Let's talk about social security (long)

Great Debates
1

Not the virtues and vices of the federal system, mind you, but the concept: lower case ‘s’ social security (which the federal system of upper case “Social Security” is designed to promote, of course.) In the thread on taxes, the issue has come up of what the government is going to provide, and what it should provide–the right-wing argument says that taxes should be for for the armed forces, for highways, in short for all the tangible immediate indisputable goods and services that we clearly require in order to live, but very little more. The left-wingers maintain that the government is responsible for helping its poorer citizens avoid the horrors of poverty–homelessness, no medical care, short-term economic pressure to drop out of school, no retirement funding, etc.

To their credit, most right-wingers have come around to seeing some need there, though they want (if I understand them correctly) to restrict social programs to the recipients with the direst need, and as little of that help as is necessary. So even rightwingers don’t begrudge paying an 80 year old with no savings enough social security money to live in a crumby and small apartment in a bad neighborhood and to get to eat enough to survive. (Some right-wingers do begrudge even a nickel, on principle, but the concept of social programs has, I think, prevailed so the practical issue there is a matter of degree.) But what I want to discuss is the intangible qualities of social security.

Why should we, as a society, be the least bit generous in funding social programs? If that retired person can scrape by on 8,000 per year, eating sparely, living in a shack, doesn’t that exhaust our responsibility? If some 15 year old gets herself knocked up, how much should the government have to shell out (on training programs, food stamps, etc.) to prevent her life (and her kid’s life) from being utterly wasted?

Rightwingers complain that they don’t want to shell out extra tax money (that should go into their own pockets, not to the government) so that the retiree can have a more comfortable apartment, or so that the 15-year old can buy her baby some nice clothes. “What’s wrong with eating dog food?” they ask. “You can live on that. Let the stupid bitch get her kid’s clothes from the Salvation Army. I don’t want to see my tax dollars going for brand-new clothes. Poverty’s supposed to hurt, to give these people some incentive to get out of it. I don’t want poor people being taken care of comfortably, and on my dime too.”

But does it really work like that? I would submit that, unfair as it may seem, and as long as it may delay your ability to buy a new plasma TV, to afford another week in a luxury hotel in Barbados, you really do get advantages from giving everyone in the country some modium of dignity and enjoyment to their lives, much as that concept grates on you.

Let’s look at Social Security as an example. I contend that working people spend their careers seriously worried about their retirements. Under the present system, they wonder if they can get by on the money in the Social Security accounts. (Answer: No.) You might argue that this worrying is good, because it motivates them to work harder, and to save some additional money for their retirement, and you’re right, but it’s also bad in that worrying also motivates them to do some stupid things–commit crimes, defraud their employers, gamble–and it motivates them to relax in ways that are counter-productive (serious drug abuse, for example). It’s not a good idea to have some large portion of the population feeling aggrieved, deprived, marginalized. Everyone’s quality of life goes down, not just those who feel the pinch directly.

Not your problem? Yes, it is. When people feel insecure socially, wondering where their next meal is coming from, they will do things they shouldn’t do, and then it becomes your problem. Yes, you work hard for your money, and you don’t want to work so some undeserving slob gets a free ride. Believe me or not, I understand your complaint.

But there’s a reason that every country in the world has become more socially responsible since the days of Dog-Eat-Dog (misapplied) Darwinism and Dickensian capitalism: it is unproductive to promote social insecurity. If we provide a modicum of housing, health care, retirement funding, the lives of even our poorest citizens are elevated above bone-crunching horrific poverty, and living in such a society is good for everyone, in material ways.

What happens in a society where people can live fairly comfortably without working too hard? I contend that this is NOT a formula for “Hell in a handbasket.” There will still be large differences between income levels, only not quite so large as we have now. I will still envy those who make 10 times what I earn in a year, and I will still have to decide if I want to put the effort into earning those salaries. But maybe the guy who would have earned 100 times my salary will only be earning 90 times my salary–I still think he will scrape by on that, especially if that means that I will encounter fewer kids on the subway raised in homes earning 5% of my salary, as I do now.

2

I’m all for having people live comfortably and be provided with their basic needs. As a quasi-Libertarian, I don’t think that is a legitimate function of a limited government. That is a function of churches and charities.

With a welfare system, you have a moral hazard problem which leads people to say to hell with it and join the system…

3

Which is what?

4
5

Thanks. Never came across that term before.

It seems to me, after skimming your link, that I’m conceding that, yes, there will be lazy people who see the public trough worth dipping into, and who abandon their part in a capitalistic society. And yes, the presence of these folks who choose to opt out of a competitive society and lead a comfortable life without expending effort or taking risks will cost the upper ranges of society considerable tax money.

What’ I’m claiming is that 1) having even an increased number of such people living tolerably well on public assistance is probably better than having such people living all pissed off on slightly less public assistance, which is what we have today, and 2) the tax money needed to pay for such social expenses won’t be nearly enough to discourage competitive types from continuing to earn big bucks.

Flat out, I simply don’t believe rich people who claim that taxes are a disincentive for them to work hard. Sure if the tax rate gets close to 100% at the top bracket, that would discourage hard work, but we could see that the top bracket is never confiscatory, so there would always be some economic motivation to earn more, and we can set that top bracket very high indeed. The rich will bitch, but frankly I’m not very troubled by complaints from people making 2x million dollars that the government is forcing them to scrape by on a lousy 1x mil. Boo-fucking-hoo. Deal.

6

This search for the “happiest countries” is interesting. Most of the top countries are capitalist, but with a catch. They are socialist or socialist-democratic in some major ways.

The happiest country is Denmark. Although the article doesn’t mention this, about forty percent of their income goes to taxes. But they have excellent health care from cradle to grave. When I was there, they didn’t have to have insurance at all. They are very proud of their health care and I heard no complaints about having to wait to see a doctor or any such problems.

I saw no poverty while I was there. The article says there is a high standard of living and little poverty. There are many public and social services.

And who wouldn’t like that mandatory five weeks of vacation every year? (That’s not mentioned in the article either.)

I think there is much to be said for a team spirit when we help each other out and that is what a system like Denmark’s does.

Canada was number 10 on the list. The USA was number 23.

7

Since you have never heard of the term moral hazard, maybe you have never heard the term dead weight loss, maybe the terms income effects vs substitution effects are not familiar to you either, but you should read up on them. Higher taxes on the wealthy slow economic growth because of the income effect and dead weight loss. Moral Hazard also slows economic growth. How much they do is uncertain, but even if they do it a little bit this effect is huge since growth is cumulative. If the US economy had grown 1% less each year for the past 100 years the standard of living in the US would now be the same as in Mexico.
So you are correct in saying that economic insecurity could be reduced and that would have positive effects on society, but it would come at a price. How many millions lifted out of poverty, how many cured diseases, how many technological advances are you ready to give up to ameliorate economic insecurity?

8

My gut reaction here is that you’re trying to bullshit me with jargon and doubletalk that is probably much in dispute among those who understand the terms much better than you do. “How much they do is uncertain, but even if they do it a little bit this effect is huge”, for example, plainly implies that you’re just guessing but drawing a certain conclusion from your guesses. I would ask you for how long are you willing to deny millions and millions of your fellow Americans a shred of pleasure and security in their lives on the promise of nebulous technological advances and other mumbo-jumbo? From your tone, I 'd guess “forever.” Not good enough.

And while you’re at it, tell me again how keeping your foot on poor people’s windpipes “lifts millions out of poverty”?

9

I have two small comments. The extent to which they apply to the OP should be clear.

First, waste in any system is important, but waste is not some kind of fundamental atrocity, it is a measurable problem. The comment shouldn’t be, “There’s gonna be waste, and I don’t want to pay for waste,” but rather the question should be, “How much are we willing to pay to eliminate waste?” Because there are serious dimininishing returns here, where it costs us $20,000 to eliminate $5,000 worth of waste (not real numbers). I don’t know what these numbers are. But I do know that this is what should be discussed about waste, which is ultimately a practical issue, not a moral one, and it should be addressed on practical terms.

Second, welfare economics. (It is purely coincidental that in a thread about social security the term “welfare” is used; it is not used in the social program sense but in the “promote the general welfare” sense.) I particularly like the second fundamental theorem of welfare economics. Wikipedia popularizes the second theorem as, “out of the infinity of all possible Pareto efficient outcomes one can achieve any particular one by enacting a lump-sum wealth redistribution and then letting the market take over.” Thus lump-sum distributions are not intrinsically something to fear, if one supposes the market meets the requirements of the theorem, which no market does, of course, but it is still something to think about. Anyone who champions the free market needs to realize that lump-sum distributions are something that the market can correct as much as anything else, if those distributions were as a matter of economic fact unfair (inefficient). The extent to which any particular social program actually acts as a lump-sum transfer is worth discussing, but in any case, the theme of this paragraph is only: if this particular social program as a matter of economic fact is unfair, why can’t the market correct for this, too, if it corrects so much else? (There are good answers to this, I’m not saying otherwise. It’s the question, Neo.)

10

So as a quasi-Libertarian, you’re OK with an established church doing this?

11

I’m a quasi-libertarian, and I have no idea what this question is supposed to mean.

Do you mean ‘established church’ as ‘a church that was established’, like for instance, the Catholic church? Or is it ‘established’ like the Church of England – THE church that the government supports and puts its power behind?

If the former, sure. Charity and welfare are probably the only good things I see coming out of religion.

If the latter, I have no idea where you’re coming from. Did you misinterpret jtgain as saying ‘I don’t agree that the government should be a charity organization, but if they call the charity branch of government a ‘church’ I’d be okay with it’?

The thought is that only voluntarily funded civilian organizations (churches and whatnot) should provide charity. It is a beautiful idea actually. People will give to whichever charity they choose, only up to the amount they choose. We’ll have the same amount of money flowing around the economy, but less of it tied up in wasteful government bureaucracy. The warm, caring liberals can support poor people on welfare to their hearts’ content, while the big, bad conservatives twirl their mustaches and laugh at the poor swine. The government doesn’t have to interpret the populace’s motives and decide (poorly) which types of welfare will get what tax money. Everybody is happy!

If less money actually gets to the poor people in this system (which I highly doubt), it just goes to show that the people didn’t want (that much of) their money going to the poor in the first place, in which case the government is certainly wrong to take it.

Anyway, to the OP, conservatives aren’t against ‘social security’ as a concept. They just feel that

a) it is not the governments job to support poor people. If a wealthy person wants to help out a poorer person, then they should be able to do so directly, without a wasteful and bungling intermediary. And

b) the governments is just going to fuck it all up anyway and we’ll all be worse off.

I love my fellow poor people, I really do. I’m one of them. I want them to have money, options, opportunities and a social safety net. I give them money directly (in person) and indirectly through charities when I can afford it. However, I respect the right of my neighbor to do something else with his money if his priorities are different than mine.

12

One could say the same of every single government program, including the military and police.

This seems doubtful by inspection.

13

If the majority of the people want less defense and less crime prevention then so be it. This is another of those topics I highly doubt the majority of Americans disagree with. If military and police spending were somehow magically tied to the percentage of American people that supported them, I bet we’d see on average more money spent there.

These kinds of cryptic comments deserve explanation. Are you saying you’ve ‘inspected’ and studied this subject and come to the conclusion that governments don’t fuck shit up? Cite?

14

Here in the UK, a single, unemployed adult gets around £4,000 per annum to live on.If a government wants to look upon these people and the families they raise, as parasitical drains on society, they could just jail their sorry asses if they are not employed within a year of leaving school, say. But hang on, that would still cost the tax-payer at least £26,000 per annum, even if they are banged up in shitty conditions. Hmm…Prisons or Welfare, Prisons or Welfare…which one should I pick?
p.s. Stick another £5,000 on top of that 4,000 to cover housing benefits, and it’s still less than £10,000.

15

I’m saying that the government doesn’t intervene just for shits and giggles. I cannot say, unilaterally, that everything the government does is super cool; I cannot say, without exception, that government intervention is correct. I’m saying that to call it fucking shit up is obviously untrue by inspection, that is, just by looking at it.

16

SS is funded through payroll taxes. It is not a gift.
It started after the depression when many were appalled at the lot of the old people in America. It was to show we care about the lives of those who went before us. Churches do not come close to handling the problems. Many are involved in helping the poor with heating bills in the winter. They can not keep up with that. It has made life bearable for the aged for over 60 years. It has an extremely low cost of running it. It is a model for running government programs. It is good for the country and good for the soul.

17

Factually inaccurate.

It was intended to remove the elderly from needing to compete for jobs, and was added during the Depression because there frankly weren’t enough jobs.

It is also not a model because, being funded by payroll taxes indexed to pay back those same taxed, it is used to provide aid to people who have never and will never pay in. That should be an entirely separate fund- the money out exceeds the money in.

18

This is the problem with your scheme.

Yeah? Let’s apply your theory to crime prevention, see how that works: “Oh, society collectively has decided that it’s OK to steal from those too poor to hire private security firms. That’s what the people wants.” Do you really think that society is a rational actor collectively? Or even an actor? Some people think man is intrinsically good, against all reason. I know man is born ignorant, & intrinsically selfish. And much evil can come from ignorant selfishness.

It’s got nothing to do with what the wealthy want. Neither morality nor economic sustainability are matters of opinion. And a planned distribution scheme is by definition far less bumbling than no plan at all.

You’re utterly benighted.

19

Maybe, but in fact people don’t stay on welfare all that long.
Cite
This is for Minnesota. Note the bottom of the table, which shows you stay on welfare less the more education you have - hardly surprising.

It would be nice if those who think welfare is so horrible would support various initiatives for full employment. I’d love to see hard data on the number of people capable of working and who choose not to work instead of not being able to find a job. I’m sure they exist, but I doubt if the numbers are very large.

Especially with the 1996 reforms, I doubt we are anywhere close to moral hazard territory.

(BTW, anyone never hearing this term must not have been reading the financial news, where moral hazard is all over the place.) Don’t you think big CEO severance packages after a screw up is a much larger moral hazard than welfare?