'Intelligent discontent is the mainspring of civilization.' -- Eugene V. Debs

Thursday, June 02, 2005

The Underlying Population and the Substantial Citizens 

Here's a Chomsky piece on Social Security that is getting zero play in the blogosphere. In the course of unmasking the Emperor's-new-clothes nature of the forthcoming crisis we hear so much about, Chomksy makes the following argument that was new to me:

The official story is that the Baby Boomers are going to impose a greater burden on the system because the number of working people relative to the elderly will decline, which is true.

But what happened to the Baby Boomers when they were zero to 20? Weren’t working people taking care of them? And it was a much poorer society then.

In the 1960s the demographics caused a problem but hardly a crisis. The bulge was met by a big increase in expenditures in schools and other facilities for children. The problem wasn’t huge when the Baby Boomers were zero to 20, so why when they’re 70 to 90?

The relevant number is what’s called the dependency ratio of working people to population. That ratio reached its lowest point in 1965. It won’t reach that point again until 2080, according to Social Security Administration figures.

Projections that far ahead are meaningless. Furthermore, any fiscal problem that might arise in caring for the elderly "boomers" has already been paid for, by the payroll tax rise of 1983, designed for this purpose. And by the time the last "boomer" has died, the society will be far richer, with each worker producing far greater wealth.

In other words, we’re already past the crisis. Anything that comes is just a matter of one or another kind of adjustment.

He goes on to contrast Social Security with the USA's health care system, which really is in a state of crisis, "one of the most inefficient systems in the industrialised world, with per-capita costs far higher than other nations and among the worst health outcomes", concluding:

But "reforming" the health care system is not on the agenda. So we face an apparent paradox: The real and very serious fiscal crisis is no crisis, and the non-crisis requires drastic action to undermine an efficient system that is quite sound.

Rational observers will seek differences between the Social Security and health care systems that might explain the paradox.

The reasons are simple. You can’t go after a health system under the control of insurance companies and pharmaceutical corporations. That system is immune, even if it is causing tremendous financial problems, besides the human cost.

Social Security is of little value for the rich but is crucial for survival for working people, the poor, their dependents and the disabled. And as a government programme, it has such low administrative costs that it offers nothing to financial institutions. It benefits only the "underlying population," not the "substantial citizens," to borrow Thorstein Veblen’s acid terminology.

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