GWB vs. FDR II

Slate's Chris Suellentrop joins the chorus of those claiming that Social Security is a "welfare" program. He does so explicitly:

Liberals, for their part, aren't bereft of philosophy. They support Social Security because it's redistributive. In other words, it's welfare for old people. The politically correct term for this is "social insurance."

To Suellentrop, Roosevelt's insistence that the system be designed as social insurance and not as redistributive welfare was a disingenuous, euphemistic form of political correctness. (What a prescient fellow FDR must have been to have embraced "PC" decades before its rise and fall as a buzzword.)

Suellentrop doesn't seem to understand what Social Security is or how it works. Consider what a "redistributive" program of "welfare for old people" might actually look like.

A "welfare" program would be need-based and means-tested. It would not be sending monthly payments to, for example, current Social-Security recipient Warren Buffett, but only to those who required such financial assistance.

A "redistributive" program would be based on some kind of progressive tax, taking money from the haves to assist the have-nots. This progressive tax shouldn't kick in until some fairly high income threshhold. This is almost exactly the opposite of how Social Security is funded. The payroll tax (the largest tax burden for 7 out of 10 Americans) is a regressive flat tax that has no minimum threshhold, but does have a maximum cap -- currently $87,900. This is not a "redistributive" program.

Again, I'm willing to entertain the idea of converting Social Security into what Suellentrop already imagines it is. But if we want to turn it into a redistributive welfare program for old people then we've got to make some massive changes. We would need to start means-testing benefits. We would need to abolish the cap on payroll taxes, and to replace the current flat rate with an aggressively progressive one.

I'd prefer, however, to keep Social Security what it is -- social insurance and not welfare. It is not a program of redistribution, but an intergenerational covenant (or a social contract, if you prefer) based on the idea that We the People do not wish to live in a society in which half or more of our elderly scrape by in poverty -- as was the case before Social Security.*

This contract requires from each of us a duty and in return makes to each of us a promise. The duty is that while each of us is able to work, we will contribute a portion of our wages to ensure the financial security of those who are no longer able to work. The promise is that once each of us, nearly inevitably, reaches the point where we are no longer able to work, that we too will receive such support from future Americans.

I like this system. It is not the only imaginable system, nor does it have a unique claim to moral superiority over every other imaginable system. But it does work (see, for example, this CBPP study from 1999, which shows that nearly half of America's elderly would be in poverty without Social Security). And I would argue it is a more moral approach than, for example, setting the elderly adrift on ice floes or embracing some form of social Darwinism.

Some of the raucous, but interesting, debate in the comments to the previous post seems to have been sparked by my complaint that Jonathan Rauch seems to view "cooperation [as] lower on the hierarchy of morals than atomistic individualism."

My gripe with Rauch's moralizing was his apparent insistence that private, individual accounts were somehow inherently morally superior to the kind of duty/promise, rights/responsibilities system we now have. It's a puzzling assertion that he doesn't explain or defend.

And, of course, where I say "atomistic individualism" and "social Darwinism," others may say "self-sufficiency" and "freedom from any and all government coercion." Tomato, tomahto.

But as for the utopian-anarcho-libertarian notion that the current system is evil because it is based on taxes, well, show me a dollar. Whose picture is that? And whose inscription?

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* This rather obvious bit of history is difficult to grasp for some post-Gingrich ideologues. These folks are convinced that government programs are the primary cause of poverty and that, therefore, FDR introduced poverty with the New Deal. Thus their desire to take America back to the Edenic, Gilded Age, before poverty was created.

Comments

[Michael Bowen]

Whose picture is that?

Adam Weishaupt's? ;)

[laughingman]

But..but...taxes are legalized theft through violence! (end sarcasm)

Honestly, do people like that think that they could pave their own roads or build their own bridges? Not to mention police the streets or test their meat and produce for safety? Or a hundred and one things that taxes pay for?

At what point do you get so hung up on principle that you ignore reality?

[Scott]

But as for the utopian-anarcho-libertarian notion that the current system is evil because it is based on taxes, well, show me a dollar. Whose picture is that? And whose inscription?

Let those who want to skip taxation by being paid in nongovt gold or silver coins and we have a deal. :-)

[David]

The fact that we even have money to tax is due to mutual agreement, and it's provided by who? The government, which has also been established and had it's powers outlined by mutual agreement. Also by mutual agreement we have set up the free market system. It is our own creation and exists purely because we choose to let it do so. It does not rule us. We made it.

It also seems ironic that a government in power would both be saying, trust us but don't trust us. After all, who is this government you're not to trust with our money? The same government we're supposed to trust with the lives of American soldiers and the power to prosecute war.

[julia]

You know, I used to wonder what contrarians would do with their feelings of philosophical ill usage if they ever took over.

I suppose as long as everyone who bases their opinions on facts instead of vague feelings of philosophical ill usage still disagrees with them they can go on as before.

Hard to say how you can manage to square being a free-thinker with the idea that anyone who disagrees with you is oppressing you, but then, per Belle Waring, there must be a pony in there somewhere.

[Scott]

The fact that we even have money to tax is due to mutual agreement, and it's provided by who? The government, which has also been established and had it's powers outlined by mutual agreement. Also by mutual agreement we have set up the free market system. It is our own creation and exists purely because we choose to let it do so. It does not rule us. We made it.

No, mutual agreement is provided by individual human beings - organizations don't act, agree, or even think, people do. Give me a bar of gold w/o any govt markings and I can get quite a bit w/ it, particularly if it falls outside govt taxing powers on the grounds that the govt didn't create the gold.

Govt isn't set up by "mutual agreement", even the best are set up by agreement among 51% of the voters, and 51% supported an SOB like Bush last time out. Did you mutally agree to the Patriot Act? I didn't.

[Beth]

Whose picture is that?
So, render unto Washington what is Washington's?

I think that if anything, your interpretation of Rausch is too generous. You attribute a moral sense to him, but I see no hint of that in his article. Rather, I suspect, he wants to bring about a sort of neo-feudalism, aka 'the ownership society.'

Bush's welfare reform is ideal for that. It will take money that's currently being used to cushion some of the government's massive debt and puts it into private investments. This has two benefits. First, it puts more money into the pockets of the wealthy, who are always the major beneficiaries of increased investments, and second it moves the government closer to the financial crisis that will justify the dismantling of all remaining 'welfare' programs, including perhaps things like public schools (Hey, when you're on the brink of bankruptcy, you've got to make sacrifices.) In addition to all that, as the money moves from the Treasury to Wall Street, it passes through the hands of average workers, giving them the illusion that they're actually benefiting from this ownership society thing. That will make it easier to sell them on some of the less palatable changes the new society will bring about.

[David]

No, mutual agreement is provided by individual human beings - organizations don't act, agree, or even think, people do. Give me a bar of gold w/o any govt markings and I can get quite a bit w/ it, particularly if it falls outside govt taxing powers on the grounds that the govt didn't create the gold.

Yet the gold only has value if we all agree it does. It doesn't have any inherent worth in and of itself. It's just shiny metal.

[a capitalist hippy]

And thus the essential flaw in capitalism is revealed: wealth is nothing more than a shared illusion.

Not that there's anything wrong with that, I'm a big believer in hallucinogenic substances, it's just the hallucinogenic societies that make me nervous.

[Scott]

Yet the gold only has value if we all agree it does. It doesn't have any inherent worth in and of itself. It's just shiny metal.

And thus the essential flaw in capitalism is revealed: wealth is nothing more than a shared illusion.

Gold was considered valuable long before the USA or the fedgov came along - our govt clearly isn't responsible for gold's value, individuals are. How is that a flaw specifically in 'capitalism'? Has there ever been a modern socialist state w/o some form of currency?

Isn't the govt a form of shared illusion? It wouldn't exist w/o people believing it does (if I believe I'm supreme ruler of the USA it means nothing, if 300 million believe it, it means everything).

[kodi]

You need to put a different hat on to realize just how redistributive Social Security is. Here, let me help you.

See, the thing about rich people is that they all got that way because they deserve to be rich. This means that they are all capable of managing their investments. Similarly, poor people are poor because they spend their money on ripple and hookers, rather than wisely investing it in the stock market. So what social security does is it takes away money from poor people, which would have been wasted, and therefore has a real value of $0, and takes away money from rich people, which would have been wisely invested, and therefore has a real value of $billions. Then it gives it back equally across the board - but now, we're looking at the same poor people who are flat broke after 45 years working dead-end jobs, so to them Social Security is the only thing keeping them off the streets, and thus the post-retirement payments have a value of $infinite, while the rich people, who are of course still independently wealthy, are getting a pittance that won't even pay the rent on their summer cottage, real value $0.

And, of course, that's why privatization is a good thing - it will let the rich people continue to make millions of dollars off the stock market, like they always do, and it will let the poor people mismanage their funds and get the fate they deserve, without the government stepping in to save them with the rich people's money.

[Evan]

Give me a bar of gold w/o any govt markings and I can get quite a bit w/ it

Okay, Scott. But I think what I'll actually do is give you a bar of lead with gold paint on it. Ha ha! Fooled you! What are you gonna do about it--sue me for fraud? With what for a government?

I suppose you might get mad enough to use fisticuffs or something, though, so maybe, to protect myself, I should just shoot you. Why would the police care? You're the one didn't want any truck with a government.

I used to be a Libertarian, capital L and everything. I'm still on the party's mailing list. I know about the anarcho-libertarian fantasy world from the inside, and it is exactly that--a fantasy world. A lot of people have managed to convince themselves that, in the absence of a monetary system, roads, police, antitrust laws, banking regulations, etc, etc, etc, they'd still be able to make and keep just as much money as they do now--which is patently absurd. I mean, think about it. If markets flourished in the absence of government, wouldn't every third-world nation with a collapsed government be seeing an investment rush?

[Brad]

SS is moderately redistributive in that low earners get a bit more back relative to what they put in than high earners do. This is offset somewhat by the fact that, as insurance, it also redistributes from those that die early to those that live longer, and lower earners are more likely to have a shorter life span. (more physically demanding and dangerous working conditions, less access to health care, etc...)

[burritoboy]

"Gold was considered valuable long before the USA or the fedgov came along - our govt clearly isn't responsible for gold's value, individuals are."

Cows and wives were once considered currency too. So, instead of paying you money for your car, I'm just going to let loose a herd of Holsteins in your backyard.

[alsafi]

Hm. Vaguely appropriate to the thread (though not the initial post, and for that I apologize), is this essay on the subject of money, barter, and altruism. I know nothing about this guy, though it does seem to be a well-researched piece--caveat lector.

[Scott]

Okay, Scott. But I think what I'll actually do is give you a bar of lead with gold paint on it. Ha ha! Fooled you! What are you gonna do about it--sue me for fraud? With what for a government?

And if your govt gives you a lead bar w/ gold paint and claims "soverign immunity" when you try to sue, WTF can you do about it?

[Evan]

Well, you can vote, obviously.

But if gold-painted lead is a government-backed currency, then it's simply a heavier and more toxic version of the dollar, so you have no cause for complaint anyway.

[Scott]

Well, you can vote, obviously.

51% of the voters get to vote to defraud you because it benefits them.

But if gold-painted lead is a government-backed currency, then it's simply a heavier and more toxic version of the dollar, so you have no cause for complaint anyway.

When a businessman lies to get what he wants, its fraud. When a politician lies to get what he wants, its merely an unenforcable campaign promise. If you applied the same moral and legal standards to govt actions you want applied to everyone else, the govt would wind up powerless.