The Candidate: The Social Security program is one of the most pernicious residues of the New Deal collectivism of the 1930s. It was introduced at a time when millions of Americans had seen their life savings destroyed in a Great Depression that was created by the Federal Reserve System’s mismanagement of the monetary and banking system. Private-sector employment and income-earning opportunities were crushed under the weight of government taxes, controls, and planning schemes that inhibited the market’s ability to adjust and recover from the imbalances and distortions caused by the anticapitalist policies of both the Hoover and Roosevelt administrations.

Furthermore the political environment was polluted by socialist and fascist-type ideologies that attempted to convince the American people that individualism and self-responsibility were no longer workable or reliable.

Only the guiding hand of government, it was argued, could ensure the needs and requirements of the population. The Social Security program was one of those programs constructed on the assumption that people were neither able nor far-sighted enough to successfully plan for their own retirement during their years in the work force. The government, therefore, needed to “plan” for people’s old age.

No one today believes or expects that his retirement years can be trusted to the government. The growth of individual investment in the stock market, mutual funds, and various private pension plans are a clear demonstration of this. People have already been taking their financial future into their own hands. They make their own choices and decisions, after evaluating their expected future financial requirements on the basis of personal projections about the lifestyle and degree of comfort they would like to have in their later years.

In my opinion, the American people are ready for an argument that says that they should be free to use their own income as they see fit for their present and future needs and desires. But both major political parties are still wedded to the elitist and paternalistic ideas of the past. I know that one of my worthy opponents has proposed that the American people be permitted to have the option to personally invest a small portion of their Social Security payments into certain government-approved private investment possibilities connected with the stock market. And it is absolutely true that the long-run payoff from investment in stocks has on average far exceeded the stream of income received from the Social Security program.

But the fact remains that this extremely modest proposal for “privatization” of the Social Security system still assumes that the American people cannot and will not be trusted with managing their own earned income. Both the amount and the type of investments people would be allowed to make would be supervised and regulated by the government. We are all still to be treated as irresponsible wards of the state.

What I propose is to end the Social Security system and allow individuals complete and total freedom on how to manage and plan their own finances. It is typical of the traditional planning mentality to attempt to homogenize and compress people into broad, aggregate categories of needs and requirements, in other words a government-managed one-size-fits-all. The fact is we are all distinct and different in our circumstances and value judgments concerning our needs and wants both for the present and for the future. No one can or does know better how best to plan for our futures than each of us by himself.

Some of us will save and invest more, while others will save and invest less. Some will start thinking ahead earlier in life, while others will begin to plan for their later years only after the passions and desires of youth have started to subside. And there may be some who take the attitude that tomorrow will take care of itself and do little or no retirement planning for a good part of their life.

But in every case the decisions and the choices will reflect the unique circumstances and preferences of each person. At the same time, the market will create the profit incentives for financial intermediaries of various types to offer, advertise, and design retirement planning policies to fit the tapestry of human desires and forethought horizons. And over time the market will test the various privately offered options and weed out the less-successful offerings and the ones less suited to what millions of people find most useful.

Society is too complex and its members are too diverse to continue this absurd and counterproductive system of monopolized and compulsory government social insurance. The individual person’s freedom to choose and to plan for his own future and that of his family is the ideal I offer to the American people.
  

What about the poor?

Washington Post: This may appeal to the higher or middle income groups in society, but what about those at the lower end of the income scale? What will guarantee that many of the poor or less educated don’t fall into a trap of needing to spend all their income to meet the needs of everyday survival, with no chance or ability to think ahead towards retirement? Are you willing to see the elderly poor left to starve without a roof over their head? Is this the political philosophy of human dignity of which you spoke earlier?

The Candidate: The various government wars on poverty and illiteracy that have been waged now for decades have neither helped nor improved the conditions of the poor. Indeed, through these programs the government has waged a “war on the poor,” to borrow from the title of Clarence Carson’s book. What the poor need are the opportunities that only the market can provide. Just abolishing the Social Security system and ending the social insurance taxes now collected by the government would be a dramatic step toward helping the very people to whom you’ve referred.

A vast array of market-based jobs and business opportunities would be rapidly created as formerly taxed dollars were now spent, saved, and invested by the private individuals who have earned them in their private-sector employments and occupations. Consumer demands would rise for some products and increased private savings would lower the cost of borrowing as the supply of lendable funds increased, thereby generating an expansion of investment demand to increase the quantities and qualities of numerous goods and services in the future.

Tens of thousands of employment opportunities would emerge as employers demanded more workers to satisfy the increased demands for consumer goods and investment. And over time, as these investments came to fruition in the form of more and less-expensive goods offered on the market, all in the society, including those in the lower income ranges, would experience a rising standard of living.

Furthermore, let me suggest that the way you phrased your question is itself a slight against the dignity of the very people about whom you have expressed concern. You assume that “the poor” are unable and unwilling to think ahead, weigh the alternatives of spending or saving, and are somehow unfit on their own to make the sacrifices to plan for the future even out of their modest incomes. Your question assumes that they need a “keeper” to watch over, supervise, and subsidize how they live.

I would ask you to go among those whom you designate as “the poor” and ask them directly: “Do you consider yourself incompetent to allocate your own income? Are you too shortsighted to think about the future and therefore need the government to think and plan for you? Are you so immature that you cannot be trusted to decide what is really important for you and your family? Do you want the government to treat you and take care of you like a child or the mentally unfit in an institution?”

Whether you like it or not, may I say that this is the implication — that government is needed to “care” for the poor, including the elderly poor. To imply that they need to be taken care of is to assume that they cannot take care of themselves. I doubt that many respondents would reply affirmatively to those questions. Why? Because while all of us make mistakes and often wish after the fact that we had acted more wisely in various situations, very few of us would actually want to be supervised and told what to do “for our own good.” We all desire the freedom and the dignity to make our own choices, even when not all the results of our choices turn out the way we had hoped.

Finally, long before the welfare state and Social Security, the private sector had developed networks of for- profit and charitable associations to assist those needing to be helped or educated or trained to care for themselves. (See the reviews in Freedom Daily of Reinventing Civil Society: The Rediscovery of Welfare without Politics by David G. Green, May 1994; Community without Politics: A Market Approach to Welfare Reform by David G. Green, April 1995; and The Corrosion of Charity by Robert Whelan, November 1996.) Government social insurance and welfare programs undermined these effective and efficient voluntary and market-based solutions to various “social problems.” Government social insurance and welfare “crowded out” the private-sector alternatives.

The free society of the future will once again create the opportunities and incentives for men of goodwill to assist those who may need the support of their fellow human beings, either because of circumstances not completely of their own making or even due to the human frailties of impatience, shortsightedness, error, and omission. And these networks of private and voluntary associations will have a far greater flexibility and sensitivity to the needs and requirements of those deserving help than any heavy-handed and bureaucratic government welfare and social-insurance system. Furthermore, the financial wherewithal for such generosity will arise out of the productivity and additional wealth generated by leaving income in the hands of its rightful earners.

Social Security is part of the bankrupt collectivist ideology and socialist planning system of the past. It is time to dismantle the financial Berlin Wall that separates people from the money they have earned and behind which the government claims the right to monitor, plan, and command how people shall secure their retirement years. It is a system that threatens fine and imprisonment for anyone who dares attempt to opt out and to be free with his own money according to his own desires and designs. A true society of human dignity is one that respects each person’s freedom to make his own plans in these matters.

Professor Ebeling is the Ludwig von Mises Professor of Economics at Hillsdale College, Hillsdale, Michigan, and serves as vice president of academic affairs for The Future of Freedom Foundation.

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