Economics Professor: Get the Government out of Social Security
Economics professor and author Robert Higgs gives his insight on Social Security and why the government should not be the one handling it.
Caller: “My wife actually hails from Oklahoma, so it’s interesting to hear that you lived with her. And we live in Central Valley, you know. But I’m curious, I’ve been [...] for 25 years so I will take issue with most of what you say. But I wonder when you say that it’s essentially theft to take from one through taxation to give to another at an individual level, how do you feel about, as another caller asked, about the proper role of government when they tax or essentially steal from everyone to provide for the common good? What do you consider is the proper role of government? And taking your argument the extreme part of Social Security and what not, don’t we essentially have to be willing to let people die in the streets if they do not handle their finances properly, for example, if they opted out of Social Security or what not?”
Robert Higgs: “We need to remember that all the money that goes into Social Security comes from us. And if it comes from us and it were never taken by the government then that would be in our possession for the relief of the destitute. And furthermore, it wouldn’t have been diminished by passing through the bureaucracy to support the Social Security Administration. It’s a leaky bucket whenever we transfer income through government because the transfer personnel themselves eat up resources along the way. In addition, the government doles out the money according to bureaucratic rules (one size fits all type rules), which means that the assistance can never be tailored so that it goes to those who truly are the most deserving and does not go to those who are basically gaming the system at our expense.
So, there is a lot to be said for never taking the money away from people in the first place. And when I say that, I certainly mean to suggest that no, I don’t think people would be dying in the streets if we never had Social Security. Before we had Social Security people were not dying in the streets for want of assistance. It’s true that the society was much poorer but that wasn’t because it lacked Social Security, it was because… if we go back far enough in history we will find that the economy was not as productive as it is now.
So, poverty was almost a necessity given the lack of productivity historically. But there was no lack of people’s assistance in help. I mentioned earlier all the fraternal organizations, thousands and thousands of them existed in this country and other countries before government took over the social insurance systems. There were countless churches, countless neighbors, countless friends, countless relatives. These were sources of assistance to people in need. Furthermore, they were people who knew the persons they were assisting. They could tailor the assistance so that they gave what was most needed when it was most needed. And they gave moral support. What you get now is you deal with a bureaucrat in a welfare office. This is one of the most demeaning experiences anyone can have. You’re forced to go in and beg for your livelihood from somebody whose just holding on to his job watching a clock to go home at 5 o’clock.
It’s far superior to have a system in which the destitute are aided by those who are close to them rather than relying on losing money by filtering it through government middlemen and then relying on one-size-fits-all rules, exploitable rules, corruptible rules, rules subject to the vagaries of politics. Rather than relying on that very imperfect means, people have the capacity to develop through charitable organizations, and to some extent they have anyhow, measures to relive distress and to help people in ways that are really effective and useful, and most of all give people help in a way that if they can be removed from that situation they are removed and not simply made dependent to stay forever on the government dole because it creates a kind of electorate for politicians that support that system.”
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