-Caveat Lector-
Thomas DiLorenzo, adjunct scholar of the Mises Institute and professor of
economics at Loyola College, had this letter appear in today's Wall Street
Journal (March 2, 1999):
Fatal Flaws in Social Security Plan
There are two fatal flaws in the arguments by Lawrence Summers and Janet
Yellen in favor of subsidizing Social Security with general tax revenues
("Saving the Surplus Will Protect Retirees," editorial page, Feb. 18). The
first is the notion that government forecasters (or any forecasters for that
matter) are capable of predicting the federal budget 15 years in the future
("the federal government will accumulate more than $4.5 trillion in
surpluses over the next 15 years"). Who do they think they're kidding?
Claims by governmental planners to possess such clairvoyant powers was
appropriately labeled a "fatal conceit" by Nobel laureate Friedrich Hayek
and should not be taken seriously by anyone.
The second fatal flaw is the preposterous assertion that politicians granted
the power to allocate hundreds of billions of dollars in private capital
will not politicize the allocation of capital. Their "proof" of this is that
the administration, led by the most untrustworthy president in American
history, "has worked hard to build a framework that would isolate ...
equities from political pressures." But politicians cannot be "isolated from
political pressures" any more than daylight can be isolated from the sun. As
former U.S. Sen. William Proxmire (D., Wis.) stated during a 1983 Senate
debate over federal industrial policy, if government is given the authority
to allocate capital, "Money will go where the political power is ... It will
go where the union power is mobilized. It will go where the campaign
contributors want it to go. It will go where the mayors and governors as
well as congressmen and senators have the power to push it. Anyone who
thinks government funds will be allocated ... according to merit has not
lived or served in Washington very long."
Mr. Summers and Ms. Yellen did not help their own cause by opening their
article with a blatant falsehood -- that the president has "charted a course
of fiscal responsibility and economic prosperity over the past six years."
In fact, just three years ago the Clinton budget contained deficits in
excess of $200 billion and the president was proposing balancing the budget
over a 10-year period -- long after he would have left office. It was only
after his own budget was rejected by the U.S. Senate 100 to 0 that the
president switched his position, accepted a balanced-budget deal, and then
shamelessly took credit for "balancing the budget." Moreover, we are in the
midst of a 15-year recovery, not the six years that the authors claim.
Thomas J. DiLorenzo
Professor of Economics
Loyola College in Maryland
Baltimore
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