Social Security

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Social Security is a pay-as-you-go social insurance program for retirement benefits, survivor benefits, and some other benefits.

Social Security and similar programs around the first world have been spectacular successes for preventing poverty among the elderly and survivors for more than 70 years in the US and more than 120 years in Germany. These programs are very robust: the populace wants them very badly, which is why they have survived two world wars in Germany (for example.)

Social Security is not a Ponzi Scheme: it is a generational transfer. Ponzi schemes require geometrically increasing participation and eventually go bust. Pay-go programs simply transfer revenue from working generations to retired generations. Public schooling in the US is also a pay-go generational transfer program, though generally on a lower level of government.

Social Security is not a pre-funded pension system. It covers more than pensions, and the benefits are paid for by current workers.

The Social Security Trust Fund was created to smooth the costs of the baby boom demographic bump.

Links

Agrarian Justice (book, online)
Thomas Paines' prescient proposal which advocated the use of an estate tax and a tax on land values to fund a universal old-age and disability pension, as well as a fixed sum to be paid to all citizens on reaching maturity.
Ponzi Schemes vs. Social Security [More...]
An article by the Social Security Historian's Office comparing Ponzi Schemes to Social Security. They are not at all similar.
Private charity can't replace government social programs [More...]
To suggest that community or faith-based charities can effectively supplant government social programs is a fantasy that serves only as a talking point to cut those programs.
Retirement Privatization (1 link)
Privatization of retirement has failed to benefit retirees everywhere it has been tried. Programs such as 401k savings plans have been colossal failures that fleece investors to benefit the financial industry.
Safety Net Cut Poverty Nearly in Half Last Year (2015) [More...]
"Safety net programs cut the poverty rate nearly in half in 2015, lifting 38 million people — including 8 million children — above the poverty line, our analysis of Census data released yesterday finds[...] The figures rebut claims that government programs do little to reduce poverty.
Singapore Is The New Chile [More...]
The Chilean retirement privatization was reversed very quickly, making it more like Social Security. Likewise, supposedly free-market health care in Singapore is becoming more like Obamacare.
Social Security Reform: Henry Aaron [More...]
Henry Aaron's 1998 testimony to the US Senate on why Social Security privatization proposals would be bad policy.
Socialized Medicine (4 links)
The proven method to the most economical and broadest provision of health benefits to a nation's populace. Rejected by libertarians because it is a government program; that is more important to them than the life and health of people.
The Myths of Social Security Crisis: Behind the Privatization Push [More...]
"Privatization of Social Security would not make the elderly and disabled go away. But it will end a system that requires high earners to help out low earners without forcing low earners to undergo the stigma of welfare."
The Voluntarism Fantasy [More...]
Libertarian stories of 19th century voluntary charity ignore the historical facts of how horribly insufficient that system was and how much it was supplemented by state and federal aid. The Great Depression destroyed most voluntary charity, and brought about progressive social insurance programs.
Thomas Paine’s “Agrarian Justice” and the Origins of Social Insurance [More...]
Thomas Paine proposed the first realistic plan to abolish poverty on a nationwide scale, a universal social insurance system comprising old-age pensions and disability support, and universal stakeholder grants for young adults. Compared to Condorcet, Locke, Spencer, Rawls and especially Hayek.

Quotations

We are going to need a bigger and better government. The private unregulated market does not do well at health-care finance, at pensions, or at education finance. The private unregulated market does not do well at research and early-stage development. The private unregulated market does not do well with commodities that are non-rival, or non-excludible, or produced under conditions of greatly-increasing returns to scale. We are, in all likelihood, moving into a twenty-first century in which these sectors will all be larger slices of what we do. Thus in the twenty-first century a well-functioning economy will need a larger government share in the economy than was needed in the twentieth century.
Brad DeLong, "My Take on the Seven Things We Need to Focus on for Equitable Growth in America: Thursday Focus"
It seems to me that there are five areas in which government spending has a demonstrated superiority over the private sector -- health and disability insurance, education, old-age pensions, infrastructure spending, and military spending. It seemed to me that structural changes in our economy and society were driving the amount of money we ought to spend in sum on those five up, hence the enlargement of government.
Brad DeLong, "Nick Eberstadt and the "Takers" Once Again: More Reflections on the General Theory of the Moocher Class"
Large-scale government social-insurance programs are the best way we have found to achieve major and important public purposes. There has never been a private marketplace offering unemployment insurance. The unemployment insurance program works quite well: It gets money to people who have previously paid for it when they need it. Edward Filene’s welfare-capitalist notion that defined-benefit pensions offered by employers and more recent hopes that defined-contribution 401(k)s could provide old-age pensions more efficiently and effectively than Social Security have not covered themselves with glory over the past generation: Too many defined-benefit private pensions have not been paid out in full as promised, and too much wealth invested in 401(k)s has been skimmed off to enrich the princes of Wall Street. In health care, despite extraordinary administrative inefficiencies and little ability to improve quality and cost-effectiveness, the private insurance marketplace works—unless you are old, sick (and happen to be out of a job), or poor. Yet it is the old, the sick, and the poor who need health insurance most—hence, Medicare and Medicaid.
Brad DeLong, "Shrugging off Atlas"
"Agrarian Justice" forged a path to this modern, systemic understanding of justice. In it, Paine envisioned justice as requiring that the lowest rung be above poverty level. He recognized that achieving this required forging novel, positive (legal) forms of property rights--social insurance and stakeholder grants--that could not be deduced from local or "natural" principles of justice. He saw, if only partially, the limitations of market- and desert-based justifications of property rights that ignore social externalities. Most astonishingly, he stood at the cusp of a famous systemic principle of equality--a principle defining the limits of justified inequality. In the words of its most influential advocate, John Rawls, "social and economic inequalities are to be arranged so that they are . . . reasonably expected to be to everyone's advantage."
Elizabeth Anderson, "Thomas Paine’s “Agrarian Justice” and the Origins of Social Insurance"