carnes@gargoyle.UUCP (Richard Carnes) (11/12/85)
>Social Security may be the single most odious program the US Federal >Government runs. ... It is a poor social program, as well: it >transfers ... from the working to the idle... Horrors. The elderly, the disabled, widows, orphans, etc. are not often called "the idle." >...and from the young to the old. What an outrage. In fact, thanks to Social Security, most of the aged poor have been raised out of poverty, an accomplishment of which Americans can be very proud. It takes some kind of clod to dismiss a program with this accomplishment to its credit as a mere failure or scam. >It transfers from the poor to the rich.... Inaccurate. For example, in 1974, ~60% of SS payments went to those with pre-transfer incomes below the poverty line, i.e. to those who would have been poor without it. Administrative costs are extremely low in percentage terms. However, the redistributive impact of SS is quite limited. On average in 1981 it replaced only about 40% of a worker's pre-retirement income. And most of the aged who are poor when they receive SS benefits have previously been middle-class through most of their lives. SS smoothes lifetime income streams by forcing people to save while they are working and paying back money when people retire. Also, workers in effect are buying insurance against certain kinds of poverty, through being disabled, leaving a widowed spouse, or outliving one's private savings. The private sector would probably not provide such insurance (or Medicare either) even though there is a demand for it (see P. A. Diamond, "A Framework for Social Security Analysis," J Public Econ 8 (1977): 279-98). Insurance, rather obviously I hope, is not a commodity for sale on the open market. But: SS does *not* equalize lifetime incomes among income classes. It is financed by regressive payroll taxes, and workers with relatively higher incomes tend to receive greater benefits, although it is true that certain features of SS do not fit the pure insurance model. But the SS system cannot continue unless population or productivity continues to grow fast enough so each generation of retirees is supported by a larger or more productive group of workers. This is the resemblance to a Ponzi game. >Hence not only do those receiving SS not have a moral claim to >the level of benefits they receive... According to libertarians, they don't have a moral claim (a right) to any benefits at all. Social Security inspires great wrath and outrage among libertarians, because it provides at taxpayer expense a subsistence for the elderly and disabled, and some of those taxpayers may actually prefer to spend the money in other ways. This is a question of one's philosophy of ownership rights and other political rights. Unfortunately many libertarians never get this far: it doesn't occur to some of them that they must defend, rather than merely assert, their views on ownership rights, according to which taxation is of necessity theft and individuals have a right to own privately the means of production. -- Richard Carnes, ihnp4!gargoyle!carnes