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We’re Doomed

I teach my pants off so that folks will become a little more economically literate. But then I run across these sorts of articles and it reminds me why I can’t sleep at night.The gist is that Social Security checks are not increasing this year. Here are some of the responses of the “disrespected” seniors:

If her check were bigger, 76-year-old Agnes Conti might be able to spring for a better cut of meat for her pot roast. She could afford to send her nine grandchildren more than $20 for their birthdays and Christmas. She’d be able to spring for some nice new clothes, like she sees on QVC, not what she settles for at Walmart.

True enough. And if my paycheck were bigger, I could buy a few pairs of new jeans and some new shirts for work (and ask my students, I sure could use some nicer looking clothes). I’d be able to send each of my nieces and nephews larger birthday presents and even take my wife to dinner. IS that how we are running the world today? I think so.

“We were good citizens all our lives. We went to work, we lived by the book, we weren’t on welfare, we didn’t ask the city for anything,” Conti said while taking a break from crafts at a senior center here. “And what do we get?”

What do you mean, “And what do we get?” Should I throw a parade for you? You are asking for more money, from us, now then the law says you are “entitled” to. And in any case, what you are getting is what happens when you happily hand over your retirement planning to the government. Had we been asked to save for ourselves, you could spend as much are as little in each year as you want, and not have to depend on some government formula, or political opinion to take care of you. Can’t wait until we EXPAND the role government has in your life too, seniors. Remember the health care debate? And no, now is not the place to hash our the tired old canard about social security as insurance, and what if people couldn’t save for themselves. For one, the sob stories above are not all that sad to me. Folks in their 80s being forced to send less to their grandkids? Really? And you mean to tell me that even modest income folks could not be prudent to save for themselves? I don’t buy it … because I see how people behave every day, and I see in the data what people choose to spend their inc0me on.

If government had not stepped in and removed any incentive people had to save for themselves, people would think twice before buying that second television, or that extra order of fried rice, and what have you. That adds up. For example, saving only $3 a day for a 30 year period at modest rates of return would generate hundreds of thousands of dollars of wealth in retirement. $3 per day is within reach of virtually all of us.

Back to the sob stories:

The money isn’t the biggest issue, Ferreira said. It’s the message the government is sending about caring for seniors.”I could use a little more, but that’s all right, I get along,” he said. “But I think that we deserve it, the elderly. You can’t just discard them. You’ve got to help them.”

Now it’s the message? Give me a break. And now “we deserve it”? Give me a break. But this is the mentality of many who suckle at the government teat. They are entitled to it. And even if economically it makes no sense to provide larger checks, economic considerations should get thrown out the window because, “they deserve it.” Really? That’s not how a good, civil, and lawful society is run.

The Obama administration plan to send $250 stimulus payments to about 57 million seniors, veterans, retired railroad workers and people with disabilities, would amount to a roughly 2 percent raise for the average Social Security recipient. If approved, the checks would cost about $13 billion, though there is no plan yet how to finance them.

Seniors vote. And Obama is a master at buying off his favored constituents. He is calling this stimulus because otherwise he’d be violating the law. The law says that when prices do not rise, social security payments do not rise. But since seniors now simply EXPECT their checks to increase, politically they are at risk of being angry if they are not bought off.

There are two economic points here. First is what I thought was obvious. The social security payments are indexed to “cost of living” because when prices rise, the intention is to keep the purchasing power of seniors the same. But that also means that when prices do not rise, the payments do not need to rise to keep the purchasing power of seniors the same. The reaction of seniors is that only increases are allowable to make sure they are being treated fairly, but when the law calls for decreases, no such fairness matters. What if prices fell in the US by 50%, 80% or more? Would seniors still be entitled to a “pay” increase? The second point is that seniors were given a nearly 6% increase last year, with not much complaining happening when that occurred.

Remember, our population is generally aging, so this will only get worse. And this is yet another enormously large group of “voters” who have a large and vested interest in expanding government and in forcing it to take more from the productive class. Think that 20 million government workers would ever sign up for reductions in government? Think all of the folks getting agricultural subsidies would ever sign up for a reduction in government? Think all of the corporations depending on government largesse will ever sign up for a reduction in government?

Fat chance. And no matter how good the logic for reducing government is, it ain’t gonna matter. As Arnold Kling has been saying, giving folks a “voice” in all of this does not matter. The “voice” is stacked against folks like me and we will never see a mitigation of the government cancer in our lifetimes. The only thing that would work is the right to exit, and there is no feasible way to do that right now.

2 Responses to “We’re Doomed”

  1. “If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion” – F.A. Hayek

    I think about this concept alot these days. As a young person, I plan to live my life in such a way as to earn everything and justify nothing.

  2. Harry says:

    Ditto, Nathan.

    Wintercow and Hayek have inspired at least one brave person!

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