by Dale Coberly
SOCIAL SECURITY More How They Lie To Us
David Brooks says in a column headlined Where Are the Liberals?
Americans don’t hate government, but “believe the government has been captured by rent-seekers.”
This is the disease that corrodes government at all times and in all places. As George F. Will wrote in a column in Sunday’s Washington Post, as government grows, interest groups accumulate, seeking to capture its power and money. Some of these rent-seeking groups are corporate types. . . . Others exercise their power transparently and democratically. As Will notes, in 2009, the net worth of households headed by senior citizens was 47 times the net worth of households led by people under 35. Yet seniors use their voting power to protect programs that redistribute even more money from the young to the old and affluent.
The lie is that this is a dishonest segue from corporate rent seekers to the implication that “seniors” (as if they were all the same) are rent seekers, and that the normal wealth that “a generation” acquires after a lifetime of work is somehow unnatural and unfair, and worst of all, that somehow SS is redistributing money to the affluent.
SS doesn’t redistribute money except from your young self to your old self, exactly as if you had saved it (and bought insurance against inflation and financial setbacks of various kinds), it does not add to the wealth of the wealthy, it helps the elderly poor live in modest comfort… very modest comfort.
Just to be clear, not all the elderly are rich. Social Security is a way for people to protect themselves from being destitute in old age. It does not make them rich. It does not take money from “the government.” It does not take money from the poor young to give to the elderly rich. Workers simply save their own money in an insurance plan run by, but not paid for by, the government. The plan protects their savings from inflation, market losses, and certain kinds of personal bad luck. It is insurance. At the end of the day part of the premium paid by those who end up not needing the insurance (they did not have the fire) is used to help out those who did have the fire. As it turns out even those who don’t have the fire get all of their premium back plus enough interest to make up for inflation and provide a real return on their “investment” equal to the average growth of wages over the time they have been making their Social Security payments.
And, just in case you missed it, working people normally start out relatively poor in “wealth”, they work all their lives to acquire “wealth” so they will be able to retire when they need to or want to. For Brooks, or George Will to imply that somehow this is robbing the young is not just a lie, it’s a damned lie.
SS does not redistribute money from the young to the old… except in the sense of deferring some of your spending when you are young so that you will have something to live on when you are old. Pay as you go is the mechanism that makes this possible without risk of losses due to inflation or bad investments.
This is no different from what you would do if you saved it on your own… except for the guarantee. It is no more “rent seeking” than any other investment. All investment assumes that when you need to start cashing in your assets there will be another generation of investors out there glad to buy your stocks, or at least buy the products of the company you own stock in. If this be “rent seeking” then the whole idea of capitalism is based on rent seeking.
Brooks and George Will know this. They are highly paid liars, confidence men paid to talk you out of your life savings.