[net.politics] Social Security -- Reply to Larry Welsch

mck@ratex.UUCP (Daniel Kian Mc Kiernan) (01/21/85)

I just love the way that people in net.politics pontificate about things that
that they're abysmally ignorant about!  Larry Welsch writes:

>The main reason social security was formed was to provide protection for
>all the hard working folks who worked their asses off being good citizens.

Social Security was introduced as a political move to capitalize on the
popularity of the Townsend Plan (which you can read about in *After Affluence*
by John Oliver Wilson).  The Townsend Plan first came to public attention on 30
September 1933, in a letter to *The Long Beach Press-Telegram* by Dr Francis E
Townsend.  Townsend asserted that the Depression could be cured by giving $200
a month to everyone over sixty, under condition that they spend it within the
month; supposedly, the resultant demand would induce increased production, and
EVERBODY would be better off.  Oh boy!  A Free Lunch!  It made for bad 
economics, but great politics.  The idea took off; by Jan 35, Townsend headed
an organization of 4 million people.  The Social Security Act bought the votes
of these people (only 35% of the American people supported the Act) without
over-alienating the rest of the voters.

>They had savings, stocks, bonds and houses from their life's work and then
>the great depression hit.

True enough.  But the Depression was caused by government manipulation of the
money supply, tariffs, and government interference with wage-adjustments (see
*America's Great Depression* by Murray Newton Rothbard).  If I'd been alive at
the time, I would have opposed all that, and I WASN'T alive.  I'm not goddamned
responsible, so don't tell me I have to pay!

>Social Security is still necessary today for exactly the same reason.
>Think of the people who retired in 1970 say they had hundred and fifty
>thousand dollars to their name, which was a lot of money in 1970
.
.
.
>What happened, inflation!

[Your punctuation is ATROCIOUS!]
I oppose deficit spending (in fact, I oppose most government spending period;
the amount of government that I'm in favor of could meet in Frank Chodorov's
kitchen), monetization of the debt, and most government measures which hamper
economic growth.  I'm no more responsible for inflation than I am for the
Depression, so don't tell me to pay!

>Now for some kickers.  Banks are still failing, and not all banks are FDIC
>insured.  Also to get 10% on your money you have to use non FDIC insured
>form of investment.  Or another words people have to RISK their savings
>just to maintain a decent return.

Okay, but just when did I cause that?  I'm not responsible, so don't tell me to
pay!

>                                  Finally, the single biggest expense
>older people have is medical.  Medical expenses have gone up more than any
>other type, so the probability of older people being able to not touch
>their principle is low, since they would need to pay their medical
>expenses.  

1) Medical treatment is so expensive because the government: coercively backs
AMA efforts to keep the supply of doctors low, and taxes and subsidizes in ways
which boost demand.  I oppose such policies.  I'm not responsible for the high
cost of medical treatment, so don't tell me to pay!
2) Why shouldn't the retired have to touch their principle?  Is this diatribe a
result of your fear that you won't inherit much?

>Now, what about social security running out of money, well horse pukkey.
>The social security system is sound, as a matter of fact Reagan is eyeing
>the money in the social security trust fund to pay the cost of running
>government.

The soundness of the Social Security System is pretty much unrelated to the
trust fund; that was just set up to maintain the fiction that Social Security
was some kind of insurance plan.  In point of fact, the Social Security System
is a pay-as-you-go program.  Incoming tax-receipts, instead of being invested,
are used to finance current payments.  Problem is, the ratio of contributors to
recipients is rapidly decreasing; we're rapidly approaching the point where 
there are too many parasites for the number of hosts!

>What social security needs is not to be disbanded, it should be
>strengthened.

Great!  Get the parasites to suck faster!

>              How?  Simple, put the tax on one's whole income and make it
>progressive.

Why should I have to pay your parents' bills?  And why would my obligation to
do so grow with my productivity?

>             Also, charge employers a progressive social security tax.
>For every dollar of an employees salary that is over a hundred thousand
>dollars, the employer must add a a matching dollar to the social security
>fund.

You might as well just boost the direct tax on the employee.  The incidence
(in economics, the term 'incidence' means ultimate burden) of payroll taxes
falls COMPLETELY on the employee.

>      Further, every time prices are raised for a given service or
>product, then the social security fund must get half the amount of the gross
>income due to the increase in price.  

Why should the business woman, trying to keep up with inflation, have her
efforts thwarted by such a tax?  If I infer correctly, you seem to believe a
cost-push phenomenon is ultimately responsible for increases in the price
level!  MONETIZATION OF GOVERNMENT DEFICITS IS THE PRINCIPLE CAUSE OF INCREASES
IN THE PRICE LEVEL!!!  I suggest that you go back thru net.politics and read
'Inflation in a Free Economy?'.  In any event, if you taxed such increases, the
suppliers would just go for bigger increases; unless the demand for the good or
service was completely inelastic (and there ain't no such thing), everybody
would lose but the SS parasites.

>Some other things that can be done is pass laws dictating that companies
>can not have mandatory retirement regulations.

Well, 'dictate' is certainly the right word!  Why should I have to employ
somebody that I don't want?

>                                                Raise the age that social
>security starts to 70 or 75.  

Now!  You've actually made one suggestion that makes sense!  Here are a few
more:
       1) Introduce a means test; don't subsidize anybody above the poverty
          level.
       2) Stop pretending that Social Security is some kind of investment
          program; throw the trust fund into general revenues and treat Social
          Security as just another welfare program (which, in fact, it is).
       3) Eliminate benefits for everyone born after, say, 30 Dec 30.

While not all of the above discussion could properly be confined to economics,
clearly much of it was dependent upon economic analysis.  And clearly Mr
Welsch has no more understanding of economics than I have of combinatorics.
Yet Mr Welsch SPOUTS-OFF anyway.  And no doubt he votes on economic issues,
which (as I pointed out in 'Inflation in a Free Economy?') is like a juror who
has slept thru the trial nevertheless casting his vote.  Mr Welsch, how do you
sleep at night, after condemning the innocent and freeing the guilty?

                                        Standing in a pool of disgust,
                                        Daniel Kian Mc Kiernan
                                        9120 Hawthorn Pt
                                        Westerville, OH  43081-9605

josh@topaz.ARPA (J Storrs Hall) (01/23/85)

> the amount of government that I'm in favor of could meet in Frank Chodorov's
> kitchen), 

Hot Damn!  a discerning individual at last!  And on net.politics at that.

--JoSH