From: Bryan Caplan <[EMAIL PROTECTED]>

Kevin Carson wrote:

I'd say just the opposite, that SS is an important component of state capitalism; and like most regulations and "welfare" spending, it serves to cartelize the economy.

By acting through the state to organize pension programs, the large corporations effectively function as a state-enforced cartel (with the added virtue of non-defectability), and at least partially remove old age pensions as an issue of competion in personnel costs.

This is just silly. If the situation was competitive initially, employers just switch to cash compensation.

Indeed, this is just a variation on the popular fallacy that employers really do "pay half" of SS just because the law says so, when in reality it depends on labor supply and demand elasticities (and since the former is near-infinite, employers pay essentially 0% whether the law says they pay 0% or 100%).

Regardless of whether pension costs are really passed on to workers, the supply of pension benefits is nevertheless an issue of competition between employers unless it is cartelized. Are you suggesting that collusion in regard to some aspect of competition is irrelevant to the total competitiveness of the situation? Why, then, the recurring talk of fighting the Canadian national health in the WTO as giving a competitive advantage to Canadian employers against U.S. firms that provide private coverage to employees? And although demand elasticities are quite finite in an oligopoly market, they are nevertheless there. So remuneration of labor remains an issue of competition between firms as far as the consumer is concerned.

The principle remains: when the state intervenes in any area of the free market, it is effectively removing that area from the realm of competition, to the same extent as if corporations came to the arrangement by private agreement.

                        Prof. Bryan Caplan
       Department of Economics      George Mason University      [EMAIL PROTECTED]

              "The game of just supposing
               Is the sweetest game I know...

               And if the things we dream about
               Don't happen to be so,
               That's just an unimportant technicality."

Jerome Kern and Oscar Hammerstein, *Showboat*

Protect your PC - get VirusScan Online

Reply via email to