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Working together

Posted By Russ Roberts On May 5, 2010 @ 11:42 am In Social Security,Uncategorized | Comments Disabled

John Dewey is one of my all time favorite commenters here at the Cafe. He is calm, patient, and reasons superbly.

In commenting on this post [1] where I argued for ending a social security system that taxes nearly everybody in order to give money to nearly everybody, and replacing it with at most, a welfare system for the elderly poor,  he wrote:

Those who are very near retirement (such as me), and who have been promised for four decades that future generations would help fund their retirement, should suddenly now accept a lower standard of living? simply because they were thrifty during their lifetime and deferred enjoying the fruits of their labors? Are you arguing that such people as me should be means-tested out of what our laws promised us?

Well, no. I’d phase it out slowly rather than abruptly. Good point. I also responded in the comments that when politicians make a promise that they can’t possibly keep I’m not sure you should call it a promise. But John is right–people close to retirement age reasonably expected to get some if not all of their “promised” check.

Then in response to another commenter, John wrote:

My generation has enough votes that Congress will not ignore us. So consider working with us rather than enflaming generational warfare.

Again, he’s right that the votes of the elderly are going to hold a lot of sway in the coming years as politicians struggle to cope with the problem that previous politicians made unkeepable promises. What is interesting is the language, the idea of “working with us”–the idea of the generations working together.

It’s a nice idea. My parents, thank G-d, are both alive and are financially comfortable. Not wildly wealthy by any means, but because they consistently spent less than they earned over their lives, they are able to live as comfortably in their late 70s as they did when they both worked full time. My brother and sister and I are very lucky that my parents have lived so responsibly. We don’t send them any money for anything. They don’t ask for it and wouldn’t want it and in some dimension, they don’t need it. But that is not the way of all families. In some families, adult children help their parents out financially.

I know of families where the adult children send their parents a regular check. Sometimes the siblings agree on an amount and share it. Sometimes contributions are uneven. In such a family, if one of the contributing siblings faces their own financial challenge (a lost job, an unexpected major expense) the family works it out as best they can. The parents, who usually care about their children, might find ways to get by with less either temporarily or for the foreseeable future. A sibling might be able to make up some or all of the difference. This is the way families and generations work together.

It doesn’t always go smoothly. Maybe it almost never does. There is posturing and guilt and shame and sometimes the parents have to take a steep financial hit or the children start to fight over the problem in ways that eat away at family ties.

But none of this will take place in the coming years as the political process tries to deal with promises that can no longer be kept. There is no working together. At least not in the way that families work together. Old people will demand what is “theirs.” This sounds selfish but it is much more complicated than that. When I am a retiree, will I support a politician who promises to cut social security or means-test it, knowing that it will help my children? Perhaps. But the desire to be kind to my children who I love is diluted by the complexity that some of the reforms that will be on the table will not have a close relationship between my sacrifice and my children’s benefit. I will be sacrificing for other people’s children. Or worse, I may support reforms that help my children differentially compared to yours. In such a world, people will rationally fight for what they can get.

Social security is an intellectually bankrupt system that is on its way to being financially bankrupt. But the worst thing about it is its cultural bankruptcy and human costs–it enflames inter-generational conflict and does so in a way that demeans us and destroys our chances of acting like mature and responsible adults. This is how people behave [2] when after living off of other people, the system can no longer be sustained. Changing what feels like an entitlement destroys civility and the natural virtues of sacrifice, compromise, and feloow-feeling. Please, let’s kill the social security system. Slowly, but surely.

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[1] this post: http://cafehayek.com/2010/05/stopping-the-social-security-ponzi-scheme.html

[2] This is how people behave: http://www.nytimes.com/2010/05/06/world/europe/06greece.html

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