Why Social Security Hurts Society and Isn’t Secure
This so-called insurance meant from the beginning not merely compulsory insurance it also meant compulsory membership in a unitary system controlled and enforced by the state.
The concept of a social safety net is well accepted throughout the Western World. The idea that some provision should be made for those who through no fault of their own are unable to provide for themselves first appeared as a state policy in Germany in the 19th century as the Iron Chancellor, Bismarck, sought to coopt the popular appeal of socialism and strengthen the newly founded German Imperial state. The idea struck a chord in the hearts of most people in Europe and in the hearts of its descendants around the world.
In days gone by the family, the parish church and the local community had filled this need. However, with the growth of cities and the near total separation of these urban populations from the land, it became necessary for the wider community to accept this responsibility.
It was inevitable that since some sort of agency or bureau was needed to supervise the distribution of such aid this public apparatus would follow the trajectory of all bureaucracy: growth. Mission creep would inevitably set in as the bureaucrats would seek to build their kingdom. Services would increase so that the servicers would increase and one layer would insulate another. From providing the bare necessities to those who through no fault of their own could not do so we have reached a stage where the modern ideal of fairness intersects and we have the self-selected indigent demanding a living wage for doing nothing.
This amounts to those who make provision for themselves being forced to make provision for those who don’t. This must necessarily be so because the only way such a system to exist for any length of time is for it to become compulsory upon all to contribute for the benefit of some. This then brings into play the economic truth that whatever you subsidize you get more of and viola the welfare rolls keep growing as the benefits keep increasing.
One of the tricks used to sell this scam to an unwitting nation was the use of the word insurance. Everyone was familiar with the concept of insurance: pay a premium and expect coverage if the event insured against occurs. The government called it Social Security Insurance and it seemed so reasonable. The problem is the money has always gone directly into the general fund. Therefore it was spent today with no provision for tomorrow. Combine that with yearly deficit spending and the inevitable growth of the national debt and the money coming in has no relationship to the money going out.
It is a Ponzi scheme pure and simple and it always has been. FDR and his Brain Trust social engineers knew that from the start. The problem with a Ponzi scheme is that eventually the music stops and there are never enough chairs. The most successful Ponzi scheme we know of was with Bernie Madof. It eventually came crashing down, and it was a pittance compared to the tenuous superstructure we have built up with Social Security.
In 2013 Social Security ran a $71 billion deficit. This means there have been four years of consecutive cash-flow deficits, which means that the inflow is less than the outflow. According to the 2014 annual report from the programs’ trustees, the combined 75-year unfunded obligation of the Social Security and Disability Insurance Trust Funds (referred to collectively as the OASDI Trust Fund) is $13.4 trillion. That is a $1.1 trillion increase from last year’s unfunded obligation of $12.3 trillion, and this is without calculating the tens of millions more who will enter the system under President Obama’s amnesty decree.
Does anyone really believe we are ever going to make that whole? Are we ever going to take enough out of other portions of our budget to fund these obligations? If we don’t eventually someone will have to pay the piper. If it isn’t us it will be our children or their children on and on until it crashes against the reality that the cupboard is bare.
This so-called insurance meant from the beginning not merely compulsory insurance it also meant compulsory membership in a unitary system controlled and enforced by the state. The main reason such a centralized system is widely accepted as necessary was the administration convenience and the economy of scale that alone could make provision for everyone at once. This is nothing except a government monopoly. Not a closed monopoly where no one can compete against the 800 pound gorilla, but an open monopoly where everyone is forced to participate even if they make provisions for themselves and never take recourse to the guaranteed payout.
Even though competition is possible the accepted principle that all sheltered monopolies become inefficient over time applies here. Just because the pyramid hasn’t collapsed yet does not mean that Social security earns the praise it garners as a successful program. As the saying which typifies government inefficiency goes, it still equates to having the DMV run your retirement plan.
How has a system that was sold to the American public as a means to relieve the abject poverty of a few morphed into a tool for wealth distribution? How has the once vigilant American public been convinced in not only the efficiency but the necessity of a program which is little more than a new way of packaging the discarded aims of Socialism? It was done incrementally.
It reminds me of the story about the two pastors who meant at a conference. Pastor A was approached by Pastor B who had once been the pastor at A’s current church, but he had been thrown out because he tried to move the piano from the right side of the platform to the left.
Pastor B: Hi, I heard you have moved the piano from the right side of the platform to the left side and that the people love you there. When I tried it they threw me out faster than the Holy Spirit can say Jesus. How did you do it?
Pastor A: One inch every six months.
What won’t be accepted today will be accepted ten years from now if we move there slowly. This is classic Alinsky, and is straight out of his Rules for Radicals.
Whereas the people of the West fought for fifty years to resist the smothering embrace of Communism we have allowed ourselves to accept it by degrees under other names until what we have is in many ways indistinguishable from what they tried to make us accept. The practice of the welfare state’s attempt to bring about a just distribution for everyone who has reached a certain age by distributing incomes in such proportions and amounts as it sees fit is merely another method under a new name of achieving Marx’s long promised goal, “From each according to his ability to each according to their need.”
It is of paramount importance that we understand the difference in a situation where a society decides to prevent the utter destitution of a few and a situation in which the state assumes the right to determine the just portion everyone must pay and the just portion everyone receives with state sponsored coercion to back it all up. Individual freedom, personal liberty, and economic opportunity are profoundly threatened when the state is given the exclusive power to provide certain services.
This system was designed in the 1930s. It has been tweaked and massaged several times since then however it is in essence a 1930s construct. Whenever someone suggests finding a new way to provide for any or all of the needs now associated with the Social Security System we are greeted with visions of heartless robber barons throwing grandma off a cliff. However it is eminently reasonable that when the best available solution based on the best available knowledge is frozen in place it becomes the most efficient way to prevent any new knowledge ever being applied to the problem.
When our desire to provide out of the public treasury for those in need is combined with a system for compelling everyone to make provision against being in need we have in effect created a third system. This is a system under which people in certain circumstances such as old age or disability are provided for without consideration of whether or not they are able to take care of themselves or not. Under this system everyone is provided with the standard of which the government has deiced they should have. With no means testing we have the specter of people who make $100,000 per year receiving pensions forcefully taken from contributions from people who make $15,000 per year.
With the current average life span and the caps on the amount of income eligible for taxation almost everyone who lives long enough to collect collects more than they ever pay in. How is that supposed to work?
Since most people want to earn what they receive and do not want a hand-out the reality of the SS Ponzi scheme has been wrapped in enough insurance type language to fill a phone book. This has become an effort through concealment to persuade the public to accept what is in reality an income redistribution plan. This was instituted and has evolved from an acceptable half-measure designed to induce hard-working people to accept what they haven’t earned and yet think it is fair, because they have paid in. No matter that they routinely receive far more than they ever pay in.
One last aspect of this corrupt bargain that transfers the wealth from future generations to the present is that the SS administration uses some of the funds gained through compulsory deductions to employ publicity agencies to convince the majority of payees that the system needs to constantly expand. Some of the money is also spent to lobby Congress for this constant expansion. This amounts to nothing less than a group of self-interested executives allowed public funds to agitate for a larger organization to administer which means even bigger budgets for publicity and lobbying. It is a self-perpetuating pyramid scheme that uses the money of the victims to gain authority over ever larger portions of the victim’s income and lives.
This superstructure has been built over generations by the elected representatives of the people and the bureaucrats they employ. However, I believe it is doubtful if Americans would have turned their backs on the work ethic which made us great and embraced spreading the wealth around as a tool for social engineering. If they had fully known where they were headed and what the end result would be: a centrally planned collectivist entitlement machine hurtling towards a fiscal cliff, they would have rebelled.
When we add this all up we find that the scales are now weighted against individual liberty, personal freedom, and economic opportunity. In the end after every deduction and every benefit Social Security hurts society and it isn’t secure.
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