June 14, 2005

"A wonderfully intentioned system that in practice promotes greed and sloth."

John Tierney notes that Americans feel entited to retire with Social Security benefits when they are only 65 or even 62, even though that have no physical need to stop working:
The problem isn't that Americans have gotten intrinsically lazier. They're just responding to a wonderfully intentioned system that in practice promotes greed and sloth. Social Security is widely thought of as a kumbaya program that unites Americans in caring for the elderly, but it actually creates ugly political battles among generations.

With the help of groups like AARP, the elderly have learned to fight for the right to retire earlier and get bigger benefits than the previous generation - all financed by making succeeding generations pay higher taxes than they ever did themselves.
Tierney goes from this to promoting personal/private accounts on the theory that it will create incentives to work longer. Wouldn't it be a lot easier just to raise the retirement age? Why use words like "greed" and "sloth" if you're going to end up with a proposal based on restructuring financial incentives? Why not come out and tell us that reason and fairness support an obligation to work a few more years before collecting benefits for the rest of our lives?

IN THE COMMENTS: Responses that show why politicians don't dare to suggest the obvious, obvious solution! Make this proposal and the practically next words you hear will be "dog food."

UPDATE: Dr. Weevil shows why you'd be a fool to resort to dog food to try to save money.


Ann Althouse said...

This problem is there wherever you draw the line. Nothing prevents a person with an active job from taking on a less demanding job. What 65 is today isn't what it was when the line was originally drawn at 65. People just aren't "worn out" at 65. We're talking about expecting young people, people struggling to provide for children, to pay for your leisure. I'm just not that sympathetic to people saying they need to retire at 62 or 65 (not all that much older than I am). You're bringing up a problem with hard physical labor that would justify having 50 as a retirement age.

goesh said...

well, I know any number of old farmers still plugging away on their tractors most every day. Let's not get too carried away here with sympathy for the geezers. I think many Seniors have a pipe dream of their children sharing their wealth with them once they grow feeble and start consuming dog food for at least one meal a day to save money. We know that's not going to happen, so let's not get too weepy and mushy. The infamous words of Thomas Hobbes may have to be resurrected to set this matter straight. The American dream is that life won't be nasty, brutish and short, not that it can't be.

Any Western history buff will recall the Santee Sioux revolt in Minnesota in the early 1860s, when the ire if Natives was raised when the local Indian agent in response to their plight uttered the infamous words, "let them eat grass". The upwardly mobile go-getters of today are saying essentially the same thing about geezers, " let them eat dog food".

Meade said...

Besides, maybe we should take a closer look at the quality of food we're asking our dogs to eat.

Beachcomber said...

This illustrates the biggest problem I have with AARP, and I say this as a member. Social security is so politicized now that it seems we can't even have a serious national conversation about problems with the system. Oh, a few people try, but the political risks are absurdly high. And all the while AARP is sending me scary propaganda that seems to suggest that the dog food cliche isn't all that improbable unless we all fall in step with the AARP party line and fight for our "rightful benefits". The underlying message is one of selfish entitlement, and if getting what we think we deserve means taking more and more from our children and grandchildren, AARP seems only too willing to sweep that unpleasant bit of dirt under the carpet.

Unknown said...

Our society has changed since 1935 and so has retirement. AARP's sexy seniors biking through Tuscany are an inadvertent advertisement for reform. Every law, every entitlement, hurts (and privileges) someone; society's job is in a way to make sure it's the fewest and the most appropriate who take the hit.

I worked in workers' comp, so I know what physical labor, even "light" factory work, does to people. It's unrealistic to assume a 50-year-old factory worker with bad knees and back can launch a second career, but Social Security Disability will still be available for those people.

The reason they won't raise the age, though, is because this is a "juice" issue, one that draws out the grass roots activists and the PAC/lobbying money.

Mark Daniels said...

Another term for Social Security is "sacred cow."

In an earlier column, Tierney compared what Social Security will be paying him to that which a Chilean friend is going to receive under that country's private-account driven retirement system. Chileans, on balance, can expect to do much better with Chile's social security program than any of us Americans with our system. Perhaps that's why Tierney jumped to a discussion of private accounts.

But to your point, I absolutely agree that with longer life expectancies goes better health for longer stretches of people's lives, on average. This set of demographic shifts alone, apart from the long-term financial prospects of Social Security, indicates that even a one- to two-year bump-up of the standard retirement ages would be advisable.

To another one of Tierney's points: The AARP is one of the least responsible self-interest groups in the country. They play a creepy game of demagoguery on the whole question of Social Security reform, deceiving their own constituency and intimidating people from doing anything about reforming the system.

President Bush may have been wiser to tackle Medicare, the solvency of which is much more at risk than Social Security.

Or, perhaps he would have been best-advised to do something about health care. A Republican dealing with this issue would be like Nixon going to China; Nixon's diplomatic initiative was totally unexpected from a Republican President, especially an old Cold Warrior. No Republican was going to speak against Mr. Nixon for his initiative,irrespective of their true feelings about it and of course, Democrats couldn't say a word against a policy which they themselves had long advocated.

Mr. Bush would have similarly confounded his critics and shut the mouths of his opponents and so, been able to reduce the unnecessarily high costs of health care in this country. No Democratic president, as Bill Clinton proved, can likely pull that off.

I suspect that it will take a Democratic president with the courage to break with partisan orthodoxy to meaningfully reform either Social Security or Medicare. It has become too much of a cliche to say that Republicans would prefer dismantling those programs for a Republican President to successfully make it happen, even with a Republican Congress.

Most thoughtful people seem to agree that whether you incorporate private accounts for younger workers or not, assuring the future solvency of Social Security is an easy fix: Simply raise the retirement age by a few years, as you suggest.

stoqboy said...

My biggest problem with the old age dole is that it is a welfare program for the middle class. Clearly, some people need this kind of help. Also clearly, the entitlement aspect of it changes peoples saving and investing behavior when they are younger. Take away the "promise" of middle class entitlements, and able people will take care of themselves (see, for example, welfare reform). As a nation, we are wealthy enough to take care of the people who really need it - I say means testing for all, phased in over 10-20 years.

hat said...

I think the problem lies in the fact that we have increasingly longer lives. Back when a man might only live to 70, retiring at 65 would not have been as big a deal.

We need to do real, objective tests on the health and competence of people at older ages, and from there determine proper retirement ages. It's no use talking about "I know farmers who are still going away on their tractors" or "I have backpain, imagine what it'll be like at 60". These kind of emotional arguments won't help us to actually define a good age for retirement.

Smilin' Jack said...

""A wonderfully intentioned system that in practice promotes greed and sloth.""

Gosh, that describes so much of modern government, doesn't it? Except that by now the intentions should be suspect as well....

Anyway, I'll retire when I choose, on my own savings, and live as I please. And my charitable contributions will go where they're needed (e.g. Central America or Africa, where people are actually starving) not to pampered American geezers who by age 60 have had plenty of opportunity to either save for their own retirement or learn to like dog food.

Ann Althouse said...

Kathleen: I think he's saying the system is structured to give people the incentive to retire -- that the natural tendency toward self-interest is destructive and the system ought to be restructured to get the right incentives in place. I'm saying it would be a lot easier to fix social security by raising the the retirement age by a year or two -- which, I believe I've read, is all that would be needed. It's so simple! I really don't see why people freak out about it. You still get to retire and collect your benefits, you just work a little longer as is entirely justified by improved health and increased life expectancy.

Troy said...

I've found the same sense of entitlement in government. I've worked with cops for over 10 years and come from a family of public school teachers and many of these municipal and state employees are beginning to sound European in their "right" to retire at 50. Cops in CA can retire after 30 years bringing home 90% of their pre-retirement pay -- often times resulting in pensions of well over $100,000/year at 51 years old.

No one respects cops and the work they do more than me, but we can't feed poor people, educate all or most of the children and support baby boomer public servants for 30 odd years. Something has to give.

Troy said...

Wandering mind... Your last comment reminds me of the scene in "The Untouchables" when Sean Connery is running after one of Capone's bad guys and he eventually gets tireed yelss "Enough of this running shit" and squeezes off a few rounds from his Tommy gun. I knew a Texas Highway Patrol trooper (since retired) that was older than God and I wouldn't have messed with him. You knew he wasn't going to fight you.

Harkonnendog said...

I'd like to suggest moving the SS benefits receiving age down to 34. My job is reeeealllllllly hard. REEEALLLY really realllllly hard, (you probably wouldn't think so, but I do) and what's more, I don't even like it! I'm worn down- burnt out- worn out... I 'd also like to suggest that I should be allowed to receieve state subsidised medical marijauna to help me deal with the stress I'm under, which is brutal, and, I think, has left me permanently in need of weed.
Thank you.

Joe Martin said...

(I realize I'm late to this discussion and most likely no one will read this anyway. But I intend to indulge myself anyway)

Kathleen B: Social security is an insurance system. Allstate doesn't say that you can't collect when your house gets robbed because you don't have kids so you have enough money to replace your stuff.

My understanding of insurance is that it is supposed to protect against unexpected events. Hence, Allstate offers homeowners insurance because having your home robbed is a fairly infrequent and unexpected event. Thus, social security fails the "insurance" test miserably. Retirement is a normal, expected even that occurs for each and every person in the United States.

Social security bears more resemblance to a national forced savings scheme (albeit one where I have no claim on my actual deposits) than it is to an insurance scheme.

Bruce Hayden said...

A couple of points. Probably will separate them.

One of the best descriptions I have heard of SS is that it is a welfare program hidden in a massive intergenerational middle class wealth transfer program from the young to the old sold as a middle class retirement program.

And this is why it is hard to change. If you start means testing it, it loses its political support from the upper middle class, who have contributed the most through their productive years. And if you cut benefits, you put pressure on those who depend on it as essentially a welfare system, and, thus, lose votes on the left.

You have the same problem removing the cap on contributions without removing the cap on benefits - the program will lose critical upper middle class support, as it becomes more and more an income distribution program from the upper middle class to the lower middle and lower class.

So, the answer, short of major surgery, as the President suggests, is to inch everything up a little at a time. Retirement age. Caps on contributions, etc. Not fast enough to scare the upper middle class into abandoning it.

Bruce Hayden said...

I see some of the same culprits here as I saw in the school voucher thread, and I am trying to make a similar point that I tried to make there.

I indirectly pointed out in my previous post that the true nature of SS is somewhat obscured. This is intentional, so that it will have mass appeal.

But note, even in this discussion, it is obvious that we all know the purpose of SS, but if pinned down, we don't agree. This is evidence of Heyak's criticism of communitarianism, and, thus, socialism.

Is it a retirement program? Some believe it is. How about a welfare program? Some believe that too.

The point is that while we all agree in the program at some high level of abstration, we all have somewhat different views of what the program really is and is supposed to accomplish.

That may have been its strength these last 70+ years, but I suspect that it is rapidly becoming a weakness.

Smilin' Jack said...

Weevil's comparison is bogus...he's talking about buying Alpo, for God's sake!...who does he think he is, Rockefeller? Buy the generic dry stuff in the big bags! Maybe on special occasions you can have the kind that makes its own gravy, but don't overdo it....

Joe Martin said...

Kathleen B: "Insurance isn't about "unexpected" events, it is about contingent events and about spreading the risk. And that is exactly what Social Security does."

I just Googled the definitions of insurance. All of the most common defintions include the concept of protection against financial risk (or loss) resulting from specific events. What risk is social security protecting me from? The risk of retiring before I die or the risk of retiring without enough money? It certainly can't be the "risk" of retiring. That's more of a certainty.

If social security is intended to protect against the risk of retiring (or being physically unable to work) without enough funds saved, then it should definitely be means tested. A retired individual whose private assets allow them to live comfortably should not be drawing insurance payments.

Ann Althouse said...

Joe: The risk is of living beyond your working years. When the program began most people did die before qualifying. The people who collected were the ones who lived too long, which seems too positive, but it's really a negative financially. Those who died and therefore did not collect are equivalent to people who have auto insurance but then never have an accident.

Smilin' Jack said...

The risk is of living beyond your working years.

I don't think most people regard staying alive as a "risk." Anyway, the risk of disability, whether due to age or any other reason, is already covered by other parts of our welfare system. People see SS as a source of retirement income, and will support it as long as they think they're getting something for nothing...when they realize they're not, the scheme will collapse.

Ann Althouse said...

Smilin' Jack: Whether people are realistic enough about life to think of this as a risk is irrelevant. It is a financial risk and that is what one is insured for. It works because some collect and others don't. The personal accounts approach, where people who die early get to pass the money along to their heirs, fundamentally changes the nature of the program.

Smilin' Jack said...

It works because some collect and others don't.

Well, I've heard it called a Ponzi scheme, but this sounds more like a tontine, that favorite gimmick of mystery writers (e.g. The Wrong Box)

It does suggest another way to save the system, though...encourage people to die young. Let's require cigarette vending machines in all schools!

Ann Althouse said...

Smilin' Jack: It's absolutely true. The tobacco companies had an argument that they declined to use. Smoking costs society some money, but it also saves a lot of money. On balance, the dying smokers are not taking out more than the healthy agers.