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The Myth of Social Security

Nick Baldasaro

Much has been said lately on the subject of social security and its future, with some advocating an overhaul aimed towards private accounts and others advocating something of a status quo course of action. However, no one to my knowledge has questioned whether social security in any form ought to exist in the first place. My purpose is to show that social security is vastly inferior to other would be social spending, and that it brings down the quality of life for United States citizens, including the elderly.

If one accepts that the reason we reallocate money through social programs is to improve quality of life, then several problems arise with the institution of Social Security. The controversial program started under President Roosevelt in the Great Depression and was intended to prevent the very poorest elderly from going without basic needs such as food. Workers pay in during their youths and receive during old age. Since the average worker gets more than he paid in, the program is considered to be an entitlement. The program still exists and has swollen to 500 billion dollars in payout a year, about a quarter of the federal budget. 500 billion dollars is a lot of money, but individually, Social Security amounts to only about 10,000 dollars per year. Ten thousand dollars per year seems at first glance to be a lot of money to a poor elderly person. 10,000 dollars could possibly prevent relative poverty, sickness, or even in the extreme case, death. Despite this, social security is a terrible squandering of resources, because none of these possible misfortunes affect the true quality of one’s life.

It is difficult to show what is quality of life. That being said, it is simple to show what it is not. First off, quality of life is not quantity of life -- one’s life does not improve in quality simply by being extended past 55, 65, or 75 to some arbitrary length. Let’s take the extreme position, and suppose that people will die younger as a result of removing Social Security. There is a lot of talk suggesting that there is some expected length of life that Americans are entitled to live. I know of no rational basis for this talk, and I know from history that some of the most respected (read: high quality life) figures in our history lived shorter lives, sometimes even with selfless intention. The overwhelming majority of people accomplish their most noble and fruitful tasks before the twilight of their lives - raising and experiencing a family, working for a living, overcoming hardship, discovering and inventing in the name of a trade, writing a book, etc. I propose that in this country at least, the sum of human accomplishments is what is truly meant by a high quality of life, and the idea that extending life for the sake of length is some sort of noble deed is preposterous. It denigrates the accomplishments preceding old age by suggesting that death at sixty is to be feared above all else, as if so many of the great men and women of our histories had not achieved their greatness in spite of dying relatively young. People are just as capable of enjoying life in their employed years as in retirement. Advocating life for length’s sake thus shackles the old with a sense of being perceived as burdens that should cling to life on the public dole as long as possible, ironically bringing down the quality of their remaining days. Accomplishment, and not longevity, is the metric of life quality.

Secondly, quality of life is not a 10,000 dollar stipend. There has arisen in the language of Social Security debate an unfounded myth that to cut off Social Security payments to the old is somehow a betrayal that would leave the elderly to slide into poverty. In the first case, common sense tells us that Social Security was never intended as a retirement program, and that 10,000 dollars a year, while debilitating to the federal budget, is considered by most to be an unlivable pittance individually -- put another way, it is not a mechanism that guarantees quality of life, not even close. If one is so close to whichever line is nowadays described as poverty that one needs social security, then we are already talking about a lost cause -- shelter, food, and medical payments wipe out 10,000 dollars in an instant. If one has already modest savings, then it is unlikely that 10,000 dollars will make that much of a difference. It is rare to find an elderly person who boasts of the generous nature of Social Security; people being insatiable with respect to entitlement, it is unlikely therefore that any sustainable amount of social security handout would ever be “enough” in the public mind. Furthermore, there arises with human nature this unfortunate tendency that we finish work at the last minute, wrack up the largest credit card debts in the world, and save as little as possible to survive our old age. Social Security is a huge incentive to be a poor financial planner, inasmuch as it amounts to “free” income. None can rightly say how many Americans Social Security converts from enjoying well planned financial security to becoming dependent on the government dole, all by biasing spending patterns towards foolish. It must be remembered that as always, people can provide more for themselves than can the Federal government, and paying early to receive in old age thwarts personal enterprise. Social Security leaves both young and old with less than they might have had. If one wishes to spend their own money, or that of their relatives, on longevity, then that is their choice. Paying for the choice is their affair, and not the duty of the public.

Third, quality of life should not shortchange the future of the young. The majority of Americans derive some pleasure from the knowledge that they have sacrificed through hard work for their family. Programs such as Social Security (to say nothing of Medicare) inherently retard the future of the young by shifting resources into the future, when they become an entitlement, rather than using them in the present, when they are an investment. Functionally, an educated individual has every advantage over an uneducated one in terms of standard of living and quality of life; this notion coupled with our great care for the young makes it amazing that whereas annual social security and Medicare combines to be 35 percent of the Federal Budget ($700 billion), education spending totals $90 billion. It is entirely true that state and local governments can choose to spend their own money on education. However, this causes great variability that lends to inefficiency and ineffectiveness. How can we claim to seek maximization of public welfare and life quality given such a gross inequity in resource allocation? Who can argue that it is good or noble to spend wealth on the elderly, with mere years left to their successfully completed lives, when children go undereducated? I propose that Social Security be gradually phased out over a moderate time period, with an eventual complete refund to any who have paid in as to not cheat them of their earnings. If any social program is to take up so much of our time and hard work, let it be one favoring education and investment in human talent, rather than entitlement where it should not be desired. Social programs should be aimed towards the young.

To many, these positions will seem extreme. What one does not often pause to consider though is the opportunity cost of 500 billion dollars directed towards the life completed rather than the life barely begun. How many children must receive a second rate college education, or no college education, or no high school education because of these assets, diverted towards entitling the old rather than enabling the young? How many discoveries, how much income is lost to society by this mechanism? I cannot imagine an American who would be proud to have the Federal dole extend his life 10 years and in the process, deprive an inner city child of the money that would enable him to survive his high school years and progress to college. If the adults in our world truly value their children and the future as they say they do, it is time to divert assets, at least in some measure, towards those who need it more.