Robbing Peter to Pay Peter
When Peter entered the world of work, his Uncle Sam arranged to provide government services on behalf of Peter at a cost to Peter of $1.00 a year. Sam also arranged to handle a retirement/insurance plan for his nephew for another annual payment of $1.00. Sam said the plan would pay Peter if he became disabled and also would protect his widow and children to specified degrees in the event of Peter's disablility or death. Once Peter reached retirement age, the plan would pay retirement benefits as elected by Peter and his wife. To get the same benefits as under the Sam plan from someone else, Peter figured he would have to pay $1.05, so Sam's plan sounded pretty good to Peter. Peter figured Sam was a sensible Uncle and would probably invest the plan dollar at the prevailing $1.05 annual return.
But as retirement age appeared on the horizon, Sam came to Peter and confessed that he had not been sensible. The Government services Sam provided were not even worth the $1.00 paid, because Sam had been more interested in lining his own pockets and those of some of his friends and he had not been a good steward of the money. Sam had always provided Peter with copies of the annual government budget, but he purposely made them as complicated and confusing as possible, so Sam could not fully understand where his money was going. In fact, it turned out the government was actually costing $2.00 a year, so there was a $1.00 shortfall every year.
After getting over the shock and trying to control his anger towards his Uncle, Peter asked about the shortfall. Sam swallowed hard and told Peter that he had made up the shortfall each year by using the money from the retirement/insurance program. Peter asked if Sam meant he had "robbed" money from the plan. No, Sam assured him, he had only borrowed the money and put IOUs in the plan to cover it. Peter told Sam he would never have agreed to such an arrangement if it had been explained to him, but he guessed as long as the IOUs got paid, that part of it could work out OK. But Sam did not look reassuring, and when questioned further, Sam admitted that he had put the interest rate on the IOUs unreasonably low, and now he could see that when the IOUs were paid there would not be enough money in the plan.
At this point the door opened and a beady-eyed man in a business suit strutted in wearing cowboy boots. He waved casually to the four corners of the room and flashed a confident smile which nevertheless felt untrustworthy to Peter, as if this man were an incompetent student about to ace a test because someone had snuck him the answers beforehand. Sam introduced the man as George, who Sam said had somehow assumed a position of authority on working out this problem, even though knowledgeable people who had spoken to him about it said his thought processes appeared befuddled. George glad handed Peter, slapped him on the back and immediately nicknamed him "Dick", because George chuckled, Dick is another name for Peter. When Peter didn't join George in laughing, George immediately pursed his lips and squinted his eyes as if seriously pondering something and then told Peter not to worry about this problem, because George had found the Lord and the Lord wanted George to take care of "Dick's" problem.
George told Peter the problem had to be solved pronto, by changing the plan. You see, by now some of Peter's kids were working and had started paying into the Sam plan also. Instead of Peter's kids putting a dollar in the plan, George said they should give a lot of it (he did not say how much exactly) to some friends of his (he did not say exactly who) to manage (he did not say for what fee) it in order to earn (he did not say guarantee) a better return (he did not say how much) than the original Sam plan. That way Peter would have more money for retirement (George did not say anything about disability or death benefits for Peter, his kids or their family members). But where would the retirement money for Peter come from if his plan account was already short and if his kids were going to be paying less into the original plan, Peter asked? We'll use some of the money from your kids, George answered. But that won't be enough and then won't their plans be short changed? George looked perturbed and mumbled some incomprehensible spontaneity about mandates, protecting people from evil and believing what he says, because he believes it himself.
Peter managed to excuse himself from Sam and George. He decided to study this all and discuss it with his wife and children. He suspected George and people like him were probably the ones who turned Sam's head and got him to line their pockets and Sam's with budgetary trickery and irresponsible investment of the plan money. If only Sam had been forthright and stuck to the plan, Peter thought, budgets could have been fairly worked out through the years and the plan reasonably modified if necessary. Now, Peter figured, it would be up to him and his family to straighten out Uncle Sam and the budgets, adjust the plan as needed and avoid George and his friends like the plague.
This story is true. Peter's name has been changed because he is innocent
But as retirement age appeared on the horizon, Sam came to Peter and confessed that he had not been sensible. The Government services Sam provided were not even worth the $1.00 paid, because Sam had been more interested in lining his own pockets and those of some of his friends and he had not been a good steward of the money. Sam had always provided Peter with copies of the annual government budget, but he purposely made them as complicated and confusing as possible, so Sam could not fully understand where his money was going. In fact, it turned out the government was actually costing $2.00 a year, so there was a $1.00 shortfall every year.
After getting over the shock and trying to control his anger towards his Uncle, Peter asked about the shortfall. Sam swallowed hard and told Peter that he had made up the shortfall each year by using the money from the retirement/insurance program. Peter asked if Sam meant he had "robbed" money from the plan. No, Sam assured him, he had only borrowed the money and put IOUs in the plan to cover it. Peter told Sam he would never have agreed to such an arrangement if it had been explained to him, but he guessed as long as the IOUs got paid, that part of it could work out OK. But Sam did not look reassuring, and when questioned further, Sam admitted that he had put the interest rate on the IOUs unreasonably low, and now he could see that when the IOUs were paid there would not be enough money in the plan.
At this point the door opened and a beady-eyed man in a business suit strutted in wearing cowboy boots. He waved casually to the four corners of the room and flashed a confident smile which nevertheless felt untrustworthy to Peter, as if this man were an incompetent student about to ace a test because someone had snuck him the answers beforehand. Sam introduced the man as George, who Sam said had somehow assumed a position of authority on working out this problem, even though knowledgeable people who had spoken to him about it said his thought processes appeared befuddled. George glad handed Peter, slapped him on the back and immediately nicknamed him "Dick", because George chuckled, Dick is another name for Peter. When Peter didn't join George in laughing, George immediately pursed his lips and squinted his eyes as if seriously pondering something and then told Peter not to worry about this problem, because George had found the Lord and the Lord wanted George to take care of "Dick's" problem.
George told Peter the problem had to be solved pronto, by changing the plan. You see, by now some of Peter's kids were working and had started paying into the Sam plan also. Instead of Peter's kids putting a dollar in the plan, George said they should give a lot of it (he did not say how much exactly) to some friends of his (he did not say exactly who) to manage (he did not say for what fee) it in order to earn (he did not say guarantee) a better return (he did not say how much) than the original Sam plan. That way Peter would have more money for retirement (George did not say anything about disability or death benefits for Peter, his kids or their family members). But where would the retirement money for Peter come from if his plan account was already short and if his kids were going to be paying less into the original plan, Peter asked? We'll use some of the money from your kids, George answered. But that won't be enough and then won't their plans be short changed? George looked perturbed and mumbled some incomprehensible spontaneity about mandates, protecting people from evil and believing what he says, because he believes it himself.
Peter managed to excuse himself from Sam and George. He decided to study this all and discuss it with his wife and children. He suspected George and people like him were probably the ones who turned Sam's head and got him to line their pockets and Sam's with budgetary trickery and irresponsible investment of the plan money. If only Sam had been forthright and stuck to the plan, Peter thought, budgets could have been fairly worked out through the years and the plan reasonably modified if necessary. Now, Peter figured, it would be up to him and his family to straighten out Uncle Sam and the budgets, adjust the plan as needed and avoid George and his friends like the plague.
This story is true. Peter's name has been changed because he is innocent
posted by Tom Blake | 2:41 PM
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