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Social Security Commentary

(c) Earl L. Haehl  Permission is given to use this article in whole as long as credit is given.  Book rights are reserved.

I suppose every blogger has some opinion of the Social Security issue. And while every politician who can move his or her lips has spoken out, the question remains as to whether a permanent fix is appropriat for what in 1935 was a quick fix to lower the unemployment rate in time for the 1936 election.

Disclaimer: I am a Social Security recipient.  That was optional but I calculated out that any way I go I will be 82 1/2 when I will have gotten back the funds confiscated from my employers and myself in my name.  Added to this is the fact that the dollars confiscated in 1975 are paid back in 2010 dollars.  And with all due respect to those who have said this is an insurance plan I say, “No!”  Social Security was designed to supplement pensions so employees would have an incentive to leave the workforce.  A true insurance plan would have fiduciary responsibilities unknown in government programs.

I began working when Dwight David Eisenhower was President and was paid under the table.  I can say this because all of the employers who so paid me have long ago passed into the realm that is beyond the jurisdiction of the Internal Revenue Service.  The culture back then was to avoid this.  Lyndon Baines Johnson was President when I first had the deduction.

Every so often a politician announces that something has to be done about Social Security and it has to be a permanent solution not a quick fix.  The resulting solution is a bipartisan plan that buys a few more years so “we” will have time to work out a permanent solution.  It is interesting that politicians use the the term “we” to mean someone who will have to deal with the problem somewhere down the line.  But the root of the problem is never addressed.

It’s easy (and often accurate) to blame the Prussians.  John Taylor Gatto points out that Horace Mann was heavily influenced by the Prussian system of public education.  Bean counters admire Prussian record keeping,  The use of statistics in government program development comes from the formation of Germany in 1870.  The hours of close order drill to which I was subjected from age 16 to 19 was the result of Benjamin Franklin recruiting an out of work Prussian staff officer to devise a method of drill for the Continental Army.  And from use of statistics Bismarck determined that 65 was an optimum age for members of the German Army to retire.

Back in the 1930s, Franklin Roosevelt was trying to redesign the mode of production in the United States to combat an economic “crisis” resulting from government and government authorized actions.  In 1929, the Federal Reserve tightened the money supply because the economy was a little too “hot.”  This resulted in the Stock Market crash of 1929.  The Smoot-Hawley Tariff Act of 1930 was vetoed by President Hoover–I give him credit for this–but it was passed over his veto.  US Industry was at full production until April of 1931 according to Merrill Rukeyser.  He viewed Smoot-Hawley as the proximate cause of the recession that began in 1931 and was nursed along by FDR until it was handed to Harry Truman.

Which brings us to the New Deal.  What FDR promised was a set of temporary laws that would restore the country.  Frances Perkins, graduate of Mt Holyoke College and Columbia University was the Secretary of Labor.  In 1935 she chaired the group that brought forth the Social Security Act.  Remember back in 1870 that Bismarck’s plan for retirement arrived by statistics at age 65.  It was a rare retired soldier that would live beyond 67 or 68 (a significant portion did not make it to 65) which made the retirement age sustainable (well, statistically sustainable).  Age 65 retirement made sense in the new deal because it had a precedent–it did not have the statistical analysis that said that workers were not as effective at that age or that their longevity was ideal to this.  The other factor that was probably more important was that this would give the older worker an incentive to leave the workplace so that “family men” could have jobs.

Like the other alphabet programs the SSA would disappear at the end of the emergency, which in this case, turned out to be 1946.  However, all of the New Deal legislation remained in effect and was enlarged upon.  In 1965, Medicare was added to the Social Security entitlement.  There have been various adjustments in retirement age.  Only individuals ages 16 through 64 are considered to be in the Civilian Workforce.  This is comparable to the withering of the state after the dictatorship of the proletariat.  While Social Security did not demand retirement at any age, social pressure was applied to those who kept “family men” out of the workforce–this is the way authoritarian regimes keep power by demonizing those who do not get with the program,

Unintended consequences:  Every piece of social legislation has unintended consequences which keep lawyers and activists in business.  While taking social security is not necessary, in a society where there were “family men” out of work, there was a certain opprobrium attached to older workers staying on jobs.  In a manufacturing setting it used to be the older skilled workers would train the newbies–65 retirement eliminated that.  AVTS and junior college are not a substitute.  When I worked at the ladder company I was taught by the foreman even though I had shop training in school and knew everything.

And the “jobs are for family men” meme sort of evolved into a bias against older workers. That had to be rectified by the Age Discrimination in Employment Act of 1967.  And it is still a perception that when you’re 60 or so it is over.  Except that there is an expectation that “older workers” make excellent greeters but not necessarily sales associates in the sporting goods section.  You will find retirees in small hardware stores, but not the big box outfits.

Meanwhile, if you are between age  40 through 70 and so inclined, you may tie an employer up with an EEOC investigation to determine whether or not there are reasonable grounds for you to sue that employer–no worries; the taxpayers pick up your tab whether or not EEOC finds anything and you have achieved a terrific inconvenience for your employer. The costs of the inconvenience will be passed on to the employer’s customers who pay the taxes to fund federal regulatory agencies.  And if that employer is a manufacturer, the cost of mounting regulatory inconveniences can help make product less competitive in the marketplace.

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