MY Vast Right Wing Conspiracy

Donald Luskin: Letter to Paul Krugman

• Posted by Beth on March 6th, 2005 filed in General    

Donald Luskin (of the Conspiracy to Keep You Poor and Stupid) posts this letter from Joseph Mann to Paul Krugman:

Dear Mr. Krugman,

I am the sole owner and manager of a 70-plus-year-old life insurance company that specializes in annuities. I’m looking for others to get in on the ground floor of this fantastic initial public offering and I’m starting with you since you might just help me spread the word; you’re one of the best salesman I know.

A very general business overview:

I offer annuities to my clients that begin payouts once they reach their mid sixties as long as they have made 10 years worth of premium payments before reaching the ‘payout’ age. The 10 years premium payments can be made during any time span and do not have to be made in consecutive years.

The law is on my side and requires that everyone becomes a client, so marketing and revenue do not seem to be an issue…more on this later. Clients that have not reached the ‘magical age’ will be sending me premium payments that are used to payout to my current clients that have reached the ‘magical age’. In fact, the premiums that I collect exceed the amount that I have to pay out to my clients and the operating costs of my business – let’s call this the surplus.

Since I am the lone shareholder I have no need to payout dividends or concern myself with share price appreciation. Besides, that’s not my goal or ambition. Here’s what I do do though…my company ‘special issues’ bonds and does not offer them for sale to anyone except me. So, my company uses the surplus money collected from client premiums (after paying current beneficiaries and operating costs) and buys the bonds that my very own company ‘special issued’. Neat trick, huh? Next, I take the now ‘freed-up’ money and I just simply give it away to charity. That’s right; just give it away! It feels so good to give in fact that I have no need to be concerned with share price appreciation because my reward comes from knowing that I will be liked. This charitable giving generates great PR for me and takes care of the marketing. Amazingly, the face value of the bonds that I ‘special issue’ correspond almost identically to the value of the premium surplus amount. These bonds do pay interest but as long as the premiums exceed the benefits then I’m cool. And, as an added bonus, I can raise the premiums any time I want to and, since it’s compulsory, the clients will pay it.

A little more general background:

- Like I’ve stated, the company has been in business over seventy years and I’m the fourth-generation owner.

- My company’s actuaries have made plenty of recommendations over the years regarding the mortality tables and disturbing demographic trends but I just generally ignore what they’re telling me. It’s all about customer service here!

- Over the years the company has increased the required percentage amount of the premium that must be contributed – the increase has been well over 1000%. The premium that the client pays depends on the amount of income that they make. It’s a little more complicated than that though but perhaps you’ve seen it…I know that you are a client of mine.

- The benefit payments to my ‘magical-aged’ clients are indexed to wage growth and not to consumer prices growth. Every time I consider changing that, they gnash their teeth and wail. I cannot afford to have my ‘magical-aged’ clients mad at me…it’s all about customer service.

So, are you interested in becoming part owner? If you don’t mind I’d rather not show you any of my financial reports; can’t you just ‘trust’ me on this one?

How many shares should I pencil you in for, Paul?

[Mallard Fillmore toon via Social Security Choice]