Thursday, October 23, 2014

Social Security: A Christian Objection- IN Policy Review

Social Security: A Christian Objection
reprinted by permission of IPR

By Tyer Watts, Ph.D.

I recently heard a politician promise that he would protect Social Security, arguing that this vaunted program is an inviolable “contract” between the government and seniors. Hah.

Now, this politician was just doing what comes naturally; that is, saying anything to appease a particular voting bloc, in this case the powerful American Association of Retired Persons. His statement about Social Security, however, obscures the economic and ethical problems that plague this and other entitlement programs.

First, we should realize that Social Security is not a sound retirement-income program. In a bona fide pension system, people contribute their own savings that are then invested. The retirement income of these investors is based on the principal plus the investment return of the fund.

With Social Security, though, “contributions” (payroll taxes) are not invested but spent. The lack of investment returns means current beneficiaries are funded by current taxpayers and not their own prior contributions. Indeed, Social Security began paying out more to seniors than it takes from workers’ paychecks in 2010, and this problem is set to get far worse due to the wave of baby-boomer retirements and meager employment growth.

So, Social Security is an unsound, bankrupt government excuse for a retirement program. We all knew that; what really should gall us is this idea that Social Security represents some kind of sacred obligation between the government and old folks. A contract between two parties that involves stealing money from a third party is not valid under Common Law. Indeed, we have another name for it — theft. So let’s recognize Social Security for what it really is: an inter-generational wealth transfer scheme, or, to put it bluntly, legalized plunder of the young by the old.

This aspect of Social Security is grotesque when viewed from a Christian perspective. Proverbs says “A good man leaveth an inheritance to his children’s children.” And Saint Paul, further emphasizing that wealth should be handed down and not up, admonished the Corinthian believers that "the children ought not to lay up for the parents, but the parents for the children.” Social Security reverses this, representing a financial version of Isaiah’s prophecy of how the wicked would “feed on the flesh of their own offspring.”

Though Social Security is morally perverse to those of us who adhere to Judeo-Christian ethics, economics informs us why politicians — both Republicrats and Demoblicans — continue to champion Social Security. They are power oriented and observe the first rule of (re)election: Old people vote.

They know that retired seniors have much more at stake in any federal election than the average working family, as 33 percent of federal spending is for old age “entitlements” in the form of Social Security and Medicare. Having more spare time and more wealth on average than working-age families, seniors also vote more and make larger campaign contributions — all aimed largely at keeping the gravy train of entitlement spending rolling. Social Security is known as the electrified Third Rail of politics for good reason: Any politician who touches it will die in the next election cycle.

Due to these political dynamics, prospects for Social Security reform are slim to nil. So what are the rest of us to do? Here’s what I’m doing, and what I advise young people to do: Forget about Social Security. It’s immoral, it’s bankrupt and even if reformed someday it won’t give you near the same benefits given to your grandparents. This should not surprise us. Why would the U.S. government, the same outfit that gives us airport security, the Postal Service and the Internal Revenue Service, do a better job administering a retirement program?

Even setting the insolvency and immorality aside, Social Security is a terrible retirement plan; it earns a pathetic return from its holdings of government bonds, faux investments that don’t contribute to capital formation or economic growth. Those who want real income security for retirement simply need to consistently save 10-15 percent of their income in a diversified portfolio in an individual retirement account or a 401(k). These are financial vehicles that promote actual business investment and therefore job growth, not just tax payroll.

Someday, perhaps, we can end this sham or change it into a welfare program for the truly poor. For now, let’s at least stop the political pretense that government is contractually obligated to take from the young and give to the old. Our politicians cannot magically transform theft into “entitlement” and draw up “contracts” that would offend the Mafia.

Tyler Watts, Ph.D., a longtime member and adjunct scholar of the Indiana Policy Review Foundation, now is director of the Institute for Economic Education in Texas.


Anonymous said...

Mathew 25: 31-41

And Jesus said "Take care of my poor, elderly and see after my people in prison."

Anonymous said...

This is absolute garbage. I'm not sure why this blog has turned into an anti-government, anti-democracy platform, but it's a shame. Whoever endorses this guy is clearly uninformed and limited on their views. Yes, Social Security wasn't created to be the sole means of retirement, but it has eliminated poverty among seniors that worked all their lives.

I'm young. I'm in my 20s. Yes, it may not be there for me when I retire, but it can and should be. There are simple solutions to our current problem that have been proposed by Democrats and blocked by Republicans repeatedly. Raise the amount that people pay into Social Security. As it stands now, only the first $117,000 or so of earnings are paid into the system. Why is it that those who can afford it don't have to pay after a certain point? You raise it to a certain point, problem solved.

Additionally, we are seeing such an income gap and wealthy disparity in this country that it would destroy us, if we allowed this social contract to dissolve. This poor excuse for a rich person really needs to re-examine the principals on which our country stands. Does he offer any solutions? No, he sits on his high-horse and uses his religion to express his greed, because he just simply can't afford to pay a little out of his paycheck to support those who had a hand in putting this country where it is today. Shame on you. Why don't you go read the actual values to which your religion and Jesus actually adhered?

On the note of not voting, that is the silliest thing I've read in a long time. The main way to effect change is to vote. To make an informed choice is easier than it has ever been. You've heard of the interwebs, yes? Get informed, cast your vote. There's early voting, absentee, and even voting on election day. Go do it, or you don't get to complain when the government is completely ineffective at moving legislation through to create jobs, improve our infrastructure, respond to natural disasters, keep us safe from threats foreign and domestic, put out fires, regulate the business cycle, protect us from scams through regulation, protect us from tainted food through inspections, ensure that the banks in which you secure your money are insured, make sure we have clean water and our sewage is taken care of properly, enact workplace safety policies, fund science research for the greater good where it may not be profitable, create vaccines so we can live to 90 rather than dying from the measles, and the list goes on.

The author of the “not voting” piece really makes some fairly broad declarations. I’m not much of a fan of Republicans, but I’d say that their platform isn’t just about lining the pockets of the 1% through failed economic policy of low taxes. There is certainly more to their platform with which one could identify. Same goes for the Democrats. Perhaps we need a 3rd party, but that doesn’t happen when we excuse ourselves from the discussion on election day, because we think it’s going to make some grand gesture. If anything, it’ll prove the pundits and other countries right. Meaning, we’ll be proven to be the apathetic citizens that we are. Apathy is what got us here in the first place and I’d rather not make it worse.

In conclusion, please don't let these people fool and disenfranchise you. Yes, the system is corrupt in the amount of money that flows through during elections, but you can clearly see, based on proposed bills, words, and action in the media, that Democrats overwhelmingly represent the majority of us on economic and social issues. Either way, if you don't believe that, I really don't care. I just want you to vote and not be fooled by someone who thinks not voting makes a statement. Your vote matters. This is your life and your family's lives. What the government does impacts us all, so get out and vote for those that you believe will improve it. It's your moral and civic duty.