Tuesday, February 5, 2013

The Worst Pun

Arnold Kling (man, how many posts have I written commenting on something he's said?  I have no defense other than that he is thought-provoking and smart, while having views that differ from mine just enough to fuel posting) has a post on the riddle of social security.  Why do we subsidize retirements?

If it's a riddle, it's a very old one.  Bismark invented the welfare state in the 1880's, and the third major law he passed, in 1889, was The Old Age and Disability Bill.  Enter social security insurance on the world stage.  The fact that old age is linked with disability in that legislation tells the whole tale: in this crazy modern world in which we live in, for some people retirement is what happens when you decide to stop working and play golf.    But for most people in history (and now?) old age isn't dominated by leisure so much as it is dominated by having a crappy body.  In 1880's Germany, being an old person is basically the same thing as being a disabled person -- you physically can't work for a decent wage.  So Otto says,

„[...] the actual complaint of the worker is the insecurity of his existence; he is unsure if he will always have work, he is unsure if he will always be healthy and he can predict that he will reach old age and be unable to work. If he falls into poverty, and be that only through prolonged illness, he will find himself totally helpless being on his own, and society currently does not accept any responsibility towards him beyond the usual provisions for the poor, even if he has been working all the time ever so diligently and faithfully. The ordinary provisions for the poor, however, leaves a lot to be desired [...].“

Auto Van Biz-Mart

For a lot of Americans, there is still some truth in the idea that old age leaves people less able to support themselves and is a form of disability (IE, if they had a very physically active line of work or if they are low skill and mostly sell their manual labor).  But in a white collar world with age discrimination laws that is increasingly not true (or at least, the wage hit old people take is more marginal), and I think you are increasingly seeing a new justification for SSI.  There is an element of hope to it.  Lots of people have to work shit jobs they hate their entire life.  Subsidizing retirement is a way to give those people meaningful hope -- there's gold at the end of the crap rainbow! -- which both makes the working people happy in its own right (lives with hope are better!) and probably gets people to buy into society more (remember, Bismark didn't implement the welfare state because he believed in it, he implemented the welfare state to keep social order in a world increasingly dominated by class struggle).  I think this is what people talk about when they talk about lives deserving "dignified retirements" -- everyone deserves a little hope at the end.

But those two things have different policy implications.  If we feel bad for old people because "old" is a form of disability and the elderly can't work, we feel bad for all old people.  But if we want to give working people an element of happiness and dignity to look forward to at the end of their lives, we can means test SSI.  Rich people can buy their own dignified retirement just fine, thank you. I suspect that, as the justification for the program increasingly moves from the first to the second thing, the system will start to look (and be) more explicitly redistributive.

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