OASDHI must die! (and your little FICA, too!)
When I first heard Andre Marrou speak in 1988, then as the VP on the Libertarian presidential ticket (with then Libertarian Ron Paul), the Libertarian platform on Social Security advocated immediate liquidation of the trust fund and its distribution on the basis of what individuals had paid into the program. The elegance of this solution is beautiful: in one swell foop, it would end the most regressive tax in U.S. History, take one more unfunded mandate off the plate of employers and the self-employed, eliminate an agency whose mission and existence is not Constitutionally justified, infuse the economy with a lot of cash very quickly, and give individuals authority over and liability for their own decisions and actions. The Libertarians also wanted to point out the lie of the program, as implementing such a strategy would reveal that the trust fund is a fiction.
They don't advocate this anymore, which is too bad. I know it's not necessarily that feasible, but really, is turning the Social Security Administration into the largest investment brokerage in the country really a feasible idea? Now their platform calls for allowing individuals to opt out of the system completely, funding remaining obligations through sale of federal properties that the federal government has no Constitutionally justifiable reason to hold. You can read about it here.
Whatever the method, it is a waste of time and resources to try and "save" or "strengthen" Social Security. Even moreso is Bush's transparent intention to cause the program to limp along until it dies of neglect. It must be ended, neatly, cleanly, and with equal pain to all thereby affected. And here's why:
-- Look, there's just NO BASIS IN THE CONSTITUTION for the federal government to take authority over and liability for individual's failure to save for retirement. The way I see it, there are two ways to win in this game of life: one is to amass a fortune that renders one immune to disaster, the other is to form personal relationships with a sufficiently broad network of individuals to have the same effect. If you do neither by the time you can no longer earn an income, YOU LOSE. You don't have the right to use the fist of the state to take my money so you don't starve.
-- even if the Constitution did authorize the government to set aside individual savings accounts for citizens, which it doesn't, Social Security has never been a savings account, but a thinly-veiled redistribution of income. Much has been said and written about the ratio of workers to retirees, and I don't feel like reproducing that debate. It is enough to say that this is a tax, money extracted through the threat of force from individuals and employees for the benefit of somebody else -- a use of government power that is completely inappropriate.
-- as taxes go, it is particularly odious in that it is regressive. Someone making more than the wage cap (currently $87,900) pays a lower percentage of his income than someone making less than that (to be crude: at $10,000, you pay 6.2%; at $100,000, you pay 5.4%, and at $1,000,000, you pay .54%) -- again, this might be tolerable if this were an individual savings account, but IT'S JUST A TAX. Add to this that nothing -- NOTHING -- reduces income for purposes of Social Security, and this expropriation is even more odious. Even if one receives a full refund on personal income taxes because of low income, that Social Security tax is gone, buddy.
-- it creates the impression, about which I ranted not three paragraphs ago, that we have the right to the income of those who follow us. There's even this perverse notion among some commentators I have heard that this mutual deprivation binds us together, and forms our responsibility to each other. Balderdash. Our responsibility to each other is to help to the extent that we, knowing better than anyone else our own situations, are able and willing to help -- not to hand over an arbitrarily determined amount at gunpoint to the state. And to those of you (like the 2004 Green Party presidential candidate) who cite the 1930s as evidence that individuals won't help the less fortunate on their own, I would point out that IT WAS A DEPRESSION -- maybe old folks were fishing food out of the dumpster because the individuals who normally would have given charitably didn't have the assets to do so. I would also point out that this is a different time: from banking to the stock market, there is much greater democratization, for want of a better word, than ever before. Anybody can get lines of credit, almost everybody can get a home loan, and almost everybody owns some stock in one or more companies. Yes, I know, the FDIC and FSLIC had a lot to do with the availability of loans, and the SEC helps keep the stock market (relatively) safe from exploitation. The government also built our railroads in the nineteenth century, but it sold off those lines (except Amtrak, I guess): just because the federal government may be the best choice to initiate an effort doesn't mean they need to stay there -- and, to drag myself back to the topic, it certainly doesn't mean that it should be free to sieze our assets because somebody thinks we can't plan for our own retirements. And just because one or more generations gets shafted by the system doesn't mean we should perpetuate the shaftage so all can experience it. I mean, if you were beaten by your dad, do you feel your child should also be beaten? (I know that's weak, but really, the arguments underlying the position that we should indenture future generations indefinitely are just so absurd that I can't even bring myself to come up with a clever analogy. It's wrong to harm those who follow you just because you have been harmed.)
-- It violates individual sovereignty.
By the way, all of these arguments apply to Medicaid, too. Let's kill 'em.
The most likely solution would be a cut-off age, probably in the 30s or maybe older or younger, under which individuals would no longer be obligated to pay the Social Security tax, and would be entitled to no benefits. That would screw those in the group who had already put their hard-earned money into the program, but if the age were low enough the freedom from future taxation would help make up for the lost benefits. Maybe we could allow older individuals to opt out of the program on the same basis, although the older the individual, the less likely that selection would be. So to share the pain, those remaining in the program would probably have to pay more to keep the current benefits -- perhaps even removing the cap on taxable wage, or raising it ten-fold. I've read an argument against this, but really, the arguments against raising the cap are the same as those against the Social Security payroll tax itself. Even more brutally honest, the payroll tax should be eliminated completely, and remaining benefits funded out of the general budget. I know, that would oblige those who opted out of benefits to still pay for somebody else's -- but we're already doing that. At least the burden would be distributed the way the general cost of government is born: proportionally by income. And if there were a cut-off age, there would be a sunset for at least one cost of government.
Or maybe we should end the payroll tax immediately, and over the next three or four years pay, in lump sums, a portion of the benefits promised to each individual, out of the general budget. As with a failed corporation, perhaps the benefits would be pennies on the dollar (although, maybe, with a higher ratio for those closer to retirement age) but all the advantages I noted in the opening paragraph would apply here.
At any rate, the last thing we should do is add to the cost of administering Social Security, as President Bush is proposing.
They don't advocate this anymore, which is too bad. I know it's not necessarily that feasible, but really, is turning the Social Security Administration into the largest investment brokerage in the country really a feasible idea? Now their platform calls for allowing individuals to opt out of the system completely, funding remaining obligations through sale of federal properties that the federal government has no Constitutionally justifiable reason to hold. You can read about it here.
Whatever the method, it is a waste of time and resources to try and "save" or "strengthen" Social Security. Even moreso is Bush's transparent intention to cause the program to limp along until it dies of neglect. It must be ended, neatly, cleanly, and with equal pain to all thereby affected. And here's why:
-- Look, there's just NO BASIS IN THE CONSTITUTION for the federal government to take authority over and liability for individual's failure to save for retirement. The way I see it, there are two ways to win in this game of life: one is to amass a fortune that renders one immune to disaster, the other is to form personal relationships with a sufficiently broad network of individuals to have the same effect. If you do neither by the time you can no longer earn an income, YOU LOSE. You don't have the right to use the fist of the state to take my money so you don't starve.
-- even if the Constitution did authorize the government to set aside individual savings accounts for citizens, which it doesn't, Social Security has never been a savings account, but a thinly-veiled redistribution of income. Much has been said and written about the ratio of workers to retirees, and I don't feel like reproducing that debate. It is enough to say that this is a tax, money extracted through the threat of force from individuals and employees for the benefit of somebody else -- a use of government power that is completely inappropriate.
-- as taxes go, it is particularly odious in that it is regressive. Someone making more than the wage cap (currently $87,900) pays a lower percentage of his income than someone making less than that (to be crude: at $10,000, you pay 6.2%; at $100,000, you pay 5.4%, and at $1,000,000, you pay .54%) -- again, this might be tolerable if this were an individual savings account, but IT'S JUST A TAX. Add to this that nothing -- NOTHING -- reduces income for purposes of Social Security, and this expropriation is even more odious. Even if one receives a full refund on personal income taxes because of low income, that Social Security tax is gone, buddy.
-- it creates the impression, about which I ranted not three paragraphs ago, that we have the right to the income of those who follow us. There's even this perverse notion among some commentators I have heard that this mutual deprivation binds us together, and forms our responsibility to each other. Balderdash. Our responsibility to each other is to help to the extent that we, knowing better than anyone else our own situations, are able and willing to help -- not to hand over an arbitrarily determined amount at gunpoint to the state. And to those of you (like the 2004 Green Party presidential candidate) who cite the 1930s as evidence that individuals won't help the less fortunate on their own, I would point out that IT WAS A DEPRESSION -- maybe old folks were fishing food out of the dumpster because the individuals who normally would have given charitably didn't have the assets to do so. I would also point out that this is a different time: from banking to the stock market, there is much greater democratization, for want of a better word, than ever before. Anybody can get lines of credit, almost everybody can get a home loan, and almost everybody owns some stock in one or more companies. Yes, I know, the FDIC and FSLIC had a lot to do with the availability of loans, and the SEC helps keep the stock market (relatively) safe from exploitation. The government also built our railroads in the nineteenth century, but it sold off those lines (except Amtrak, I guess): just because the federal government may be the best choice to initiate an effort doesn't mean they need to stay there -- and, to drag myself back to the topic, it certainly doesn't mean that it should be free to sieze our assets because somebody thinks we can't plan for our own retirements. And just because one or more generations gets shafted by the system doesn't mean we should perpetuate the shaftage so all can experience it. I mean, if you were beaten by your dad, do you feel your child should also be beaten? (I know that's weak, but really, the arguments underlying the position that we should indenture future generations indefinitely are just so absurd that I can't even bring myself to come up with a clever analogy. It's wrong to harm those who follow you just because you have been harmed.)
-- It violates individual sovereignty.
By the way, all of these arguments apply to Medicaid, too. Let's kill 'em.
The most likely solution would be a cut-off age, probably in the 30s or maybe older or younger, under which individuals would no longer be obligated to pay the Social Security tax, and would be entitled to no benefits. That would screw those in the group who had already put their hard-earned money into the program, but if the age were low enough the freedom from future taxation would help make up for the lost benefits. Maybe we could allow older individuals to opt out of the program on the same basis, although the older the individual, the less likely that selection would be. So to share the pain, those remaining in the program would probably have to pay more to keep the current benefits -- perhaps even removing the cap on taxable wage, or raising it ten-fold. I've read an argument against this, but really, the arguments against raising the cap are the same as those against the Social Security payroll tax itself. Even more brutally honest, the payroll tax should be eliminated completely, and remaining benefits funded out of the general budget. I know, that would oblige those who opted out of benefits to still pay for somebody else's -- but we're already doing that. At least the burden would be distributed the way the general cost of government is born: proportionally by income. And if there were a cut-off age, there would be a sunset for at least one cost of government.
Or maybe we should end the payroll tax immediately, and over the next three or four years pay, in lump sums, a portion of the benefits promised to each individual, out of the general budget. As with a failed corporation, perhaps the benefits would be pennies on the dollar (although, maybe, with a higher ratio for those closer to retirement age) but all the advantages I noted in the opening paragraph would apply here.
At any rate, the last thing we should do is add to the cost of administering Social Security, as President Bush is proposing.
posted by heavynettle at 23:12
9 Comments:
This comment has been removed by a blog administrator.
In your argument that "YOU LOSE" if you fail to save for retirement or form a social network, I'm not sure what you're advocating. More homeless, with the attendant crime and property value loss? Setting the older poor out in the snow to succumb to the elements? Someone who reaches retirement without amassing wealth has not necessarily gone through life without making contributions that they deserve some compensation for from society at large; but if you don't buy that argument are you really advocating turning out the elderly poor whose kids can't or won't support them? Or perhaps Soilent Green?
My point is that if you don't have children or family who are willing to help support you, how good a person could you have been? You can be a good person without amassing wealth, in which case there are probably folks who recognize you as such. But the two principle strategies for surviving our non-productive years have always been to amass the resources ourselves or live off of our social network.
Besides, in your argument you make the same error that the supporters of SSDI have made: it's either Social Security or Soilent Green -- no other choice. That's ridiculous, although pretty common reasoning on several other issues, too. Are APS and CPS (Adult and Child Protective Services) federal agencies, supported by federal income taxes? And yet we somehow manage to protect (to varying degrees) children and adults from abuse and neglect without having an overarching federal structure. The real place for welfare (which is, after all, what Social Security is) is at the lowest level of government possible, where we can exert more oversight of the program and bureaucrats who run it.
Better still not to use force or threat thereof to deprive one person of resources to support another person; better still not to let legislators or well-meaning citizens presume to know better than the individual what he or she can afford to give to someone else's welfare.
I hate to stand in the ranks of those folks who normally say this sort of thing, but here we are: if we care enough, we will give money voluntarily to organizations that serve the need, or create the organizations ourselves. If we don't care enough, we might be persuaded to change our minds. Charity, from alms to donations to volunteer activity, carried out in the community, is the basis for assisting the disadvantaged that most respects the sovereignty of all concerned.
Oops, I didn't state my whole point, and I guess I must concede that "YOU LOSE" sounds a little harsh. The main thing I wanted to drive home is that retirees who don't have assets or a social network are not entitled to anybody else's resources. As is so often the case in such discussions, however, certain folks always assume that that means such individuals shouldn't receive any help. The distinction is between that help the government extracts by force from your fellow citizen and that help that your fellow citizen is persuaded or volunteers to supply. Just because I don't want the government to take an arbitrary amount out of my income doesn't mean that I would refuse to give what assets I can spare to help those who need it. And just because I don't want my citizen's income similarly raided doesn't mean I wouldn't and you shouldn't persuade him or her to provide what assets he or she can share. I might even support a compulsory contribution at the municipal or county level -- based on something other than a knowledge of what an individual earns and/or spends. But we don't need the federal government to do this -- and what we don't need the federal government to do, we don't want it to do. Power corrupts, etc.
Oh, and the other advantage of getting the federal government out of Social Security and throwing that ball to the states, the counties, the municipalities, or the individuals is that the solutions that arose would be tailored to the locality, and would further provide a wide spectrum of policies that could be evaluated for partial or total adoption by other localities. I mentioned this in one of my posts, but it bears repeating. We don't need to rely on the feds for everything.
There's an interesting sidebar in the May (?) Atlantic Monthly you might enjoy looking at, as well as getting the original sources. It argues that social security systems like those in the U.S. and western Europe are actually CAUSING the precipitous, overly-rapid decline in birthrates in those countries. So, if it's true, 3rd world population crises (if they are such, which is debateable) can be combatted with welfare supports. People with plenty of money & guarantees are apparently content to die childless. Interesting.
Hmm. . . . And here I thought that air-dropping condoms would keep the third-worlders from breeding.
There is something to that argument, though. In the absence of a reliable means of preserving wealth -- a stable, accessible banking and investment system; a stable currency; consistent and predictable tax policies and police protection, etc. -- it is both logical and observable that individuals seek security in their dotage by having enough children that at least one of them shall be able to support not only him- or herself but his or her parents (and one or two siblings as welll). In an agricultural setting, this makes perfect sense: additional children do not constitute an appreciable expense, and the can very rapidly be employed to increase productivity and sustain it when the parents are too old to do so.
At the same time, however, I would argue that it is the failure of this paradigm, rather than viable welfare from the state, that first bites into birthrates. In urban life, each additional child constitutes a much larger expense, and children of rural families that have moved into the city rarely have large families themselves. Urban Catholic and Mormon families are generally much smaller (with 2-4 children, in my experience) than their rural counterparts. It just doesn't make economic sense to have lots of children in an urban setting.
Finally, one might reasonably ask what the point in having children is, from the individual's perspective. Sure, there's the survival of the specie, and all that, but at the individual level, what is gained from having children? As a relatively new father myself, I can provide no rational justification for having a child: for me, it was just something "to be done". My son is not "mine", in the sense of my expecting to possess authority over or benefit from him. He is a sovereign being whose sovereignty I have been entrusted by circumstance to exercise for that period preceding his adulthood -- and if I screw it up, I have no right to maintain that role. He's not another worker for my fields, a soldier for my army, or source of income (although I hope he'll at least double my vote. . . .). I may be stating the case more strongly than others would, but I think we can agree that in our socio-economic-blah-di-blah stratum we raise children with no expectation of material gain from the activity. At the same time, we put much more effort into rearing the child as separate from our everday activities. That combination, by definition, argues for smaller families. Add to that the wealth of our society, the infinite diversions, and it's easy to see why individuals and couples might be perfectly happy without any children at all. And that doesn't have as much to do Social Security as the general wealth of the society. I'll have to read this Atlantic Monthly article. . . .
I thought you were arguing that a large family is one of the necessary social networks individuals would be encouraged to sustain in the absence of a debilitating "Big Brother cum Sugar Daddy" setup, as you seem to view the current federal social model (sorry to put words in your mouth, just paraphrasing). So, kids aren't really "yours" in the sense of property of filial obligations on their part, but you are still "each others" and bound to each other.
Personally, I see a lot of arguments against the accepted American norm of forcing each child to leave home and set up a completely separate household as a sign of maturation. It's just not an efficient use of the extended family's capital. I think this is one of those deep-rooted cultural ideas that exists without ever really being evaluated objectively, and it might not stand up to scrutiny--especially if the kind of society based on voluntary relationships that you're proposing is going to work on the practical level.
Well, as with the large family paradigm, the small family move-out-of-the-house-upon-maturation paradigm can only continue until it fails. Indeed, it persists in some cases where it should fail precisely because of federal- and state-level welfare. When I was in the social services biz, I encountered cases of individuals who would apply for government assistance but not ask for money from their parents -- or, their children. There's much more complexity behind that than a simple anecdote, because sometimes family is the root of our problems, not the solution to them. Still, I think we can agree that among parents and children this impulse exists. Think about college financial aid: all the U.S News & World Reports articles on college tuition I've read talk about hiding the parents' income so the kids can get financial aid. This is the logic of treating each individual as an individual, and not tying him or her to factors outside his or her control, and there's really nothing wrong with that -- so long as maintaining the illusion of independence doesn't require resources extracted through force from other individuals.
The small family paradigm is neither desirable or undesirable: it is merely more or less workable within a given context. Smaller families in an urban setting means that not only does each child (arguably) receive a larger share of either attention or resources, but that the parents themselves can save more for their own retirement, and not be, as my own parents say, "a burden" on their children. There's nobody forcing anyone to refuse to ask for help from family; there is a threshold past which the awkwardness of asking relatives for help is far outweighed by the direness of the situation. But try to convince the IRS, or the SSA, that a dire situation has forced you to reallocate that 7.5% of your income away from paying the Social Security and Medicaid taxes. . . .
You were indeed putting words into my mouth in your comment, but not those that you thought. I don't view the family networks alone as necessary to replace aid through government expropriation, although they form the first line in many cases, obviously. All individuals with excess should provide the necessary assistance at the community (municipal and county) level, whether to relatives, acquaintances, or strangers. This is the social network that must take the place of aid through government expropriation. But it is individuals who must be free to determine just what that excess is, and to whom or what cause it should go. That's where compassion and persuasion take the place of force.
I agree that communities in which individuals do not voluntarily assist their neighbors are not sustainable. I disagree that the disadvantaged are served only -- or best -- by aid through state expropriation. Historically it is easy to make the point that individuals have never given enough, but history's relevance extends only so far: the mechanisms for personal saving and investment, the mechanisms for charitable giving, are more varied, sophisticated, and accessible than at any time in human history; our interconnectedness with communities near and far is equally unprecedented. That alone should allow us to dispense with, for example, the Great Depression as a laboratory for understanding whether non-governmental charity can ever satisfy the needs of the disadvantaged. That should get us out of the mold of presuming that individuals with governmental positions can better decide how to use an individual's income better than the individual. And that, of course, forces the individual to choose to be actively moral, to act in ways whose emulation by others would improve the welfare of all. A certain percentage will not chose to do so, admittedly: it's not necessarily easy. But would that doom a community's non-governmental efforts to inadequacy? None can say with certainty. We can look around and see that Social Security is inadequate in some cases and extranneous in others. Even if we would do no better (and no worse) without Social Security, relying on voluntary assistance, we would still be ahead by having eliminated a regressive tax, an unfunded accounting burden on businesses, and this pernicious expectation that we have the right to somebody else's assets for our retirement, that others exist to support us.
And I'll repeat this, because it seems that I can't emphasize it enough: just because nobody has the right to our resources doesn't mean that we shouldn't give them away voluntarily; just because we have no rights to the assets of others doesn't mean we can't seek to persuade them to help us.
Okay, rereading the posts, I did imply that one should rely on large families -- although I did mention a social network -- and I seemingly reversed that by stating that the individual should give money to aid relatives, acquaintances and strangers alike. But both are valid.
The individual strategy for survival is to hedge against bad times by either saving money or cultivating interpersonal relationships, and I'll clarify here that that includes relatives and non-relatives. That would also include, by the way, contributing to those agencies that would help one in times of need, and assisting one's friends and family so that they'll be more likely to return the favor.
The responsibility of the individual is also to give of his or her excess to strangers. Because an individual would want strangers to help him or her in such cases, and he or she should do the same for others. This has the karmic effect of making such assistance more likely by providing an example to those who observe us and resources to the apparati for securing that assistance.
So there ya go -- two posts in response to one. Sorry for the ambiguity.
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