"Social Security is commonly portrayed as benefiting most, if not all, Americans," writes Alex Epstein, "by providing them 'risk-free' financial security in old age."
This is a fraud. Under Social Security, lower- and middle-class individuals are forced to pay a significant part of their income _ about 12 percent _ for the alleged purpose of securing their retirement. That money is not saved or invested, but transferred directly to the program's current beneficiaries _ with the "promise" that when current taxpayers get old, the income of future taxpayers will be transferred to them.Since this scheme creates no wealth, any benefits one person receives in excess of his payments necessarily come at the expense of others.
He goes on, "Observe that Social Security's wholesale harm to those who would use their income responsibly is justified in the name of those who would not. The rational and responsible are shackled and throttled for the sake of the irrational and irresponsible." And for what -- what "security" is there?
Under Social Security, every aspect of the government's "promise" to provide financial security is at the mercy of political whim. The government can change how much of an individual's money it takes; it has increased the payroll tax 17 times since 1935. The government can spend the money on anything it wants; observe the longtime practice of spending any annual Social Security surplus on other entitlement programs. The government can change when (and therefore if) it chooses to pay benefits and how much they consist of; witness the current proposals to raise the age cutoff or lower future benefits.Under Social Security, whether an individual gets twice as much from others as was taken from him, or half as much, or nothing at all, is entirely at the discretion of politicians. He cannot count on Social Security for anything _ except a massive drain on his income.
Just so. As Epstein argues, we should be debating how to end SS, not how to save it or "improve" it.
Along similar lines, Harry Binswanger reminds us -- in fact, it should be more commonly understood -- that "a shortfall in government revenue is not a cost.
In fact, the exact opposite is true: government revenue is the cost, the cost borne by those whose production supplies that revenue.
From that principle, and from the definition of "cost," Dr. Binswanger concludes that there is in fact no cost involved in the transition to privatized Social Security. Worth reading and pondering.
The final piece in our roundup here is from Robert Anderson, who begins his "Making Socialism Work Better?" by quoting Ludwig von Mises: "The history of government intervention is the correcting of the ill effects of earlier interventionism, and the results from that interventionism yield consequences precisely the opposite of what the interveners themselves intended!" He goes on:
Finally, a personal aside: One of the great frustrations of spending a lifetime under an expanding "nanny state" has been to witness how readily our citizenry has succumbed to statist edicts. The notion of mandating individuals into a Social Security Savings Account scheme is virtually unquestioned today from the perspective of personal freedom of choice. In fact it is being promoted as a return to an "ownership society." What a mockery of the private property order!
Welfare by any other name is welfare, theft by any other name is theft, and socialism in any realm can't be made to work "better." Ask the Cubans. Ask the North Koreans.
Treat yourself. Read all three.
Posted by Craig Ceely at January 25, 2005 10:39 PM