Cav Daily article about Social Security

Well, I wrote this back in March, but I want my blog to look full and active from the very beginning, so I'm going to post it. The first part is a newspaper article in the Cavalier Daily, the student newspaper at the University of Virginia. My response starts about half way down after the spot with his email.


Securing the dignity of the elderly

Zack Fields, Cavalier Daily Columnist

WHEN MY grandmother's great grandfather died, he was living on the poor farm in Lawrence County, Ala. Before there was Social Security, those old folks who didn't have any family or whose family couldn't afford to take care of them went to the poor farm or the poor house. In Lawrence County the seniors who could still get out of bed in the morning went on down to the fields and hoed cotton or squash, working until the day they died. Many old folks who didn't end up on the poor farm lived with their relatives. My grandmother told me that often a husband and a wife would be split up for their final years because one family could not afford to take care of both of them. Perhaps a son's family would take care of the mother and the daughter's family the father.

None of my relatives live on the poor farm today. No elderly person has to suffer the indignity of being separated from her or his spouse because of economic necessity because in 1938, Franklin Delano Roosevelt and the Democratic Congress created Social Security, which Lyndon Johnson expanded to cover all seniors under the auspices of the Great Society. According to Associate History Prof. Grace Hale, these federal programs had virtually eliminated poverty among the elederly by the 1980s. While rising drug prices have compromised the living standards of seniors in the past decade, Social Security nevertheless ensures that my grandmother can retire in her home rather than till the soil on the poor farm.

Why, then, is President Bush attempting to dismantle Social Security? Why privatize, and thereby destroy, our country's most successful social program? Why would the Republican Party return us to an era when old age was characterized by poverty? It is not only callousness to the well-being of my grandmother and all working-class senior citizens. To be sure, Bush will sacrifice the interests of the seniors in order to enrich the stock brokers and mutual fund managers who, as Hale pointed out, are the only sure winners of Social Security privatization. Yet Bush is not attempting to destroy Social Security merely to transfer the retirement savings of all citizens to some stock brokers on Wall Street. Bush must destroy Social Security because its existence is a daily refutation of Republican ideology and "free" market rhetoric.

Social Security has vastly lower management overhead costs than privatized pension systems in oher countries (such as in Britain), according to Princeton economist Paul Krugman, and Social Security is so successful that we effectively eliminated poverty among seniors. The Social Security Administration estimates that "nearly half of all older Americans" would live below the poverty line without Social Security, based on data from 1999. Fifteen million seniors would live in poverty today without that guaranteed benefit. Over the last forty years, the time since Johnson expanded Social Security to include all seniors, the poverty rate for the elderly has fallen 72 percent, according to the SSA.

But because the Republican Party thrives on criticizing "big government," the existence of a big government program that eliminated poverty for old folks threatens their party's and their ideology's long term solvency in America. If we can eliminate poverty for seniors, there is no reason we cannot eliminate poverty among children, who currently suffer the highest rates of poverty. If we can eliminate poverty for seniors, perhaps we can provide employment for workers who have seen their jobs sent to Mexico and China by their former corporate employers. Social Security's unambiguous success is a stirring testament to the power of government to affect positive change in the average person's life.

My father and mother deserve to retire after a lifetime of labor. My cousins in northern Alabama should not have to work at Wal-Mart until the day they die. We have a moral responsibility to protect Social Security from Bush's assault, and expand the welfare state where otherwise possible, precisely because the wellbeing of my family, of most American families, depends upon it. We cannot return to an age when, as Prof. Hale said, Americans "worked until physically unable, then lived with family or in the country home, the poor house."We have an obligation to protect the "profoundly important" achievement of our grandparent's generation, lest we condemn our children's to the poor farm in their old age.

Zack Fields' column appears Wednesdays in The Cavalier Daily. He can be reached at zfields@cavalierdaily.com.


Now my response...

Here's my response to the article... a letter to the newspaper. They didn't publish it.

This letter is in response to Zack Fields’ article concerning Social Security that appeared in the Cavalier Daily on Wednesday, March 2, which argued that Bush’s plan to ‘privatize’ Social Security would lead to the destitution of millions of American seniors’ ability to retire. Mr. Fields praises Social Security as an “unambiguous success” and a “testament to the power of government to affect positive change in the average person's life.” In addition to this, he also accuses President Bush of being a free-marketer which is simply not true. This letter is intended to amend some of the thoughts expressed in Mr. Fields’ article through a look at economic growth since 1930 and the Republican Party’s approach to ‘big government’ and free trade.

Mr. Fields misunderstands the underlying causes of the decline in poverty rates of senior citizens in the twentieth century. He writes that Social Security “eliminated poverty for old folks.” Yes, to an extent, Social Security may help seniors to retire – especially those that would not normally save the money in the absence of Social Security. What really though, has stopped poverty in the United States? Mr. Fields starts his article off talking about his grandmother’s great grandfather. If I am not mistaken, that is five generations. That could be between one hundred and maybe one hundred and fifty years ago. In 1850, the United States was only beginning to experience the effects of a world wide Industrial Revolution that would eventually lead to greater prosperity for virtually every nation and almost every individual in the United States. It was the enormous economic growth of the last one-hundred years that has ‘saved’ us from more poverty than we are currently experiencing, not government programs attempting to define what we can and cannot do with our own money. It does not logically follow then, that if Social Security were to be dismantled, we would return to a period of poor elderly members of society toiling their last years away on the poor farm.

Personal income in the United States since 1930 has risen drastically. It is this increase, this huge economic growth, which has saved fifteen million seniors, as Mr. Fields says, from poverty. From the article on Wednesday – “According to Associate History Prof. Grace Hale, these federal programs (Social Security and Johnson’s Great Society) had virtually eliminated poverty among the elderly by the 1980s.” Well, of course poverty had been “virtually eliminated” by 1980. Per capita income has increased between the years of 1929 to 1980 by fourteen times what it was according to Bureau of Economy Analysis. The massive economic growth of this century does much more to fight poverty than the government forcing people to save a small percentage of their income.

I may surprise some of you now. I am not a conservative. Mr. Fields’ article not only talked about how wonderful Social Security and the ‘Nanny-State’ are, but also implied that the Republican Party does not approve of ‘big government’ programs. He also wrote that President Bush is a free-marketer. In the last four years, the President and a majority Republican Congress have succeeded in spending trillions of dollars, pushing the National debt higher and higher. The war in Iraq and Bush’s social programs have cost the American tax payer much. Accusing the president of being hard on ‘big government,’ according to the evidence from his first term and his most recent State of the Union Address, is absurd. The President is expanding government spending and policy quite rapidly and doesn’t seem to think there is anything wrong with ‘big government.’

Mr. Bush also supported a tariff on steel in his first term that would prevent the free importation of that commodity into the United States. That is an attack on free trade. I tend to think that the President is more of a mercantilist or moderate socialist than a conservative. Mr. Fields writes too, about how the government could fight for American jobs to stay at home instead of being sent to China or Mexico. In the article, the blame falls on the corporations for sending the jobs away. The President, in his campaigning speeches anyway, promised to bring the jobs back home. Of course the blame would fall on the corporations though. The leaders of all business firms attempt to make a profit. If labor costs are very high in the US, then it’s cheaper to build factories in Mexico or even China. This is not unusual. Firms attempt to maximize profits. Why is it though, that wage rates are higher in the United States than in other countries? One quick answer is that it is the unions and their involvement with the government drives up labor prices and prevents the flexibility of wages. That is, wages can only rise in our current system. This encourages credit expansion by the Federal Reserve to help alleviate the problem of only upward moving wages through inflating the dollar.

If jobs leave the United States, the prices of all goods fall for all consumers in the US. If totally free trade is permitted by our government, then the prices of all goods in the US would fall at the expense of some American jobs. If wages were also allowed to fall, then the drop in prices would nearly equate to a drop in wages that would allow the employment of a large percentage of American workers, even ones that have lost their jobs to cheap foreign competition. If you have any trouble with this letter, please direct at least some of the questions to your economics professor.