Social Security and Medicare

My uncle and a good friend got me thinking more about entitlement programs, especially in context with the health care bill, and so here are some thoughts. I don't have a high degree of confidence in these views, but perhaps they could contribute to a meaningful discussion.

Here is a perhaps conventional conservative narrative on where we are now. During the Great Depression, politicians began pandering to the masses by passing Social Security legislation, which over time has grown exponentially, and with the addition of other welfare programs like Medicare, have led to a current situation of fiscal crisis. Some people blame all this on the democratic party, but many conservatives see Bush’s war on Iraq (imperialism?) and the propping up of the banks after deregulation gave them too much freedom as serious contributors to the current situation. I don’t see many conservatives saying that Bush’s lowering taxes contributed to the deficit, but a deficit is the result of spending exceeding revenue, so at least it should be on the table. (I understand that Glen Beck takes the problems back to Theodore Roosevelt. I can see the passage of the federal income tax in 1913 as being a hinge point, but am not sure why this is T.R.’s fault, since he was no longer even president. Maybe this is just a rhetorical response to Obama’s claim that T.R. first tried to get universal health care for citizens of the U.S.)

In my first post on conservatism, I raised the deficit and future deficits as a legitimate problem, and referenced a post by Bruce Bartlett which detailed the magnitude of the problem. However, I am very uncomfortable with the current narratives that make up analysis in popular media because they simplify history, just get it wrong or selectively use certain facts to support a particular ideology. On both right and left, there is a nostalgia for the wisdom of the founders and a tendency to believe we have “fallen.” Just look at how often each side quotes Thomas Jefferson. But let’s be clear. The Articles of Confederation failed for very good reasons. Those believers in state’s rights ought to give some consideration to why it failed. More importantly for the current topic, we did not have a real democracy in 1787. Only white male owners of real estate could vote. Women, roughly 50% of the population, did not have the right to vote until 1920!! Until the 14th Amendment in 1868, the Bill of Rights did not apply to the state governments. Blacks did not effectively have the right to vote in the south until the 1960's. So, according to the conservatives, the downfall of the U.S. roughly coincides with the actual beginning of democracy for a majority of the people.

The Industrial Revolution led to a transformation in the urban workplace. Many jobs were reduced to simple operations that later could be performed by machines. Because of steam power, women and children could perform many factory jobs, and were hired because they could be paid less. The vast shift of power to large corporate entities in the Gilded Age led many to be ruled by a few. This led to many states passing laws to protect workers. However, the Supreme Court ruled many of these laws unconstitutional. It was not until the 1930's that they stopped reading a particular economic theory into the Constitution, about the same time many people stopped believing in the myths of laissez-faire capitalism...something which many conservatives do not understand today.

Of course, the old-time conservatives favored states rights because they supported slavery. However, I think that this is really distinct from the views of the thinkers in the more recent conservative movement. I think Andrew Sullivan got it mostly right when he said that “in the mid-twentieth century conservatism revived itself by a profound critique of liberal hubris and rationalism, of liberals' belief that they really could transform the world through better government, of the new left's critique that the personal is political, and of the stifling of human nature, individualism and freedom that socialism and communism had wrought.” There is no doubt that many in the intelligensia of the left went too far during the early part of the last century. So far that many could not recognize what a terrible place the Soviet Union was. In recognizing the differences from then to now, we should also resist the attempt by people like Thomas Sowells to group liberals across time into one mindset.

Going back to the Social Security Act, it seems that the worst mistake was a failure to recognize that there might come a time when the number of retirees vastly outnumbered the number of workers, a failure of long-term planning that is being made manifest by the baby boomer generation coming of retirement age, as well as medical improvements resulting in longer lives. In figuring out why the problem occurred, we must recognize that benefits for the old and the poor, protection from capitalist exploitation, and other measures are primarily the effects of having a real democracy. My brief history is far too simplified to be taken as a real corrective, but it is closer to the truth than many of the historical speculations floating around in popular culture.

While recognizing that the Social Security Act and Medicare may have been mistakes, there is little doubt that they are part of our institutional structure, and are not going away. It seems pretty clear that the solution to the Social Security problem is to raise taxes, increase the retirement age, decrease benefits, introduce means-testing, or some combination of measures. But I don’t think that the current generation of seniors is going to agree to reduce their own benefits, and I don’t think the majority of my generation will either. We are probably going to have to take a page from Reagan, who increased the retirement age for future retirees back in the 1980's.

Regarding Medicare, I am not so confident of a solution. How are we going to get people to agree to cut costs? I don’t have the answer, but maybe we should all have the same Medicare benefits. That way, we would not be pitting one group against another. Conservatives, now pandering to seniors, resist any change in Medicare. Conservatives resisted universal health care benefits in the 1950's. Instead, the powerful unions got benefits for themselves, which could not be sustained over time. Instead we got employer-based health care by giving tax advantages to its provision, a system that has also failed. Here I will give some conservatives credit; I can’t see that maintaining such a system over the long run is going to work.

The Wisdom of Fred

Fred the cat survived major dental surgery on Thursday and is back around here squawking his conservative values at me. Fred doesn't like change. Fred says change usually involves bad surprises. He has been around almost 17 years, so he has learned a few things.

I am intrigued by James C. Scott's Seeing Like a State; How Certain Schemes to Improve the Human Condition Have Failed. There is some conservative wisdom in here. Many of these attempts were well-meaning. He sees as one of the greatest influences "high-modernist ideology," something that developed as a result of scientific and technological success. It is "above all, the rational design of social order commensurate with the scientific understanding of natural laws." But applying science to social issues is difficult, not the least of which is due to the fact that human beings are self-interpreting creatures. That is, in order to understand and maybe even predict their behavior one has to see the world through their eyes. This raises all sorts of difficult problems in history and the social sciences. Anyway, this seems to be a conservative insight to which maybe we all should give more consideration.

But let's not confuse the issue with current politics. Here is one of the many fascinating quotes from the Browser each day. Jane Hamsher, on party politics:
The left-right paradigm is insufficient, in that it presumes everything can be explained within the context of back-and-forth shots fired between political “tribes” that have coalesced within the two party system. But they’re firing past the larger corporate players who operate freely within both camps, whose role is rarely accounted for. And it should be clear by now that they have captivated leadership on both sides.

Scott points out that large-scale capitalism "is just as much an agency of homogenization, uniformity, grids, and heroic simplification as the state is, with the difference being that, for capitalists, simplification must pay." It too crimps innovation and trial-and-error learning. While the left presupposes a false view of human knowledge in support of social engineering, the right ignores the dangers and downsides of capitalism. Or proposes it's own form of social engineering relying on one-size-fits-all religious models.

Finally, conservatives also have some insights into social justice, although they more often than not take it to extremes. Here is a good post from Tim Harford on a faulty line of typically liberal thinking. Individuals often need to be treated as individuals and not just as members of a group.

Conservatives and History

The question of what “is” conservatism is perhaps unfair, if not unanswerable. Lots of people call themselves conservatives for different reasons. One friend says that conservatives accept the fallibility of man, while progressives strive for the utopian goal of man’s perfection. For instances that actually fit this description, I join him in favoring the former. Maybe that question gets us nowhere. It certainly didn’t go anywhere useful in this discussion of liberals vs. libertarians on Arnold Kling’s blog.

My conservative friend says that we began a decline about 100 hundred years ago with the presidency of Teddy Roosevelt. My progressive friend says that a severe decline began with the election of Ronald Reagan in 1980. If various groups do not fall into easily defined camps, at least we can consider what their views of history look like. My own view of U.S. history doesn’t see a long slide of decline anywhere. I see terrible years around the Civil War and from the First World War to the end of the second, roughly 1914 to 1945. You can get a taste of my view on history by looking at my post Relentless Revolution II and the other two posts on Joyce Appleby’s book, The Relentless Revolution; a History of Capitalism. We seem to be at some sort of hinge of history now, but it is always impossible to discern this when so close to the present. In retrospect, Appleby and others see the era around 1973 as a hinge. Who thought so at the time? In 1914, most people thought the war would be over in six months. Virtually no one foresaw how serious the Great Depression would be, although you can always find some individual somewhere saying things that most people thought was crazy that, in fact, turned out to be right. The story of this history is at least as interesting as a discussion of political principles, and much closer to considerations of evidence.

I am now reading Telling the Truth about History by Joyce Appleby, Lynn Hunt and Margaret Jacob, all professors of history at UCLA when the book was written. It appears to be the case that it has not been until the postmodern era that the meta-narratives that have defined how history has been written have been investigated. She talks about three that have been challenged in the recent past, the view of science as the model for history (which she calls “the heroic model of science”), the idea of progress which came from adoption of a scientific world view looking for the laws of history, and the powerful national sentiments that 19th and 20th century people draw upon for a sense of identity. These meta-narratives replaced the Christian one which saw man as fallen and time as an endless cycle. The meaning of time itself changed, as did the meaning of life. Time now had a direction. The meaning of revolution changed, from a circular repeat to a thrust forward. Of course, Marxism is a rather more specific meta-narrative, too. But so is laissez-faire capitalism. Both are demonstrably false. America as the torch bearer of the enlightenment is an even more specific narrative that motivated people in the U.S. in the early years and has a residual attraction today.

I will be returning to these issues in the future. There is a good review of Gordon Wood’s new Empire of Liberty; A History of the Early Republic from 1789-1815, that is presently not available on-line. Wood is my favorite historian of the revolutionary period. I also have on order Appleby’s widely admired book on the period after 1815 called Inheriting the Revolution; The First Generation of Americans (the first generation born as Americans). The world looked very different to them than the prior generation, and the world became different, so much so that most of the Founders lamented what had become of their country in their old age. I think we can see similar sentiments from the right and the left today. Things change, sometimes for the worse, but I think this overarching pessimism is misplaced. But again, that depends on a view of history, and evidence.

I have also ordered the book a commentator recommend, The Tea Party Revival, as it was not available locally. We will see what insights it provides. I expect that I will find the concerns about federal fiscal policy very relevant and attempts at religious social engineering misplaced. The questions about the power of the federal government is a complicated and interesting one, too. To that extent, we must acknowledge the fact that the power of the federal government was greatly increased by the sixteenth amendment authorizing the income tax, which was ratified February 3, 1913. But we must also recognize the facts of the massive increases in corporate power in the Gilded Age I talked about in my posts about the history of capitalism. Something else which seems clearly true to me is that the world has become more complicated over time. This has led law to become more complicated to deal with more complicated social and economic issues. The conservative criticism of the power of the federal government must acknowledge such facts to be persuasive.

What is conservatism?

Andrew Sullivan (link here) writes in the Atlantic: "People accuse me of pedantry or semantics in insisting that all of this - on the right and the left - is in fact a sign of the death of conservatism as a temperament or a politics, rather than its revival.... Conservatism, if it means anything, is a resistance to ideology and the world of ideas ideology represents, whether that ideology is a function of the left or the right.
In the mid-twentieth century conservatism revived itself by a profound critique of liberal hubris and rationalism, of liberals' belief that they really could transform the world through better government, of the new left's critique that the personal is political, and of the stifling of human nature, individualism and freedom that socialism and communism had wrought."

I have been trying to get my conservative friends to tell me why they believe in certain things, like state’s rights or term limits, with little success. But here is what one recently wrote about conservatism in general:
"Conservative –– he who believes in The Constitution as written, SLOW change (I like 60 in the Senate) and all change (laws & regulations) reviewed in context with our time tested values (family, hard work, honesty, lawfulness, integrity, equal opportunity for all, meritocracy, and yes, even a belief in a Higher Power). I could go on and on, such as promoting/requiring assimilation of all legal immigrants (multi-ethnic good, multi-cultural bad) and no illegal immigrants..."

The New York Review of Books has an entertaining article (link here) about the Tea Party convention in Nashville. It seems that a great number of people at the convention did not believe in many of the Tea Party concerns. They were concerned about budget deficits and government spending.

And here is an excerpt from republican Bruce Bartlett’s blog on the deficit (link here):
"At the end of 2009 the gross debt was $11.9 trillion, $4.3 trillion more than the debt held by the public. Although many people get excited about this figure, it is in fact economically meaningless. The Treasury securities held in government accounts really amount to nothing more than budget authority permitting the Treasury to in effect use general revenues to pay Social Security benefits once current Social Security tax revenues are insufficient to pay current benefits, something that will happen in the year 2015, according to Social Security's actuaries.
Another confusion is that the Federal Reserve is treated as part of the "public" when debt held by the public is calculated. This is awkward because the Fed is part of the government and holds vast quantities of Treasury securities, with which it conducts monetary policy. (When the Fed buys them it increases the money supply; when it sells them it reduces the money supply.) At the end of fiscal year 2009, the Fed owned about $900 billion in Treasury securities. (The Treasury pays interest to the Fed on these holdings, but the Fed then gives almost all of it back to the Treasury.)
As big as these numbers are, they really only touch the surface of the federal government's indebtedness. The full scope of that appears annually in something called the Financial Report of the United States Government. The latest report was issued Feb. 26. According to it, in addition to the national debt, the federal government owes $5.3 trillion to veterans and federal employees. But the really big debts are those owed by Social Security and Medicare: Over the next 75 years, the federal government has promised benefits for these two programs in excess of anticipated payroll tax revenues equal to $7.7 trillion and $38 trillion, respectively.
The Treasury Department estimates Social Security's deficit at 1% of GDP over the next 75 years and Medicare's deficit at 4.8%. With federal revenues estimated to be about 19% of GDP in the long run under current law, taxes would have to rise by about one-third to pay all the promises that have been made for just these two programs.
The Office of Management and Budget estimates that in the absence of massive cuts in Social Security, Medicare and other programs, or an equally massive tax increase, the national debt will rise to 77% of GDP in 2020, 100% of GDP in 2030 and more than twice GDP by 2050."

This is a serious problem. And I applaud anyone who takes it seriously. But how are we going to deal with it? And what does this have to do with other items that fly under the banner of conservatism today? I see no logical connection. I believe in "The Constitution as written, SLOW change and all change (laws & regulations) reviewed in context with our time tested values (family, hard work, honesty, lawfulness, integrity, equal opportunity for all, meritocracy." Sixty in the Senate I am not sure about. While personally I don’t believe in a Higher Power, I have nothing against those who do. Many who do perform a lot of work on behalf of the poor and have values with which I agree. And I understand that their beliefs are important to them and should not be silenced. But I don’t think views on metaphysics have any place in our government. I also have nothing against deporting people who are illegally here or requiring people who are here legally as immigrants to learn to speak English and helping them to assimilate. So my conservative friends, help me out. What ideas hold conservatism together today? Is Andrew Sullivan correct in asserting that current conservatism has betrayed it’s original values?