Social Security Archives — Laissez FaireLaissez Faire

I have no plans to retire. I’m a writer who loves what I do, and so I have every intention of working right up until the day when I simply can’t. My dad, on the other hand, is an avid golfer, and although he enjoys his job—he’s runs two different tech companies—he’s looking forward to a decade on the links.

We want different things from life, and all else being equal, we would take vastly different approaches to preparing for retirement.

I would want to save enough to guard me against any financial risks, and perhaps to enable myself to cut back on my hours, but otherwise I would rather spend on my current priorities: growing my business ventures, buying a home, seeing the world. Dad? He would funnel as much money as he could into his retirement accounts.

And that process—thinking about what you want out of life and pursuing it the way you judge best—is what Social Security interferes with. It confiscates a huge portion of our wealth on the premise of “preparing us for retirement.” What that really means is that the government wrecks our freedom to plan our own lives.

And for what? Not even for some one-size-fits-all retirement plan, which would be bad enough. But for nothing—nothing except the assurance that the government will continue to take away the freedom of our children and grandchildren, and give us the money they would have used to design their lives.

I would say “count me out,” but I don’t have that option.

If you would like to ask me a question, you can submit it here.

If you would like to ask me a question, you can submit it here.

It’s often said that Social Security was a response to the problems created by industrialization. Not simply that it was motivated by certain problems associated with industrialization, but that the conditions of industrialization necessitated Social Security—that industrialization created problems the free market could not cope with.

Here’s how one book puts it:

As the United States shifted from an agrarian to an industrial society, the intergenerational family support structure weakened. The jobs created in the cities provided new opportunities but also major insecurities. The number of indigent aged persons grew rapidly, vastly exceeding the capacity of private charities.

Social Security, the authors go on to say, was a response to these and other changes. All of these claims, however, are half-truths, outright falsehoods, or in desperate need of context. As Yaron and I have argued elsewhere, there were problems associated with industrialization, to be sure, but (a) they were not unmanageable and (b) they were diminishing as the economy progressed.

It wasn’t industrialization that led the U.S. to adopt Social Security: it was a set of beliefs about the world, including certain moral premises about the relationship between the individual and society, that led the U.S. to adopt Social Security. This is why, for instance, the United States was one of the first countries to industrialize but one of the last to adopt a social security program. Far from demanding Social Security, Americans were reticent. It took decades for left-leaning intellectuals to convince them that a welfare state was consistent with their values.

Although they seldom talk about it publicly, most people on Capitol Hill understand that entitlements cannot continue to exist in their current form indefinitely. One proposal for cutting entitlement spending is means testing Social Security and Medicare. Peggy Noonan explains:

What means testing in a general way means, as you well know if you’re reading The Wall Street Journal’s site, is that the very wealthy who do not need to receive a Social Security check or Medicare payments will no longer receive them, or no longer receive them in full. The object is to cut spending.

It’s a proposal she thinks should be palatable to both conservatives and liberals. Conservatives, because it will conserve the entitlement state. Liberals, because it preserves entitlements for those in need, which after all is their stated goal.

But, Noonan notes, the left has some reservations about means testing. In short, they argue that it will weaken political support for the programs.

I think that’s probably true. Not because, as Noonan quips, “the wealthy who no longer receive Social Security will turn around and try to kill the program because it would amuse them to see old people, homeless and hungry, suddenly roaming the streets.”

Rather, it’s because support for Social Security and Medicare depends heavily on the fact that many Americans don’t see them as wealth redistribution programs, but as earned benefits. “I paid in, I deserve to get something back.” (I’ve addressed this argument here and here.)

Means testing would make that view far less plausible, since it would make it hard to disguise that these are not insurance plans but welfare programs. I think there still would be plenty of support for them on altruistic grounds, but the left is correct that programs which depend only on appeals to altruism are far less popular and hard to defend in this country than programs that try to appeal both to altruism and to people’s alleged self-interest.

Of course, unlike Noonan and other conservatives, I don’t want to conserve the entitlement state. I want to end it.