Difficult economic times force people to confront the problem of economic security. In fact, it’s easy to imagine that, in an ideal world, economic insecurity would be a thing of the past. With that worry gone, we could spend our days pursuing things that are really important, like playing with the kids, helping a neighbor fix his fence, or watching television. In short, if we were guaranteed economic security, we would be free at last. But is that true?
In his 1913 book, The Servile State, Hilaire Belloc threw down the gauntlet:
If you were to approach those millions of families now living at a wage, with the proposal for a contract of service for life, guaranteeing them employment at what each regarded as his usual full wage, how many would refuse?…Such a contract would, of course, involve a loss of freedom: a life-contract of the kind is, to be accurate, no contract at all. It is the negation of contract and the acceptance of status. It would lay the man that undertook it under an obligation of forced labor….It would be a permanent renunciation of this right to the surplus values created by his labor. If we ask ourselves how many men, or rather how many families, would prefer freedom (with its accompaniments of certain insecurity and possible insufficiency) to such a life-contract, no one can deny that the answer is: ‘Very few would refuse it.’ That is the key to the whole matter.
Belloc thought that the ownership of property, of capital, was an essential counterpart of freedom, for apart from property, insecurity would be prevalent, and a nation of chronically insecure citizens will eagerly forfeit their perilous sense of freedom for the real security provided by government largess. How many Americans today would refuse the offer of a lifetime contract with good a good wage but no option to leave? Would you?
According to Belloc, citizens who do not possess some property are not economically free. They are, though, politically free insofar as they have the right to vote. This property-less class will express its deepest concerns at the ballot box. Because they realize their own insecurity, they will, not surprisingly, vote for the candidate who promises the greatest security. The desire for security is understandable. The willingness to exchange freedom for security demonstrates how far the taste for freedom has eroded.
Is it any wonder, then, that Presidential candidates fall over each other making promises to create programs that appear to increase security? The candidate will win who is considered most genuinely able to deliver the goods. This is one important reason that the welfare state has proven so difficult to reverse. It creates property-less dependents. Such people, naturally, want security without pain. It is no wonder, then, that what were once the traditional positions of Democrats and Republicans have resolved into a ludicrous and, ultimately, unsustainable position. The Democrats were typically characterized by a philosophy of tax-and-spend. Yes, they were for more social services (to provide security to the property-less) but they were willing to raise taxes to pay for the programs. The Republicans, on the other hand, traditionally spoke in favor of reduced taxes and a corresponding reduction of services. We have reached a curious situation where both the Democrats and the Republicans have won. Yes, the public expects more services, and both Democratic and Republican candidates seem to agree (if they differ it is only by degree), but the public also believes that taxes should be reduced, as evidenced most recently in the 2008 presidential campaign where both candidates boasted that their plans contained the highest tax reductions. Increased spending and decreased revenue leads to skyrocketing debt, and that is what we have: a welfare state drowning in red ink.
Property-less citizens will use their political freedom to achieve security and the price will be economic sanity and a steady increase of government power and scope. Property is essential to freedom. Without it, there may be social security, but even that will prove less than secure. Belloc anticipated the rise of what he called the servile state. Today, in the name of security, a new kind of slavery is being born in America, one far more subtle than chattel slavery, for the bonds are voluntary. As a consequence, even though the outward trappings of this new form of slavery are muted, the degradation of the nation’s soul will be profound.
This is just the meritocracy argument in a different guise. Those who have, get. Can you possibly be more elitist? I don’t think so, not if you truly believe this argument.
In a nation where the median household income is insufficient to buy the most modest of homes, much less participate in the capitalist system as something other than labor, how is one to obtain this “property” of which you speak?
I guess you assume one of the traditional methods – theft, extortion, malfeasance in office, or the most beloved of the elites – inherit it.
If you are gonna propose a state wherein the option to choose to own property is nearly universal, you really ought to suggest at least ONE possible path for achieving that state.
Frankly, I don’t see one. What I see in your words, and in Belloc’s for that matter, is a post hoc justification for things-as-they-are.
Jake
You have it exactly BACKWARDS Jake. In the trade of freedom for security the freedom given up is the Permanent renunciation of this right to the surplus values created by his labor, in other words to be paid for your worth at the time in a given market not to be constrained by an artificial wage set by your Government.
No one is guaranteed the right to property, and the author nor the quote does not propose Universal property. Property is the wage of your labor. Many opportunities exist to raise that wage and perhaps own property but if you are wage capped by the Government you will NEVER own property. That is the essence of Socialism, everyone is capped at a given level. Unfortunately there are many people in the world that are slaves the the regulatory systems of wage such as Welfare.
Any desire to be ABOVE your level, to earn things you would like, to put extra food on the table but with wage opportunity constrained by Government leads to the corruption, theft and criminal acts as that is all that is left unregulated. The Socialist and Communist states have had the worlds greatest corruption. The tentacles of the corruption reach every level and facet of those societies. Sure Democracy has it’s issues but it’s still the best system as man is by nature an immoral being and no system can provide a guarantee of purity as long as that system is of man.
I think Belloc has it backwards. May have been true in his time, but voting patterns in the modern era don’t work that way.
Who are the most reliable voters? Old folks who own their houses free and clear, not the welfare class or the up-to-my-eyeballs-in-debt class. And why do we oldies vote? Supposedly because we want to keep what we have.
It’s all mythical anyway, because the system will keep rolling along, serving every whim of the Wall Street Casino, throwing trillions of dollars into the Swiss and Dubai bank accounts of people who already have trillions. This happens, and will continue to happen, regardless of tiny nano-trivialities like laws, constitutions and votes.
polista, great comment.
I vote because I want my children and grandchildren to have a shot at the life I lucked into.
It ain’t lookin’ good.
Jake,
Why do you think property is so hard to come by? Because the world is just naturally unfair to you and me? Or might it have something to do with the fact that the government heavily subsidizes both home-ownership and education, so that the price of both has reached a level that the proper economic decision is to find a substitue product.
If you want total security, go to prison. There you’re fed, clothed, given medical care and so on. The only thing lacking… is freedom.
– Dwight D. Eisenhower
You know, what you describe as economic dependence sounds a lot like tenure…
Jason, I don’t think the world has been particularly unfair to me. I am sure it has been unfair to friends of mine.
Educate me, Jason, if you don’t mind. How has the subsidy of education and housing increased the prices of said goods? Further, to what substitute products do you refer?
As for your DDE quote, I agree completely. It is equality of opportunity that I believe lacking, not an assurance of no risk. Frankly, the last 8 years have proven that many people will trade freedom for security, particularly conservatives.
Jake
H.C. Johns,
Perhaps so, but getting a PhD. usually requires 5-8 years of living on, say, $12,000 per year. Moreover, a recent PhD. might work for several years as an adjunct or community college professor, receiving a pittance. Finally, there is no guarauntee of finding a tenured job at a good school. Those who prefer security to freedom probably would be advised not to pursue a PhD. and a career as a college professor.
Jake
1) Look up the average per student public education cost.
2) Compare the rate of the increase of college tuition to the rate of inflation over the last 10-25 years.
http://townhall.com/Columnists/WalterEWilliams/2008/06/11/are_americans_pro-slavery
Jake,
As the government kept the interest rates at historic lows, housing prices skyrocketed. Coincidence?
I don’t mind at all. I’m sure I will be corrected by a real economist, but this is my take…
The government subsidizes/supports/makes more readily available than the free market would, both home loans and student loans. So what does this do? It brings more people into the market to purchase a college education or a home, not because they can actually afford it, but because the government subsidizes their ability to go into debt. What happens when demand for said goods rises faster than the supply? The price increases. This was slowed in 2007 for housing, but is still happening in education.
What happens when the lending dries up, and the credit is no longer available, because of the subprime loan losses? The demand shrinks, while supply remains constant, driving the price back down. Which is the free market’s version of an affordable housing program. The government’s version is to get credit flowing again, so we can all go into further debt, and home prices will go back up.
Substitute products:
– on the job training
– self education
– learning from experience
– renting as opposed to buying, especially at the prices of the boom years, when you put 0% down on a house, and the market value goes down, you are not a home-owner
Strip the piece down to the bare bones and you have a question: if offered a decent lifetime wage but no chance of exit, would you take it? My guess is that plenty of Americans would jump at the chance. The Obama administration is working hard to increase the number of Americans who would accept the proposition. This is slavery disguised as security.
Jake, the only “equality of opportunity” afforded by a State…and even there it was perverted by the powerfully authoritarian Dacha-Class…. was in the “equal opportunity negation” of Chinese and Soviet communism. People shared in the privation while those who yammered on about solidarity with the working class murdered their opponents between sessions of pampered luxury .
You are absolutely correct that the so-called conservatives of this era have been enthusiastically trading freedom for presumptions of security…and , as Franklin averred, getting neither.
I don’t know if there ever can be an “equality of opportunity” because there is such a fundamental variance amongst people as to what qualifies as opportunity and how one might actually respond to it. There is an awful lot of natural or learned behavioral variance in the so-called entrepreneurial spirit amongst people and a state-sponsored approach to qualifying it will generally pervert it to aims that benefit the State in opposition to “equal opportunity”.
I do not agree that Mitchell was following an elitist trend of thought here. In my interpretation , he was endorsing the idea of property as a means to avert the slide into slavery ….emotional or real….represented by societies that want to diminish the ameliorative stewardship effects of property stewardship. The State has been a classic offender in this regard just as it has , in this country, helped me buy a house and enter into the property ownership class.
BigDog, I don’t recall trading security for freedom. Nor do I think all those socialist European states making that choice. Equating equal opportunity with with the freedom/security trade doesn’t even make sense on the most basic meaning-of-words level.
What is required k-12 education but an attempt to level the playing field? Do you mean that education for all is canard, that we as a people and a nation are not well served by primary and secondary education? Because that is the logical import of your words.
Limitedgov, you make my point. Why has post secondary education gone up so much? Clearly, it isn’t a subsidy. It’s a lack of a subsidy, a direct subsidy to make advanced education available to those who can benefit from it, not just those that can afford it.
As for housing prices, it is impossible to separate inflated consumption, runaway consumerism, from the runup in house prices. Further, historically low interest rates or no, many, MANY, of those houses were sold to people hoping to get on the capitalist gravy train. It’s hypocritical to say that the ownership society is the only truly free society and then bemoan the fact that people take you at your word and try to own stuff they can’t afford.
Jake
Jake,
Why do you think that the rate of college tuition has increased at approximately twice the rate of inflation?
Mark, I agree with your question, but not with your answer, and definitely not with your comment about Obama. If any one party has shown a propensity to trade security for freedom, in exactly those words, it is the daddy party, Republicans, the conservatives of this nation, who have promoted that choice. Liberals actually get it, for the most part, that choice is integral to a good life. Choose badly (elect GWB) and you pay the price. Sometimes you pay even when you choose wisely. That’s just the way the world works. What I see as appropriate is setting the ground rules so that people can reach for their dreams without fear falling into poverty. No guarantees except that – if you try, and it doesn’t work, then you have not permanently harmed your family.
DW, I am not sure where you are going, but in large part I agree with what you say.
Maybe not the part about Mark “not” being an elitist. 🙂
If you say ownership is the only way to not be a slave, then say, too bad, most people can’t own stuff, you have just defined yourself as an elitist.
We will see where he falls as he posts more essays. Which I hope he does.
Jake
LimGov, because we no longer support post secondary education the way we once did. The GI bill was support on a massive scale, and it fueled 50 years of growth in this nation, even the world. Time once again to make that kind of investment in education, in young people.
Jake
Jake,
I completely agree that the Republicans have played a role in all of this. But the fact is, the Democrats are now in power, so I don’t feel bad about focussing on them. The Bush Administration focussed on security from external, terrorist threats (9-11 did alert us all to the fact that a threat existed and could not be ignored). The Democrats are focussing on security from economic uncertainty (which has always existed to some extent). Both are to blame. There is much more to say, though, about the relative differences behind both moves, but I’ll leave it there for now.
Elitist? No. Distributist.
Mark, to the extent you ARE a distributist and not an elitist, I say, great!
I only make that observation, of course, because I just read up on distributist. Is it truly a 3rd way, or more likely, a 3rd rail?
Jake
Jake wrote:
“Is it [distributism] truly a 3rd way, or more likely, a 3rd rail?”
Maybe both. But things are fluid right now. The world could look very different in ten years. Working for the restoration of the idea (and reality) of property is an important task for those who think freedom is an important part of human flourishing.
Jake,
I am not sure I understand how your response answers my question. Explain how our “lack of support” has increased the cost of tuition. We have certainly been “supporting” public education and the real cost per student has doubled since the seventies. However, the results have not followed.
Why is the cost of educating students in public schools increasing with “support,” and yet tuition is also increasing, as you suggest, “without support?”
LG, how much support are we providing? In the past, it was nearly entirely supported by the state. Today, much less so. Why has the real cost gone up so much more than inflation? I don’t know. Maybe inflation is under reported. I think I can say with some certainty that compensating professors and staff is not the reason.
Why do you think education has risen so much in cost?
Jake
Jake, I think its because schools can continually raise the price and still get paid, because the students now have more ability than they used to, to go deep into debt (because of government subsidized student loans) to pay the higher tuition.
How else can a 20 year old kid get $100,000 of unsecured debt (at a 4% interest rate) to party on for 4 years? Only through student loans.
http://www.fafsa.ed.gov/
And no, federally mandated price controls for universities aren’t the answer. Don’t fix government intervention gone wrong, with further intervention.
I’m not saying they don’t exist, but I’m not aware of very many subsidies that don’t end up becoming victim to the law of unintended consequences. But, if the government insists on these subsidies, can they stop subsidizing Americans increasing their debt, and do it a different way. If there is one thing we’ve learned from the past few years isn’t it that the uneducated renters of the world have a poor recored when it comes to managing massive loads of debt? Something for nothing is a myth.
Subsidies, Jason, are part and parcel of what a Government SHOULD do. That is, through a prescriptive of some kind – a law, a direct subsidy, a tax break, artificially low interest – take those steps that a community, however large, cannot take on it’s own. Interstate highways, land grants for railroads, the FAA – all those things are something that Government should do and yet are clearly subsidies of the kind to which you refer.
What is truly at issue is which subsidies and to what ends. Those are always good questions.
Just as clearly as renters have problems, so do pure Ivy League capitalists. The banks, Jason, are not and were not run by renters. And they, not renters gone wild, are the source of our current malaise.
Jake
Financial Security VS Freedom?
Is this really the question that is asked? I am not sure that we cannot have both even without distributism (though I do see how that might make it easier). Are we sitting here and asking this question because of the current economic situation? We know as time goes on the situation will change and resort to a more “normal” economic situation (and I learned this last week that many think the recovery is well on its way).
So that leaves me with the question “is working and receiving a wage really slavery if I can leave my job for another?” I know that I would never work the same job forever as I have never stayed at a job more than 3 years (and that was because my annual bonus was so large I would not leave until the year ended). So I cannot fathom working for one person even for economic security but I assume that as we are talking Belloc we are talking about wages versus production of one’s own items.
I am not sure that I would consider myself a slave but I also know that I worked overseas in a country that would not allow me to come and go as I pleased and at times that was frustrating. If I had not come up with distractions to make me not think about being trapped I might not have stayed so long (it was the job I stayed for 3 years).
That leads me to the question if I am allowed to do what I want but work for a wage am I free or a slave. I would claim I was free but that I am potentially a slave if I must work to be able to eat and have shelter. But if I own land (or a trade skill) and must farm it for food and shelter have I not traded one slavery for another? I do not think either directly relates to freedom or slavery as both require work to survive and both (at least in the USA) if done well allow for some freedom to do what you want.
I would argue instead that our wanting security (either economic or physical) at the cost of things for the future has more to do with people not being able to look at see what the consequences of the choices we make. It is almost like playing chess with people who move pieces but do not look to see what could be the response from their opponent. It is this short sightedness that has hurt and it amazingly has to do with education in this country. Not only have we strayed from educating in subjects that promote creativity (here in Florida Music and Arts are almost completely gone from public education) to colleges promoting those subjects that tend to be analytical but not creative to cause and effect to the world around them. I fall in the later as I got a BA in history but said how can I make money with this degree without better writing skills. I therefore went into accounting which may show economic results to decisions but clearly does not broaden one’s view like History. As Social Sciences and the arts leave our education for other subjects that produce more money (economic security assuming that some if not most is saved regardless of what Belloc says) we will continue to have these problems.
If you read all that you now see why I went into accounting.
Garden tip “Do not plant your cucumbers to close to your okra.”
Jake , if you really believe the so called “liberal” Democrat party is materially different from the Republicans in its overall actions…not in it’s perceived history…its actions today, then I will be so bold as to suggest that you are not in ownership of your senses. Admittedly, I say this as a Republican in Recovery but let me be the last to let you know that your exclusive loyalty to the Democrats is getting you nowhere fast.
The previous Administration practiced a kind of thumb-in-yer-eye authoritarian Federalism. This is the kid of Authoritarianism that says its going to do something whether you like it or not, then proceeds to cut taxes and go to war simultaneously…. something not generally done by someone in possession of even moderate degrees of cause and effect intelligence. In the case of President G.W. Bush, this devil-may-care and hand me the ammunition attitude was piquantly accented by a level of discourse not seen since men in furs painted the outline of their hands on cave walls. Downhome folks thought they would like to join the caveman for a beer and did so in droves, only to find that the caveman’s cohorts had visited a mighty plunder on their homes whilst they were enjoying the folksy friendship of the Executive. The current Administration choses a more cheerful and smoothly gamed method. They exhaustively explain their moves and insist on telling you, at length how different they are and how much more better even though the difference is roughly equivalent to the side effects of a gut shot as opposed to a sucking chest wound. In urban parlance, I think the term is “Fronting”.
So, Jake, we are getting it smoothly now , with higher production values and many high hopes for the best of intentions on the everlasting cusp of “Change” but the end product is still a chartered bus to an abutment near you. The last Administration thought we could achieve democracy for others at gunpoint in their own land. This one seems to agree but it also seems to think it can hold the tiger of inflation by the tail and perhaps even avert it ever coming simply by trotting Paul Volcker out for a photo-op or two.
The “Liberal” vs. “Conservative” debate in this country now is like debating whether you like a boot in the arse or a kick in the head…or maybe a screwdriver in yer left ear or a ballpoint pen in the right. Either way, you’re in for a beating.
D.W.,
Well said. Pain is pain wiether it is coming from the right or left. I just hope that someday before I die that there will be some change to where we see a young and new democracy moving forward for us to model ourselves after.
DW, it is very much a case of lesser evils. Power begets abuse, and liberalism is no more able to resist abuse of power than are Republicans.
But speaking in today’s environment, you’ve got to choose between one of two horses, even if you got some young stock in the corral that might prove a good mount someday. And if you’ve only got those two choices, you choose the one that doesn’t appear headed down the toilet with the crazies and then work to ensure that horse does good.
Perhaps I am an optimist, but more likely a realist. You get the best horse you can and go ride. Not riding is not an option.
I appreciate your answers, DW, as I do all of the posters and commenters here. I confess I am confused by your inflation worries. Something tells me we first have to get thru the current recession. The people I read who have studied this kind of thing don’t think inflation is something we need to worry about at this moment in time. Why do you? Just so I’m clear, worrying about inflation at a time when we have so many people out of work sounds like a conservative excuse to not do anything – and that is not a tolerable course of action unless you want breadlines and Hoovervilles. Personally, I can imagine those people who are laid off as my brother or sister or son or daughter, and I don’t want to see them in those straights, and I don’t want to hand them money, I want them to find worthwhile work. And if we have to take on some debt to do that, then fine with me. We can always raise taxes to Reagan levels and pay off that debt.
Jake
Jake, I am not “worrying” about inflation because I know it’s going to come and excise it’s pound of flesh in just as crippling a manner as the current economic farrago. We’ll be raising taxes AND watching inflation suck whatever marrow might be left in the old cadaver. Good luck with that but I can tell you thats a game horse your betting on.
Tinkering one way or another with this excursion into penury is not going to improve it in the long run. The system went tilt….a tilt breeding for a very long time and if you think …with the debt as a percentage of GNP we are growing now…at an accelerating rate …that we can simply assert “just raise taxes to Reagan Levels” and everything will be fine…well, See:Nixon and Carter, add a dash of Weimar and then spin the chamber before firing…but do it in the bathtub so as to not make a mess.
Or, perhaps we can reconvene a swell World War just like last time but better.
Jake and D.W.,
I personally would like to see some inflation as I would be able to pay off some debt with cheaper dollars (home mortgage). Inflation is not currently in the picture but it will be once we get the economy moving forward. The problem that we have in trying to manage the economy is that we have to look at analysis of where we were last month to see how we are doing and then react. Clearly we are always at least one month (or more depending on which economic numbers we use) behind by the time we make our changes and sometimes that is disastrous. Someday I hope that we will be able to adjust quicker than a month.
Good article. My opinion is that liberalism and the democrat controlled congress have brought ruin upon us. FDR opened the floodgates with SS, then LBJ with the Great Society and Medicare. Carter unleashed radical islam by cutting the throat of the Shah and Clinton was getting “serviced” in the Oval Office while Al-Qaeda became emboldened and allowed nuclear technology to be sold to China (treasonous acts).
I would vote to secede from all blue counties if it were to happen – and it just might. Too many lazy folks, willing to take that secure government job, than hard working producers.
Jake,
What’s so bad about being an elitist? If someone is an elitist, why is that a mark against his argument? Please explain.
An excellent piece by Mark Steyn: http://www.hillsdale.edu/news/imprimis.asp.
The following are taken from above:
In short, if we were guaranteed economic security, we would be free at last. But is that true?
How many Americans today would refuse the offer of a lifetime contract with good a good wage but no option to leave?
A few observations:
1) The guarantee of economic security is an illusion. No entity can guarantee economic security for a population.
2) If more Americans understood that the lifetime contract with a good wage (economic security) was an illusion, more Americans would refuse it.
Jake,
Do you think Social Security is a good government program?
Jake,
Please provide what you consider examples of more socialized/dependent countries with robust freedom.
LG, yes, I think social security is a good program.
As for examples, lets see what Mark has to say about freedom.
But I will say that France, Germany, Denmark, Canada, Spain, Japan – those I believe are examples of industrialized and socialized nations where freedoms don’t appear to be abridged.
Jake
Jake,
If Social Security is a good program:
1) Do you know what the original “contract” stated?
2) If it is good, why is it mandatory?
3)In 1960 there were 5.1 workers per SS recipient. There are around 3.4 now. This will decrease to 2. Is this a good plan for future workers/recipients?
4) Is it good the benefit payments will exceed revenues in 2016?
5) Is it good that the “trust fund” will be depleted in 2037?
Regarding Germany, are the citizens really free if the government costs 45% of GDP? http://www.heritage.org/Index/Country/Germany
An interesting read: http://www.fff.org/comment/com0904s.asp
Jake,
I know Mark and usually have disagreed with him for a number of years on many topics. I think that the issue Mark is pointing out that giving a person a label is not conducive to looking at the question or topic being asked.
I personally do not think as we are currently set up in America that we would be able to move to a distributist society and have stated that many times. That does not stop me from asking questions to see if I am wrong and to better understand the issues, which many times I miss some points.
I also am probably more liberal than most people who read this blog yet I am not a liberal, instead I am an individual who holds to convictions that should be shared and maybe argued for. As such I have found many of your arguments compelling and in some cases no satisfactory answer (though an answer will usually come on a different article than where your questions was asked or at least that is what happens for me and the answer is still not always satisfactory).
I have written this so I can learn more from you and others who respond to the articles on this blog without it turning into a discussion of who is what.
lg, the Social Security report also indicates that with an increase in FICA of 2.0% of taxable payroll the fund will be sound for 75 years.
Now I am not anxious to contribute another 2%. But I think it a fair trade my contribution will ensure that all Americans have a minimum level of old age security.
Yes, there will be free riders. All systems have free riders, whether we are talking banking systems, social security, or the workplace. It is in the nature of humanity that some of us are not contributors. Any system that purports to eliminate free riders does so by denying benefits to far greater numbers of legitimate participants.
Jake
Jake,
From the original Social Security plan(http://www.socialsecurity.gov/history/35acviii.html):
INCOME TAX ON EMPLOYEES
(1) With respect to employment during the calendar years 1937, 1938, and 1939, the rate shall be 1 per centum.
(2) With respect to employment during the calendar years 1940, 1941, and 1942, the rate shall 1 1/2 per centum.
(3) With respect to employment during the calendar years 1943, 1944, and 1945, the rate shall be 2 per centum.
(4) With respect to employment during the calendar years 1946, 1947, and 1948, the rate shall be 2 1/2 per centum.
(5) With respect to employment after December 31, 1948, the rate shall be 3 per centum.
The tax on employers was the same, for a combined total of 2%-6%. Now we are 12.4% (15.3% if you include medicare).
The worsening of the long-range outlook for the Social Security program is due primarily to the recent economic downturn and faster reductions in mortality than previously assumed.
The projected actuarial deficit over the 75-year long-range period is 2.00 percent of taxable payroll — up from 1.70 percent in last year’s report. (http://www.ssa.gov/pressoffice/pr/trustee09-pr.htm)
The 2.0% increase is just a projection. Based on the history of Social Security requiring a larger and larger percentage of payroll, do you think that it will ever decrease?
You stated “I think it a fair trade my contribution will ensure that all Americans have a minimum level of old age security.” In that regard, I guess Social Security is successful – most Americans now do have a minimum level of old age security.
“According to Social Security expert Carolyn Weaver, author of The Crisis in Social Security, in 1929 about 95 percent of senior citizens were self-supporting — an increasing number had private pension plans or annuities. Many seniors were helped out by family and friends.” (http://www.fff.org/comment/com0904s.asp)
Would not a better plan have been to target only the 5% that were not self supporting? Instead, a nation of dependents has been created.
Sixty-six percent of Social Security beneficiaries 65 and older get more than half their income from the program, according to the Social Security Administration. A third get 90 percent or more of their income from the program. (http://www.civilrights.org/seniors/)
If this is a good program, what would cause you to think it a bad program? Would you set a limit for percentage of payroll that could be taxed to support it? If so, what would that limit be.
lg, good questions.
First, maybe we could consider what it meant to be self supporting in 1929, and in the years following. In 1929 and at age 65 you could expect to live approximately 10 years longer. However, in 1900 at age 30 your life expectancy was just under 65. So, because this is an average, not a median, this means 1900 that more than half of all 30 year old men could not expect to reach retirement age. They worked until they died. One possible reason that so many retirees in 1929 were self sufficient, or relied upon their families, is that those with the access to less dangerous occupations – that is, not labor – also had more money and better health care, thereby self selecting for greater self sufficiency at retirement. I don’t know if this is true, but it is a hypothesis that with enough research could be verified. If it is true, then we don’t live in comparable times. In 1970, 30 year old men could expect to live to 71, 6 years past normal retirement. In 2004, 30 year old men could expect to live to 77 – 12 years past retirement. Yet most occupations today do not pay sufficiently to guarantee a retirement income. Not even with two wage earners contributing.
Yes, I know, that is a presumption about the median wage being insufficient to support retirement savings. 🙂
If the average family income is around $50k, then lets take the total social security payment (call it 15% for simplicity) out and assume it is invested in something reasonably safe – an annuity, bonds, or even an equity. The expected ROI for that money might 3% over the entire working life and after inflation is backed out. Lets further assume that that the working life is 43 years. That would lead to a nest egg of $624k, leading to an annuity (in approximately today’s terms) of $40k/yr. Which is about what a 2 wage earner median family could expect from their social security payments over the years.
Which is why it would only require 2% more from payrolls to make social security solvent for the next 75 years. Today we pay in nearly what it costs to provide a similar annuity – a commercial product intended to make money for a bank.
The difference, of course, is that everyone is covered. No matter how profligate they were, or how little their occupation paid them, there will be something for their senior years, however long those years might be. Some more than others, but isn’t that the American way? You put more in, you get more out?
Jake
Jake,
I thought life, liberty, and the pursuit of happiness was the American way.
Do you really believe that it will only be 2% for the next 75 years? Does the government have a good track record for getting their estimates right? If so, why have the required contributions already increased from 2-6% to 12.4%? What if there are even faster reductions in the mortality rate?
Are you okay with the federal government taking 100% of your income and then returning what it thinks you deserve? If you would not be okay with it, what % is your limit?
I am disappointed both in the lead article here and in the largely irrelevant discussion of it. The article – as Belloc did, but not Chesterton – simply projects the trends given the way we are now doing things. However, Belloc had in mind the way [French] peasantry then bucked the trends. Chesterton tried to get to the root of why those old ways were better ways: because small communities tend to involve everybody in everything. The Popes have moved on from peasant values to focus on subsidiarity in government, the reciprocity of rights and duties, aiding human development, national solidarity and now the relation between freedom and gift. The world no longer has landed peasants and local government able to act independently of government, so the value of ‘property’ has been reduced to its ability to provide a reliable livelihood, with the value of ‘ownership’ (as against secure possession) reducing to avoiding rent or receiving unearned income.
What none of the participants here yet seem able to imagine is some other, more Christian, way of providing livelihoods involving mutual service without servility, despite our superfluous goods and ability to automate the delivery of pensions equivalent to a Citizen’s Income. The fact that I have a pension doesn’t mean I don’t have a duty to earn my keep; it means I can give of my time to earn it (i.e. do what is necessary to ensure there will be superflous goods for the next generation) in the way I rather than some employer or government sees fit. The best way, of course, does usually involve working with others, as I am trying to do by joining in here.
A decent Citizen’s Income (in the form of a drawing right on interest-free debt) would cost nothing. What costs is people (including bankers, rentiers and speculators) not earning their keep, yet hogging access to the existing superfluity of real goods to such an extent that others are unable to regenerate it.
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