Friday, September 30, 2011

Social Security

At 63 going on 64, I care about Social security. Of course, we should all care about Social Security. One of our perennial political problems has been that so many of the present beneficiaries of Social Security seem to care about it more than they seem to care about any other issue facing our country, and that their political clout has prevented the rest of society (including, therefore, those actually paying to sypport today's retirees) from caring enough to take on the challenge of making Social Security sustainable for the long term.

For better or for worse, we are all being told nowadays - and not just by the governor of Texas - that Social Security is a "Ponzi Scheme." Certainly Social security has some superficial resemblance to a "ponzi Scheme." That's not unlike the fact that - as a man and an American citizen - I have something in common with Barack Obama. But that resemblance is not sufficent to make me also President of the United States - much less thin and fit!

What Social Security is - has always been, in fact - is a transfer payment. In other words, it is a social welfare program. Today's workers pay to maintain today's retirees (yesterday's workers) - and hope that tomorrow's workers will in turn pay to support them, which they will do unless Americna law and present policy change. (Thus, Social Security is the main reason that seniors are among the least poor in our society, since they benefit from this massive transfer of wealth from the young to the old. This is true in less direct ways as well - ie., the short-changing of "discretionary" expenditures, such as education, while entitlements such as Social Security remain untouchable).

Social Security's resemblance to a proper "Ponzi Scheme" is real but superficial, because unlike a "Ponzi Scheme" Social Security's reliability rests on the credit - and credibility - of the United States of America, a sovereign state (and one which, unlike Greece for example, controls its own currency). As long as the United States remains committed to behaving as sovereign states are supposed to behave and thus remains committed to fulfilling its obligations to its citizens, Social Secuirty stands. That it would not do so has, of course, hitherto been unthinkable - at least until a significant segment of the Republican Party decided to advocate defaulting rather than paying our bills, as happened (to most of the world's amazement) this past summer.

The problem, then, is not some malevolent flaw at the heart of Social Security, but how to sustain it in the face of our society's demographic transformation - a larger senior cohort than ever before, living longer than ever before, and (this impacts Medicare) spending more of the country's money on health care than ever before. All Western society's have some variation on this problem. Those that are also committing demographic suicide by not having sufficently large families have the problem in an even more extreme form.

So, by all means, let us look at appropriate adjustments to entitlements to reflect the demographic transformation of our society, but let's start by stopping all the silly sloganeering!

1 comment:

  1. Thank you for sharing this beautiful memory. Father Jim Donovan was my uncle and I miss him dearly. He always spoke so fondly of his time in Canada. Warm regards, Karen Donovan Mannion