Tuesday, March 22, 2016

The socialist Ponzi Scheme...

A Primer on Socialism Security

By James Ostrowski

Note: This is an excerpt from Progressivism: A Primer on the Idea Destroying America (2014).

Like government schools, Social Security is a failed program that nevertheless remains popular with the American people. Why? Keep in mind that progressivism is not a rational system of thought but a means to make progressives feel better about themselves and provide a (false) sense of control over a big, complex and often hostile world. As such, the mindset necessarily excludes any notion that progressive programs might fail or might cost too much which, in the case of Social Security, is a critical issue. If progressivism was sensitive to its own failures, it would not be what it is and would not serve the purposes that make it so popular. If a program needs more resources, then, since progressives have no theory of costs or awareness that all resources are scarce, the progressive will merely propose spending more money as has been done with Social Security, at least, twenty times. At no time when higher Social Security taxes were proposed to save the program from insolvency, did progressives ask themselves, is this program worth the increased costs? Should we liquidate the program instead of continually increasing costs? Where are those additional resources coming from? How were those resources being used before they were taxed away? What harm will be done to persons and to their projects and to the overall economy by seizing those resources from where they are being used and applying them to save an insolvent program, the campaign promise of a dead and depraved politician, FDR?[1]

These would all be fair, rational, logical questions to ask, however, progressivism is not a rational or logical system of thought. If progressivism asked these questions, it would defeat its prime goal of making the believer feel better and have a greater sense of control over the world. It would then cease to exist in its present form!

Lest the reader think I am being too harsh on progressives, let me acknowledge that progressives do respond to allegations that their policies have failed, however, they do so by “doubling down” on progressivism. They do so in a manner that preserves the nature of progressivism as a means of maintaining a sense of control and positive emotion. They will therefore invariably propose fixing the broken, failed or insolvent program by using more government force, more taxation and more regulation. The state will get ever greater power. Social Security itself illustrates this as what was originally constructed as an inherently insolvent program with people paying very little in, became a program with many people getting out of it large sums that they never paid in. Facing the choice of liquidating an insolvent program and admitting that progressivism had failed, or doubling down on progressivism by raising taxes, the progressive chose to continue being a progressive.

So, in evaluating from a rational point of view whether the program failed, the key problem is not logical, but psychological! How do we figure out how to get our arguments and facts past the mental force field that protects the progressive from having his emotional therapy session painfully interrupted? I have no easy answer to this but believe that defining the problem itself is the first step toward solving it. Now that I hope I have the progressive’s attention, what is the case for the failure of Social Security?

First, as with many progressive programs, Social Security was a classic instance of the government purporting to solve a problem caused by the failure of previous government programs. By 1935, America was not even remotely a free market nation. Big government, whose first manifestation was the Civil War (1861-1865) was now firmly ensconced in numerous areas of life and had had many decades to disrupt the workings of private society. Some of the major examples of programs that had damaged the economy included: World War I, the Income Tax, the Federal Reserve, government schools, the Smoot-Hawley Tariff, Hoover’s disastrous big government policies and the early portion of FDR’s New Deal. All these programs destroyed private wealth, disrupted families, and reduced the wealth available to support what was a complex and successful web of private, voluntary relief agencies.[2] Worst of all was the impact of the Federal Reserve and Hoover’s policies in causing, lengthening and worsening the Great Depression.

Social Security in turn immediately worsened the Great Depression:

“Payroll taxes to finance Social Security and Unemployment Insurance programs increased employers’ wage bills even further, which also reduced the level of employment. In their book Out of Work, Ohio University economists Richard Vedder and Lowell Galloway provide econometric estimates that government-mandated payroll cost increases added nearly 1.2 million people to the unemployment rolls by 1938.”[3]

Even after the Depression, Social Security increased unemployment by raising the cost of employing workers.

For those lucky enough to get a job, the payroll tax robs them of a tremendous amount of wealth for as much as 45 years in exchange for the possibility, if they remained alive and subject to the whim of Congress and assuming that the Federal Government still existed at that time, they would receive a modest pension paid for by extorting current workers. For those inclined to plan for the future, Social Security robs them of the capital they could otherwise invest in a market-based pension that could pay a greater rate of return. Whereas Social Security revenue is immediately spent by the state on wealth-destroying activities such as war, private pensions would be paid out of productive investment in productive assets such as stocks and real estate.

Worst of all, Social Security turns older Americans into dependents on the state, forcing them, in effect, to be cheerleaders for a corrupt, murderous, imperialistic kleptocracy just so they can be assured that the kleptocratic state will pick the pockets of younger workers to pay them a few hyper-inflated shekels in their declining years. At a time when the elderly should be relying on their families, they are forced to spend their golden years voting like automatons for the same wretched state that is destroying the future of their own children, grandchildren and great-grandchildren.

“Social Security” is another Orwellian lie. It is, in fact, antisocial and insecure. It weakened the age-old bond between parent and child. As Allan Carlson writes about Sweden: “The rise of the welfare state can be written as the steady transfer of the ‘dependency’ function from the family to the state. . .”[4] In olden days, older parents would live with their children and help raise the grandchildren. Now, adult children think nothing of moving thousands of miles away from their parents and then easing them into government-funded nursing homes where they are drugged into oblivion with Medicaid-funded drugs providing huge profits to Big Pharma. FDR and LBJ in three generations were able to undo the family structure built up over the eons. The kids are in daycare, the grandparents are in nursing homes and the adults are tax slaves for the progressive state. What a country!

The program is always teetering on the edge of disaster as it depends entirely on taxing current workers. Social Security is not an entitlement but a mere statute that can be changed any time at the whim of Congress. The level of benefits and the age of eligibility can also be changed at any time. Benefits are also subject to the vagaries of inflation and the indexing of inflation is obviously subject to manipulation. The Freudian slip on the security of Social Security is the constant refrain from Democrats that the Republicans (fat chance!) will cut your benefits if they win the next election. This is a concession of the basic insecurity of the program.

Of course, the government can only give what the government possesses. Thus, if the government becomes insolvent, which is the current projected trend, the checks will stop or will be paid with hyper-inflated virtually worthless dollars. Finally, if the Progressive State of America (PSA) ceases to exist, as has every other overextended imperialist power in history, the checks will cease. Only a fool would discount that possibility in a country founded by a violent revolution, which suffered a violent Civil War and has a history of racial, religious and ethnic conflict that seems to be intensifying at the moment. If that happens, you can trade in your Treasury checks for Confederate war bonds.

I have argued elsewhere that the only politically practical way to abolish Social Security is to buy out current recipients with cash paid for by selling off government assets.[5]


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