and our media have consistently and completely told us the truth about these programs, including their fiscal and generational imbalances?"
On fairness: "How many think it is fair to vote for ever increasing benefits for people over 65 and leave the whopping bills for people who can't even vote or have not even been born? How many think it is fair that many corporate executives are going to jail today for misstating their financials and our federal government is not being held to the same financial accounting standards that it requires of businesses?"
On good will and better friendships: "How many of you still working feel a lot of good will knowing that 15.3% of your payroll is going to pay for Social Security retirement and Medicare benefits for Warren Buffet, Ross Perot Sr. and Boone Pickens, just to name a few? How much good will do you think your children and grandchildren are going to feel toward you when their payroll taxes take off toward 20% so that you can enjoy these benefits?"
On being beneficial for all concerned: "Will it be beneficial to all concerned if these entitlement programs eat up a third or three-quarters of all income taxes, resulting in massive cuts in our budget for national defense and homeland security, or a massive increase in our national debt? Will it be beneficial to all concerned if funding these programs takes such a large share of our GDP that our economy stops growing, our debt gets out of control, and the prime rate gets back to 18%?"
You can obtain a copy of his presentation -- a very good primer on the problems Social Security and Medicare present -- by visiting my Web site.
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