Social Security is NOT a Ponzi Scheme

I had a rough night last night, and I may not be at my rhetorical best, but this claptrap over Social Security is maddening to the point of apoplexy.

No, you turds.  Social Security is not a Ponzi scheme, is nothing like a Ponzi scheme, it never has been, and it never will be.

The central argument made by Perry, and Bachmann (the two least likely people in the GOP debates to have an original idea, much less a logical, or true one--THERE ARE NO BAD IDEAS IN BRAINSTORMING LEMMON) is that Social Security is like a ponzi scheme because you rob Peter to pay Paul.  But this does not a Ponzi scheme make.

There are three things about Social Security that have made it a big fat easy target to the wingnuttery.  1)  The first generation on social security (most of whom are dead now) never paid for it.  2)  Payments toward social security are mandatory.  3)  Money in virtually any other investment vehicle will do better than that invested in SS.

Point 1:  This is true, Social Security was established because the state of eldercare in the United States during the 30s and 40s was absolutely deplorable. On top of the Depression, was the larger issue that saving for retirement is all but impossible for the vast majority of the population.  When 85 to 95% of your income is spent on your day to day existence, even putting the remaining 10% toward retirement is a bit of a pipedream.  So Social Security was established to get that first, elder generation, out of poverty, eating food instead of pencil shavings, and having stable roofs over their heads.  Opponents of SS use this fact to indicate that some people got their's for free.  But the purpose of the program was to take care of those people.  So this wasn't 'free,' it was a government transfer program that was designed to pay for itself.

Point 2:  Opponents of SS have proposed two alternatives to the mandatory social security program.  1)  Opt-outs and 2) means testing.  Allowing either of these into the program would ultimately destroy it--which is precisely what people who suggest this are saying.  Both points sound reasonable, right?  Mandatory payments in the land of the free!?  What a travesty!  Nevermind that the pay as you go system of taxes have proven to be most efficacious and has saved the treasury and IRS billions of dollars in collection fees and litigation.  Tea Partiers love this point, but it's a red-herring, classic misdirection.  These "freedom fighters" don't care about the "violation" of a mandatory payment.  They simply see no reason for the program itself and believe that Point 3 should take prevalence.  So they suggest, why not allow people to opt-out of social security?  Simple fix, right?

Well--not really.  The problem here is a logicial one, and difficult to explain, let alone understand.  The program depends on mandatory payments because of its mandate.  Look.  Thirty years from now, if you haven't been saving, you'd still be entitled to Social Security.  Why?  Because that was the mandate of the law--to protect the elderly.  There is sixty years of caselaw in the system backing this up.  Even were the law to change--anyone who could pay a lawyer would have an actionable claim on SS.  Which means ultimately, that the system would be bankrupt in a generation, when a generation of opt-outers decide they're entitled to that for which they did not pay into.

What about means testing?  I heard the editor of Reason magazine make this argument on Bill Maher's Politically Incorrect.  "Why should a millionaire receive payments?"  This argument too is a red herring.  If the editor of Reason magazine doesn't know that the millionaire receives payments because he's receiving his own money back--than he shouldn't be an editor.  He knows.  Why this argument?  Great soundbyte.  The system is corrupt, millionaires don't need government transfer payments!  The system is based on a certain amount of equity.  It's a retirement program.  It's not a tax or a handout.  The money is yours, you're just getting it back when you're 65. Prince or pauper, so long as you worked a day in your life, you're entitled to some benefit.  (Personally, the only reform to SS that I would countenance would be to up the age.  People are older and working now than they were in the past.  We're healthier, and science has advanced our ability to work well into our early 70s.)  So why should a millionare make payments?  Again, equity, and see my previous paragraph: the more Opt-Outs the more you inherently weakent the system. 

Point 3:  This is one of the more insidious arguments against SS because it's completely true.  Social Security is not an investment vehicle--it's a savings vehicle.  This argument against SS is built on the idea that everyone is making proper arrangements for their retirement, which is patently false.  Let's face it, most people's retirement planning is non-existent.  The right, and Libertarians would like to believe otherwise.  But remember, the right doesn't care if you have money to retire.  They have money to retire, and if you're out on the street at 70, tough luck.  You were an idiot, it's what you deserve.

Never forget this one inalienable fact, Ravingleftatics, the Right would have you believe they care about freedom, about security, about morals, and about justice for all.  This is a deception.  They're only interest is in maximizing their own wealth, their own gain.  They assume everyone is acting the same as them.  They do not believe in collective action, or in altruism--in fact they say its impossible to act selflessly.  This belief is the justification for itself.  If everyone is acting in their own best interest, we'll all get something.  But its a tautology, and its premises are both false and laughably self-serving. 

In their world, it's all a Ponzi scheme, and they're all Madoff, running to the end of the line to get stuff out of other's hands and into their own.  And if you're an investor in their scheme, they assume you're running your own scheme and be damned with you.  And if you're not, well you're a sucker.

So my fine Ravingleftatics, do not believe this bull puckey about Social Security.

Klein on the Theory of Moral Sentiments-Econtalk

So over at Econtalk they are doing a book reading of Adam Smith's "Theory of Moral Sentiment." And they touched on a couple of related subjects that I didn't buy/understand/agree. Ok. So naturally, social welfare came up. In the context of moral sentiment, and I am not talking about Smith's theory, because I wouldn't say that I know enough about it to comment one way or the other, but the idea came up that social welfare programs destory the morality of giving. Meaning, when you have no choice to give, when a certain portion of your income is given to the needy, it destroys the morality of the people who are giving. It breeds anger and resentment, and divorces the giver from the givee. It is an interesting point, and I agree with the last statement in full. However, I think that Smith, and the folk at Econtalk are missing an important point. Who gives a crap about the morality of giving. You want people to care, but is it really necessary? I mean a Kantian perspective would certainly indicate just the opposite. In fact, by one reading, you could say that social welfare is a Kantian device. Granted there's no choice in the matter, but those who give who do not want to are indeed making the MOST moral choice. As opposed to those who want to give, and receive a feeling of well-being and happiness from the giving--indeed a selfish feeling no matter the sacrifice. The fact is, needy people are in need of help--not morality. And even the guys at Econtalk were forced to concede that there was no way social welfare would be able to drum up anywhere near the amount that it has were they forced to rely on donations.

I also think that they lumped social security into that category, which is just plain wrong. FDR established Social Security as a personal retirement program for the entire country. When you're on it, you're getting your own money back. There is no charity there, no morality. Just smart planning. The economist would say that people like me should suffer for my lack of ability to plan my own retirement, and that programs like SS make people less likely to plan for their retirement. I think that this is unsupported by any data. The day to dayers, the people who are in the lowest brackets would never be able to make a retirement plan. But I think the majority of people are concerned, and do indeed work towards one. Another interesting point for me is this idea of disassociation from your neighbor. Though I think that this has happened, to blame this on social welfare programs is, I think, a bit unjustified. Disassociation from your neighbor is, I think directly related to the dissolution of the family. Nuclear families living in two-three bedroom homes.

My final issue was a statement that suggested that government wealth redistribution plans were a form of tyranny. Even though I think I can appreciate the sentiment, I find it to be somewhat ludicrous. The scales of wealth in this country have far tilted to the right. Even now in Obamaland. That needs to be realigned. Seriously, it is in EVERYONE's best interest. You saw the mob fury of the fall and winter of 2008. Better to legislate than burn. So you can't take anyone's money, but you can readjust the tax code, you can enable small business owners, you can get education out the people who are trying to make the jump between classes.