THE VARIETIES OF DEPENDENCY….One other point on George Will’s column. Will suggests that the Democratic defense of Social Security “really is rooted in reluctance to enable people to become less dependent on government.” Unlike Will, sadly, I’m not a psychoanalyst, so I can’t speak to ulterior motives, or to what liberals “really” believe. But I’d like to know, because I’ve heard this repeated more often than I can count, how on earth does Social Security foster “dependence” on government?
Like almost everyone else, I pay FICA taxes for Social Security and Medicare part A. For the most part, I don’t even think about it, the taxes are withheld automatically. As a 22-year-old, I know that 45 years from now the Social Security Administration will use an automatic formula to calculate my guaranteed benefits and send me a monthly check. I know that if I work hard and my salary goes up over the course of my career, that check will be bigger. And I also know that I should probably save elsewhere if I don’t want a big income drop-off at retirement. But day to day, I don’t really feel any sort of “dependence” or “neediness” or anything else towards the federal government. If there’s anyone who does feel this way, let me know.
To make a rough analogy, although the details and rates of return obviously differ somewhat (and that’s a separate debate), my little Social Security routine is similar to when I deposit a chunk of my paycheck in the bank down the street. Money goes in, money is guaranteed to come out later on, and I can rest easy knowing that part of my paycheck is safely stored. But no one, of course, pretends that banks are fostering a culture of dependency. Sure I “depend” on the bank to give me my money back when I need it, but this doesn’t make me fat and lazy. Everyone knows the difference between a friend you can rely on and a friend you depend on. The latter can be unhealthy, true, but the former is perfectly essential, and, I think, the right way to look at banks or Social Security or many other things.
Now there’s another angle here. If the bank was somehow allowed to “lose” some of my savings at random points in time, this might make me feel less secure about the future and force me to work harder. But banks don’t do that, because no one thinks that’s cool. In fact, you could say that Social Security is even less secure and less dependency-breeding than a bank, since we can never fully predict whether Congresses of the future will hack up benefits or not. Interestingly, Alberto Alseina, an economist at Harvard, once showed that when people are more nervous about the future of the public pension system, they start saving more. So here’s a modest compromise: We’ll keep Social Security in its current form, and George Will can keep writing Chicken Little columns about how the system is in a “crisis,” so that we keep the public a little nervous and less dependent. Deal?