I am very far from being a member of Terrell's constituency but I think he has a stronger case than you care to admit. It should be more than apparent now than the welfare state in developed countries does not diminish poverty or degradation -- and is a very expensive way of not doing so also!
The welfare state in the developed countries can only exist now by the assent of the non-poor who vote in elections, so those people have to be bribed, albeit very subtlely. Over my lifetime there have been more and more ways in which the middle class receive more subsidies and state help than the poor, whatever complexion of government is in power. However, as the burden of taxation grows then the bribes have necessarily become less subtle in order that more of the voters are included in the net.
However, as in Soviet Russia, there's a limit to how much the state can tax and redistribute without the whole country falling into a state of demoralisation. (Of course, I realise that the USSR didn't have a formal taxation system -- redistribution was done in other ways.) Even in the arch-welfare states, such as Sweden, they are cutting back on taxation and welfare redistribution as quickly as they know how. We are probably reaching the limits of taxation now in developed countries (as the condition of France and Germany well testifies) and the only way that a right-wing government in America and a left-wing government in England can maintain the system is by bribing the middle class.Terrell has a very telling sentence in his article:
<<<<
Cutting benefits will succeed politically only if a large number are "grandfathered" into the current benefits setup.
>>>>
. . . which is exactly what is happening. I don't know the figures for America, but the latest dodge in England is that a middle-class family earning up to 75,000 pounds per year (US$120,000 -- a very adequate income you'll admit) is receiving family credits! I doubt whether the state system (and, remember that there is a large state-employed lobby whatever political party is nominally in control) can get away with much more, and I think there will have to be a retreat fairly soon. Some recourse to Terrell-type nostrums will have to take place. It will probably produce more problems than we have now but it will at least be affordable.
Keith Hudson
At 00:21 12/06/2003 -0400, you wrote:
Since we don't have conservative Christian economists on this list. I think it is a liberal thing to do to be sure that we read a few of the people who Bush listens to. This man says he didn't vote for Bush. I suspect Bush is too liberal for him. I invited him to the list but he declined not very respectfully. But I think his view is important to know and answer. I'm sure that Kutlow and Kramer on MSNBC agree with the gist of what he says although they probably are not of his faith or rationalization. Both claim to have the ear of the White House.
REH
Social Security and the Family
Timothy D. Terrell
April 4, 2003
Families in our society are fragmented in ways that would have been difficult to comprehend centuries ago. This is all the more strange because we are better able than any of our ancestors to communicate and meet with family members. The market economy has produced a wide variety of machines that allow us to speak with and see people across thousands of miles, and travel distances in a few hours that would once have taken weeks. With this capacity to keep in touch with family members, why is it that we have a greater disregard for family connections than did previous generations?
Perhaps one reason is that we are less dependent on one another than in times past. Before the state began to provide welfare in its various forms, unemployment insurance, and Social Security, the family and the church were the primary sources of assistance for an individual suffering hardship. The family would properly be the first resort when individual resources were exhausted (I Timothy 5:8, 16). Thus, the individual who neglected family obligations, was quarrelsome, or isolated himself geographically from the family became exposed to greater risk.
The wider availability of insurance has increased the ability of the individual to purchase protection from some hazards. Yet even when insurance can alleviate some risks, there are serious eventualities that would cause an isolated individual or small family to suffer immensely if the family or church does not step in. Insurance arrangements are better suited for those events that are unlikely, expensive, and are not substantially influenced by the insured's own behavior. Insurance is not for events that are likely. For example, aging, and a decline in the ability to earn income, is a likely event in the lives of most people. Saving is better preparation for retirement than insurance. In the event that catastrophic loss destroys savings, or higher-than-expected expenses mean that the savings are inadequate, the family or church may be called upon for help.
Social Security is a poor substitute for this kind of old-age "safety net," in addition to whatever we might be able to say about its being beyond the legitimate scope of the civil government. First, Social Security is a wealth transfer scheme and not a savings plan or a charity. Money paid into the system goes to fund the benefits of current Social Security recipients, and not into actual savings accessible only by the contributor. Payments do not stop when the total amount received comes to more than the person paid in over their lifetime, plus any reasonable rate of interest. Instead, the payments continue, courtesy of those still working (who have no say in whether they pay in to the system or not).
Second, Social Security does not allow for the use of discretion in relief of the impoverished. Yet the Bible requires us to use discretion in deciding whether to provide assistance, how much assistance to provide, and the nature of the assistance (e.g., I Timothy 5:3-16).
Third, Social Security does not allow unused benefits to be retained and passed on to heirs as an inheritance. In contrast, family funds allocated to the support of an elderly family member would remain in the control of the family if the supported individual should not live as long as expected.
Fourth, Social Security is poor stewardship of the resources used to fund the system. Because it is a wealth transfer scheme instead of actual savings, the money going into the system is not being invested in the economy. The economy's rate of growth is substantially slowed by Social Security, as several economic studies have shown.
Finally, Social Security eliminates some of the economic benefits that come from having large families. William Mattox, Jr., writing in USA Today (July 6, 1999), notes Allan Carlson's argument that today's smaller families may be related to Social Security:The presence of Social Security can serve as an excuse for family members, and the church, to dodge their responsibilities to widows and orphans. Because Social Security is available, parents may not be as concerned about maintaining a close relationship with their children, or church members with their church. When one is not financially dependent on another, one may be less inclined to resolve differences and pursue peace.
- [I]t's funny how "maybe one" advocates never get around to complaining about the fact that their Social Security benefits will be largely financed by other people's children. Indeed, Allan Carlson, president of the Howard Center for Family, Religion and Society, points out that government old-age programs tend to disrupt the natural economic incentive for adults to invest themselves in child rearing.
- Carlson says that if Social Security did not rob Peter to pay Paul, Americans would be more apt to appreciate the long-term social-insurance value of raising children. And Americans would be more apt to question various economic projections about how ridiculously "expensive" child rearing is today.
The church is a backup for the family when the family cannot provide for its own needy (again, see I Timothy 5:16). Yet the family should be the first recourse when disaster strikes. Social Security bypasses the church, and makes the church and the family unit less economically relevant, and therefore less effective.
How, then can our society move toward a more family- and church-oriented system of economic dependencies, and away from our current dependency on the state? The first step will be a renewed recognition of the mutual responsibilities family members and church members have toward one another, and a preparation to meet those needs. Families should save not only for vacations, houses, education, and retirement, but for emergencies beyond the immediate family. Churches should become sources of practical assistance, and not simply direct the needy to state programs.
Next, the state can assist in returning charity and old-age provision to families by phasing out Social Security. There is no way to do this without someone losing some benefit they expected. Some group is going to receive less than it expected, whether those currently receiving benefits or those currently paying in to the system. Cutting benefits will succeed politically only if a large number are "grandfathered" into the current benefits setup. But the sooner Social Security taxes are ended, the sooner money will be freed up to go into personal savings and charitable efforts. Some nations have phased out their own Social security systems by moving to required contributions to individual IRA-type investments. The state has no legitimate authority to require people to provide for their retirement in any fashion, but at least the wealth redistribution aspect of old age provision would be reduced.
As difficult as the politics may be, eliminating Social Security is, I believe, a moral obligation. The closer we move to reestablishing the family as an economic support network, the stronger our society will be.
Timothy Terrell teaches economics at a small liberal arts college in South Carolina. In addition, he is director of the Center for Biblical Law and Economics, on the Internet at http://www.christ-college.edu/html/cble/. Dr. Terrell can be contacted at [EMAIL PROTECTED].
Keith Hudson, 6 Upper Camden Place, Bath, England
