They both wanted to exchange bodies, exchange faces. There was in both of them the dark strain of wanting to become the other, to deny what they were, to transcend their actual selves

October 21, 2013 § Leave a comment

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Because people hate to think they are receiving welfare handouts, we’ve all decided to pretend that Social Security is some kind of savings program. That way it can really be about you paying in and getting out. Hooray personal responsibility and individualism! But in reality, Social Security is really just a straightforward welfare handout. You tax the currently-working and then take the revenue and give it to the currently-old. It is a transfer program or, if you’d like, a “redistribution” program.

This aspect of old-age security programs is completely unavoidable. As I wrote earlier this year, if you can get currency out of your head for a moment, you should be able to see that — in real resource and real production terms — all retired people live off the production of the currently-working. This is vacuously and stupidly true. Retired people don’t produce anything. So where is the stuff they are consuming coming from? That’s right: the currently-working.

In non-money terms, our ability to support retired people is a function of how much stuff the currently-working are producing. It has nothing to do with how much money is in the Social Security Trust Fund. It has nothing to do with how much payroll tax the people who are moving into retirement paid over the last few decades. That’s all meaningless outside of the world of accounting.

For instance, suppose we had jacked payroll taxes 30 years ago such that the Social Security Trust Fund was much bigger at the present moment than it actually is. Would that change anything outside of the accounting world? No. Recall once again: the iron rule here is that the currently-retired are necessarily living solely off the production of the currently-working. Piling up a bunch of cash and then disgorging doesn’t change the mechanics of what is going on. The currently-retired would still be snatching up the exact same fraction of the currently-working’s production for their consumption. The real outcome would be exactly the same in this more “fiscally responsible” scenario.  read more

PHOTOGRAPH: Margaret Durow

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You are currently reading They both wanted to exchange bodies, exchange faces. There was in both of them the dark strain of wanting to become the other, to deny what they were, to transcend their actual selves at my nerves are bad to-night.

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