Monday, April 9, 2012

A quiet rant on the meaning of the word "earn".

I used to think that Robert Samuelson was an honorable, slightly conservative columnist.  Today he proved me wrong.  He is very conservative, and not at all honest.

The problem is that I work during the day, so I have to blog late into the night, and that means others are onto the obvious things well before I am.  There’s no point in going over ground already well tilled by others; Samuelson’s column today raised hackles all over the more progressive end of the econoblogosphere.  Jared Bernstein responded very well here, but he too deferred to another blogger with a track record on SS:  Dean Baker, at the Center for Economic and Policy Research.  You can find Dean Baker’s comments here, and I highly recommend them.   Baker exposes Samuelson's dishonesty, a dishonesty typical of the right’s SS arguments.  Through the whole piece Samuelson is talking about Social Security, and only Social Security, until this passage:

"Although new recipients have paid payroll taxes higher and longer than their predecessors, their benefits still exceed taxes paid even assuming (again, fictitiously) that they had been invested. A two-earner couple with average wages retiring in 2010 would receive lifetime Social Security and Medicare benefits worth $906,000 compared with taxes of $704,000, estimate Steuerle and Rennane."

Baker responses with this passage:

“Okay, this is a really nice trick. Remember we were talking about Social Security? Note that Samuelson refers to "lifetime Social Security and Medicare benefits." It wasn't an accident that he brought Medicare into this discussion. That is because Steuerle and Rennane's calculations show that this average earning couple would get back less in Social Security benefits than what they paid in taxes. That would not fit well with Samuelson's story, so he brings in Medicare (remember this is the Washington Post).

And, the high cost of Medicare benefits is not due to their great generosity. The high cost is due to the fact that we pay our doctors, our drug companies, and our medical equipment suppliers way more than do people in any other country, and we have no better outcomes. If our per person costs for health care were comparable to costs in Germany, Canada, the UK or any other wealthy country, then workers would be paying far more for their Medicare benefits than the cost of what they are getting in care.”

I added emphasis here and there in that passage.  But I can’t say all that any better than Dean Baker did, so I’ll leave the exposure of Samuelson’s duplicitous misdirection to him.

Instead I’ll tone down the rant response, and focus on an area where I think we may---giving Samuelson a benefit of the doubt that he doesn’t really deserve---we may be talking past each other.

First, a quote from Samuelson’s column, cited by Baker:

"Millions of Americans believe (falsely) that their payroll taxes have been segregated to pay for their benefits and that, therefore, they 'earned' these benefits. To reduce them would be to take something that is rightfully theirs."

And then Baker’s response to that passage:

“Of course Samuelson is 100 percent wrong here. Payroll taxes have been segregated. That is the point of the Social Security trust fund and the Social Security trustees report. These institutions would make no sense if the funds were not segregated.”

And here’s my issue.  Baker is correctly asserting that the Social Security Trust Fund has been segregated from the rest of government, and that it’s phony nonsense to claim that “it’s already been spent”.  But that’s not what Samuelson meant, at least I don’t think it is.  I think he meant that millions of Americans believe that their payroll taxes are segregated from the contribution of other Americans, in other words that the money they get back in SS payments when they are old is the very same money that they “saved” when they were younger, plus some accrued interest.  And Samuelson’s feeling, clearly, is that if that is not so then these people did not “earn” the retirement they are getting.

And that’s where my deepest issue with him really begins.  First, I think most people do understand that SS is a pay-as-you-go system like all other insurance.  But second, I have trouble understanding what in the hell Samuelson means when he says that these people didn’t “earn” the right to survive in their old age.

Social Security has been called a compact between generations, in which young, healthy Americans in the prime of their working lives give a little of their current income to maintain a dignified life for the generation that worked before them, the generation who left them the nation they work in, with all its freedoms, its wealth, its infrastructure, its technology, it’s vast web of existing businesses, in which most of them earn a living far more opulent than they might earn in other parts of the world. We do “earn” the care we get when we are older, but not by putting our own money in and taking our own money back out.  We earn consideration and support from younger generations when we are old by offering consideration and support to the generations before us when we are young. 

In a sense, a national health care system does the same thing: young people, who are healthy and often have little need for medical care, pay taxes which are used to pay the medical costs of the sick and the old.  In return they receive the security of knowing that when---if---they ever need care, it will be there for them.  They won’t have to bankrupt themselves or their children to pay for it; they won’t have endure sickness or death alone without help, because they have “earned” the right to medical care when they are sick by providing it to others while they are well.

Good lord, how touchy-feely!  How fuzzy and squishy and liberal!  A compact between generations, where we actually care about the other citizens of our country and care for them when they absolutely need it, and by doing that we “earn” the right to expect them to care about us, and for us.  

It drives the right wing nuts, that concept.  They don’t understand that meaning of the word “earn”.  They know what “earning” means: if it’s in your bank account, you earned it, and if it is not in your bank account you didn’t.

Tomorrow I’ll return to my regularly scheduled adulation of the free market system, and my expositions on the efficiency of private enterprise.

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