The Road to Serfdom!!
Brad DeLong points us to a post from The Nation on early Koch brothers and Hayek The Road to Serfdom!!
Charles Koch to Friedrich Hayek: Use Social Security!: [I]n early June 1973, weeks after [Charles] Koch was appointed president of the Institute for Humane Studies. Along with his brothers, Koch inherited his father’s privately held oil company in 1967…. Koch invited Hayek to serve as the institute’s “distinguished senior scholar” in preparation for its first conference on Austrian economics, to be held in June 1974.
Hayek initially declined Koch’s offer. In a letter to IHS secretary Kenneth Templeton Jr., dated June 16, 1973, Hayek explains that he underwent gall bladder surgery in Austria earlier that year, which only heightened his fear of “the problems (and costs) of falling ill away from home.” (Thanks to waves of progressive reforms, postwar Austria had near universal healthcare and robust social insurance plans that Hayek would have been eligible for.)
IHS vice president George Pearson (who later became a top Koch Industries executive) responded three weeks later, conceding that it was all but impossible to arrange affordable private medical insurance for Hayek in the United States. However, thanks to research by Yale Brozen, a libertarian economist at the University of Chicago, Pearson happily reported that “social security was passed at the University of Chicago while you [Hayek] were there in 1951. You had an option of being in the program. If you so elected at that time, you may be entitled to coverage now.”
A few weeks later, the institute reported the good news: Professor Hayek had indeed opted into Social Security while he was teaching at Chicago…. He was eligible…. On August 10, 1973, Koch wrote a letter appealing to Hayek to accept a shorter stay at the IHS, hard-selling Hayek on Social Security’s retirement benefits, which Koch encouraged Hayek to draw on even outside America. He also assured Hayek that Medicare, which had been created in 1965 by the Social Security amendments as part of Lyndon Johnson’s Great Society programs, would cover his medical needs…. [T]aking on the unlikely role of Social Security Administration customer service rep, Koch adds, “In order to be eligible for medical coverage you must apply during the registration period which is anytime from January 1 to March 31. For your further information, I am enclosing a pamphlet on Social Security.”
(h/t Mike Kimel)
So much for those who “talk the talk”……..”walking the walk”…..
Laissez Faire indeed…
I was wondering what it would cost to buy an annuity or provide an employee pension which offered all the benefits of Social Security with a guaranteed payout, no matter what. I think it would be very expensive, so expensive that no private company would want to offer such a plan. If they had a pool of insureds as big as the US population, though, maybe it would be doable and you could maybe even make a profit by charging the customers for any separate services that they performed for them.
Like providing information on customers’ annual earnings/premium payments, an estimate of future and current payable benefits from the plan, an annual accounting of the assets and liabilities of the plan, etc. All of those features would be paid for by a built-in administrative fee of perhaps 25% of premiums paid, as is the case for some similar plans in the UK. Expensive, and the UK plans are not anywhere nearly as generous in payout as ordinary public pension benefits there. But, hey!, the annuity belongs to you, not the government, and sheer pride of ownership should be reward enough for buying into the private scheme.
If Hayek paid in his FICA for the required 40 quarters of coverage, he would certainly be eligible for retirement benefits whether he lived here or in Austria. Wonder why he hadn’t pursued his possible SS benefits already? However, notice that Koch is offerring Hayek a position in a nonprofit organization. I suspect that in 1973 wages for the Institute of Humane Studies were not covered for Social Security purposes. Koch was not offerring to pay for health insurance for or some sort of pension scheme for Hayek and would not be paying the employer’s share of FICA contributions. Instead, like any good businessman, he finds a way to have the government pay for Hayek’s health care.
So, we conclude that SS is great for Koch’s employees as long as he doesn’t have to pay anything to make that possible.
Whoops. The line, Right. NancyO belongs at the end of the post. NancyO
Nancy I think you hit this on the nose. Koch has consistently used his power and influence to get the government to help him financially. In this case, the goal was to get the government to help cover the costs of securing Hayek’s services. For enough money, Hayek’s services can be bought. Use the government to reduce these costs.
This raises a couple of questions. If Hayek had not been eligible for Social Security and Medicare, would Koch have paid the money needed to secure Hayek’s services? And how much would that have been? I wonder whether Koch would have paid market price. Koch could have reacted to Hayek’s rejection of Koch’s initial offer by upping his offer rather than looking for government programs to add compensation. Maybe Koch didn’t value Hayek’s services above the original offer, so he went looking to the government to ensure that he didn’t pay more than warranted by his own cost-benefit calculations.
The little I knew of Hayek included the idea that social programs were not all bad.
The Austrians were fresh water (flowing toward the Russian Black Sea quantifiers, in a time when modeling and correlation were very limited.
David Warsh did a piece on Sunday at Economicprincipals about the US tycoon class inviting Hayek and Mises in to fight the Keynesians likely not understanding that Hayek was mostly a quant and not anti New Deal as they wanted to use him/Mises.
Anyway, th word serfdom is interesting since the Austrian model was serfs who hapened to be non German speaking until WW I.
The sponsors used Slav phobia in the Austrians to shift to diminishing compassion for the poor who were largely non WASP.
Besides what is the different between a wage slave beholding to the tycoons and a serf?
It boils down to owing the company store or beholding to the New Deal.
PJR–It wouldn’t have taken all that much work to make Hayek eligible for retirement benes back then, so Hayek got a pretty good deal in becoming eligible for RIB and Medicare benes. However, Medicare only covers 80% of allowed expenses. So, if the Austrian health system paid 100% of all expenses Hayek would have lost money on health care. He didn’t seem to care about SS and Medicare though, or he would have looked into on his own. He was 74 (DOB 1899) when Koch suggested he file for SS benefits. If he hadn’t worked at all, he could still have been eligible for Prouty or Special Age 72 benefits, something I notice Koch’s crack economist missed this little additional type of possible benefits for Hayek.
I suspect Hayek didn’t pay the household bills. If he had, he might have signed up for RIB long before. Depending on how much he worked, he could have been eligible for benefits as early as 1961. Oh, well. Just goes to show you that guys who spend their lives pondering imponderables don’t necessarily make good Service Reps. heh ;-)NancyO
Ayn Rand wrote about this:
“Since there is no such thing as the right of some men to vote away the rights of others, and no such thing as the right of the government to seize the property of some men for the unearned benefit of others—the advocates and supporters of the welfare state are morally guilty of robbing their opponents, and the fact that the robbery is legalized makes it morally worse, not better. The victims do not have to add self-inflicted martyrdom to the injury done to them by others; they do not have to let the looters profit doubly, by letting them distribute the money exclusively to the parasites who clamored for it. Whenever the welfare-state laws offer them some small restitution, the victims should take it . . . .
The same moral principles and considerations apply to the issue of accepting social security, unemployment insurance or other payments of that kind. It is obvious, in such cases, that a man receives his own money which was taken from him by force, directly and specifically, without his consent, against his own choice. Those who advocated such laws are morally guilty, since they assumed the “right” to force employers and unwilling co-workers. But the victims, who opposed such laws, have a clear right to any refund of their own money—and they would not advance the cause of freedom if they left their money, unclaimed, for the benefit of the welfare-state administration.”
“The Question of Scholarships,”
The Objectivist, June, 1966, 11
I’m not hugely familiar with the works of Ayn Rand, but I do know she also wrote a book that seems to justify a creator blowing up a building one was partly involved in designing if the building doesn’t match that creator’s vision. Yes, its a work of fiction, but it was used primarily as a vehicle to explain her philosophy. Now, I believe my former employer changed things I did in ways that don’t match my creative vision. Am I justified in causing a lot of destruction to rectify that situation?
But… moving on, what about externalities? Applying her logic, if, say, a manufacturing plant emits pollution onto someone’s property, is he justified in blowing it up? After all, by placing pollution onto his property, they are stealing from him. If he opposes the law that allow that taking, is he then also justified in blowing up the plant to prevent that stealing? If not, why not? Or does Rand only justify “stealing back” when its from the state?
yes, and when the government forces you to stop at a red light it is stealing your time at the point of a gun. you have a perfect right to ignore the light and shoot anyone that gets in your way. after all, the people in a democracy are the government and it is only their greed and selfishness that leads them to steal your time. and time, as everyone knows is life. so they are stealing your life. best to just shoot them.
“Ayn Rand wrote about this:”
And Henry Miller wrote several highly regarded if a bit “blue” novels that you may have heard of. I wouldn’t, however, take Henry’s philosophy of life too seriously. It’s fiction you fool. It was meant to tickle the imagination. Before Ayn was a novelist she was a Hollywood script writer wanna be when Cecil B. took a shine to her. She spent a bit of time there, in Hollywood developing her philosophy of life in the land of dreams and enchantment. The high priestess of individuality and libertarianism failed to point out that it was only the result of the take over of the Russian government by the Bolsheviks that allowed Ayn, Alisa Rosenbaum at that time, to attend and graduate from university. It seems that the state intervened and opened higher education to women. Alisa seemed to have lost sight and recolllection of her past early adulthood once she had spent some time in the dream factory of the early 20th Century capital of cinema.
Personally I find the work of Grace Metalious far more imaginative, but yet still far more reality based than that of Ayn Rand, who was apparently embarrased to use her own real name. As I said, fiction.
But I guess I shouldn’t blame Ayn/Alisa if her fans took her fiction a bet too seriously. She had as much right to accept their admiration as they had to exhibit their adoration. It makes their choice of the term Objectivism rather oymoronic in their own case.