When it comes to ending a government program to which most people have become accustomed and many have become dependent, there is sure to be popular backlash against ending or curtailing it. In this post I shall use the example of Social Security because it is well known around the world, even if some of its inner workings remain a mystery.
The basic apparatus of Social Security works like this: everyone who works pays into a fund, from which people who are older, disabled, and the like are paid a sum. Because it involves no real savings, the first beneficiaries did not pay into the fund but did collect from it. The next generation of beneficiaries both paid into the fund and collected from it, which has been going on even to the present day. The argument for its continuation nowadays seems to boil down to the personal level: I worked to pay into the fund for many decades; I should be able to draw from it. That seems reasonable on its face.
The problem arises when we look one level deeper. How is the fund supplied? (You have a leg up in this post: I gave the answer just a paragraph ago.) Current workers pay into it. The benefits of Social Security come at the expense of current workers’ deferred savings and purchases.
Let us imagine a similar scenario to highlight the injustice in such a system. Imagine you save a sum of money each month for six months to buy a nice television for yourself. You had foregone other savings and purchases you could have made, including dining out, investing for retirement, new shoes, and on and on. All those took second place to the promise of a television at the end of six months. If a burglar were to steal your television and escape without getting caught, what recourse would you have? You could make a claim on your insurance, live without a television, save up for another six months for another, or steal somebody else’s television. Let us imagine you are upset enough to steal a television, and you pull off the perfect heist (just as your burglar had done), thus restoring in kind the possessions that had been yours.
If the seedy underbelly of theft is not your cup of tea, you could remove yourself from the dirty business and hire someone to steal a television for you. Alternatively, you could vote for a politician to collect a little bit in taxes from everybody until your television were restored, thus saving you the effort of stealing a television or saving up for one.
The aforementioned situation is similar to the proposed end of Social Security. What of the people who receive the benefits? They could live off their savings and charitable donations, continue to work, or simply vote for politicians who will continue to collect a little bit in taxes from everybody until they can receive a check. This saves them from having to do the dirty work of stealing from people by voting for a middleman.
Many problems arise from this situation. Those currently drawing on Social Security were forced to pay for the previous generation’s benefits, so a sense of entitlement is natural. In addition, the money they were forced to pay throughout their working lives was not left to them to gain their own security, including save for retirement or a disabling injury, buy medical care to improve their health, or pay off a mortgage to have a place to live rent-free in the future. Another problem is the pervasive view that this system is a charitable one: people who may not be able to live on their savings or utility (i.e., cannot work) are benefitting from a small bit of money from many people.
Unfortunately, the charitable aspect of this system is very diminished. It is not an act of charity for me to hold a gun to your head, saying, “Give me three dollars so I can pool your money with your neighbors’ to buy some food for the hungry family down the street.” The threat of the initiation of force reduces or eliminates any charitable aspect to that act. In addition, it sows discord: “Why didn’t the family just ask me for money or go to the food bank downtown to which I donate?” “Why did this guy have to hold a gun to my head? I would have given even more voluntarily, but now this degenerate might hold his gun to my head at any time in the future, so I should hoard some money for such instances.” “I cannot afford to donate right now; I need to save every dollar I can to bring my aunt into this country.” This is exactly the problem with Social Security.
I am not against safety nets and charity; rather, it is precisely because I do favor them I do not favor politicians standing in for burglars to take everyone’s money, all the while taking a cut (salary and benefits). Then they have the gall to parade around as if they have done good in the world, when all they have done is stolen, sown discord, and made everybody less charitable. And voters continue to pull the levers for them, thinking they are doing good.
What a sad legacy has the modern state left this world.