Grand Forks Herald opinion editor Tom Dennis and I have developed something of a public back-and-forth over entitlements. Last Sunday I responded to one of Dennis’ editorials in which he wrote about moral hazards.
“[A] key reason why so few people have nursing-home insurance is the fact that long-term care is available for “free” to people who qualify for Medicaid,” wrote Dennis. He was pointing out that these sort of entitlements can create a moral hazard whereby citizens stop caring for themselves in favor of the government caring for them.
I agreed with Dennis, but wondered why he wouldn’t apply that sort of thinking to other areas of government like Social Security. Today Dennis responds by arguing that Social Security, far from creating moral hazard, is a social imperative opposed only by those “in thrall to a dog-eat-dog libertarianism that holds very little mass appeal.”
As evidence, Dennis cites surveys of poverty among senior citizens taken by the states before the implementation of Social Security:
“Though there were no national measurements, in surveys taken between 1925 and 1932 in Connecticut, New York and Wisconsin, nearly half of elderly people lived on less than $25 per month, which survey administrators deemed ‘insufficient subsistence income,'”a Huffington Post report notes.
“An attempt to quantify elderly poverty in 1939, deep into the Depression, using census data, found the rate may have been close to 80 percent. Whatever the national numbers, by 1974. official elderly poverty had fallen below 15 percent, and by 1995, it had dropped to 10.”
And as a 2004 National Bureau of Economic Research study concluded, “Our analysis suggests that the growth in Social Security can indeed explain all of the decline in poverty over this period (1968-2001).”
Let’s see: Social Security and a modestly less robust capitalism, or no Social Security and a free-market juggernaut that leaves Calcutta-like casualties in its wake
The surveys referenced suggest that the income level among some seniors pre-Social Security was below subsistence level. And yet, seniors subsisted. Why do you suppose that is? Likely because their families and communities cared for them. Social conservatives often point out that the rise of the government entitlement/welfare state has marginalized the role family and private charity played in the lives of Americans. Anyone looking at some of our nation’s nursing homes, where seniors are warehoused out of sight and out of mind can see evidence of that.
But I reject the premise that our only choice is between our entitlement status quo and hyperbolic claims of “Calcutta-like casualties.” And attributing decline in poverty in America to Social Security alone seems shockingly myopic.
None of us wants to see our fellow citizens, senior citizens and otherwise, pushed into an impoverished existence, but is a universal defined-benefits pension really the only way to avoid such an outcome? Given the mathematical reality of Social Security as it presently stands, not only is the program not our only solution, it’s not even a particularly good solution for modern Americans.
Dennis embraces compassion for seniors. What about compassion for younger Americans who are getting the short end of a massive wealth redistribution from young to old? What about this generation of Americans entering the workforce today who may never be able to build up the sort of savings needed to provide for themselves in retirement because the weight of America’s entitlement systems falls squarely on their shoulders?
Medicare and Social Security, our two largest entitlement problems, are on a path to insolvency and the only reforms the loudest proponents of these programs seem willing to embrace are reforms that take more from Americans to pay for the programs while giving them less. And even those reforms will only kick the can down the road until another round of austerities and tax increases are required.
It’s one thing to be compassionate for those these programs help. It’s quite another thing to ignore the math of these programs, and the realities those calculations represent for younger generations.