Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
Demography and the Welfare State
The demographic crisis that Claire alludes to is, in part, a product of the welfare state. As Gunnar Myrdal noted in a set of lectures that he gave at Harvard in the 1940s, political communities which adopt programs of social insurance (what we call Social Security) eliminate one of the chief reasons why women and men marry and have children. He suggested compensatory tax legislation, and the Truman administration responded by legislating a very substantial tax break for those who have children. That tax break was, in effect, frozen and dwindled gradually in importance as inflation did its work, and we now find ourselves with little or no population growth. In Europe, where social insurance was invented and implemented — at least in some cases — much earlier, there is a demographic implosion. And, irony of ironies, that implosion, seconded by greater longevity, has bankrupted the welfare state: too few people laboring and paying in, too many taking out. This year, for the first time, Social Security tax receipts have been outpaced by the payment of Social Security benefits.
There is an entitlement crisis; it is time for serious entitlement reform.
Published in General
If diet pills worked as well as birth control pills, then we’d all weigh about 90-lbs and be even more helpless–more helpless than just being old and arthritic. But, we’re smarter than Mother Nature….yes we are.
Entitlement reform can be accomplished, but won’t be popular. I expect that, as in Europe, even politicians who love all of those big programs will ultimately make the cuts, but they’ll catch hell for it.
Sadly, if it happens like that here and Republicans are the ones in power when it does, voters’ preference for Republicans might be short-lived.
I agree with Dr. Rahe. We can either reform entitlements in a thoughtful, sustainable fashion now, or, in a few years, reform will be forced upon us under conditions where we have little or no wiggle room (see, e.g., Greece). One way or the other, it must happen.
There’s another demographic problem that’ll make reforming entitlements even tougher: the boomer bubble. This voting powerhouse is on the cusp of cashing in on the largesse of entitlements (Social Security, Medicare, and now Obamacare–which is largely a wealth transfer from young to old), and so I fear that real, substantive sacrifice–diminished care, rationing, means testing, confiscatory tax rates–will be reserved for the parade of generations that follow the boomers, and perhaps by a few particularly robust boomers who happen to outlive the political leverage of their generation.
Hey, keep quiet. I am 61; I have paid into the system for more than forty years; and I intend to cash in! Yes, alas, the boomer bubble is a problem, and I am lucky to be part of it.