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The Repeal of Social Security

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Sixty years ago — on August 14, 1935 — President Franklin D. Roosevelt signed into law the Social Security Act. It was one of the major political events that transformed the United States into a welfare state. It was a law that enabled government to use the force of taxation to take money from the young and productive and give it to others, specifically those who had reached retirement age.

It would be difficult to find a political idea that was more foreign to America’s culture and heritage. For 150 years, Americans had lived without Social Security. Individuals were free to accumulate unlimited amounts of wealth and to decide what to do with that wealth. No one was forced to take care of his parents or anyone else. Charity was considered a totally voluntary activity. Thus, the elderly and the poor were taken care of by families, churches, neighbors, and others in the community — always on a voluntary basis.

While there were some exceptions that crept into the system during the 19th century, Americans, largely, rejected any law that took money from one person in order to give it to another person. The reason that Americans believed this way was expressed by the 19th-century French legislator Frederic Bastiat:

The mission of the law is not to oppress persons and plunder them of their property, even though the law may be acting in a philanthropic spirit. Its mission is to protect persons and property.

Furthermore, it must not be said that the law may be philanthropic if, in the process, it refrains from oppressing persons and plundering them of their property; this would be a contradiction. The law cannot avoid having an effect upon persons and property; and if the law acts in any manner except to protect them, its actions then necessarily violate the liberty of persons and their right to own property. . . .

If you exceed this proper limit — if you attempt to make the law religious, fraternal, equalizing, philanthropic, industrial, literary, or artistic — you will then be lost in an uncharted territory, in vagueness and uncertainty, in a forced utopia or, even worse, in a multitude of utopias, each striving to seize the law and impose upon you. This is true because fraternity and philanthropy, unlike justice, do not have precise limits. Once started, where will you stop? And where will the law stop itself?

Thus, our ancestors believed that laws had to have a strong moral foundation. They believed that law, among other things, was supposed to protect a person’s fundamental right to accumulate wealth and to decide for himself what to do with it. They also believed that it was wrong to steal — that is, that it was wrong for a person to take what did not belong to him from another person. And early Americans knew that an immoral act — stealing — could not be converted into a moral act — charity — simply by making it legal.

What happened to the poor and elderly throughout the 1900s? Did they starve to death? No. Even though there was no legalized plunder, no one starved to death in the United States. When people were free to accumulate wealth, that wealth helped the poor either through capital accumulation (and therefore higher wage rates) or through voluntary charity.

Unfortunately, in the 20th century, Americans abandoned the political and economic philosophy of our ancestors. Fearing the type of life chosen by earlier Americans — a life of liberty — a life without governmental security — they turned to the welfare-state socialism that was sweeping across Europe. There is no better example of this than the socialism of Social Security.

Where did the idea of Social Security come from? It did not come from Washington, Jefferson, Franklin, Adams, or any other American. No, it came from Otto von Bismarck, the Iron Chancellor of Germany, who had pushed Social Security through the German Reichstag in the 1880s. Under the guise of saving America’s free-enterprise system — a system that had refused to use the force of law to steal from some to give to others — Franklin D. Roosevelt looked to Otto von Bismarck as his model for Social Security and other aspects of the welfare state.

The constitutionality of the Social Security Act was decided by the U.S. Supreme Court in 1937 in Stewart Machine Co. v. Davis . The American people came close to being spared sixty years of Social Security, for the decision was a close one — five to four in favor of upholding the law.

Today, everyone agrees that Social Security is in crisis. There is no money in the “trust fund.” Money is simply transferred from young to old. The number of people reaching retirement age is increasing. Taxes on the young and productive continue to rise.

Unfortunately, everyone has a plan to save Social Security. But Social Security should not be saved. It should instead be repealed.

The attitude of the elderly is: “I put my money in and I have a right to get it back. My retirement was promised to me. The government made a contract with me and now has to honor it.”

All of these arguments are fallacious and specious. And deep down, the elderly know it. They are living a life of the lie and a life of stealing. The excuses are simply ways to rationalize their mind-sets and beliefs.

Social Security was — and is — simply a tax-and-welfare scheme — just like any other tax-and-welfare scheme. The government taxes some people. The government pays welfare to others. The tax revenues are used to fund the payment of the welfare.

There are no promises in the law. There are no contracts in the law. The law is a straightforward process of political plunder. It steals from the young and gives to the old.

The fact is that the elderly deceived themselves. All they had to do was read the law and they would see that there never was a promise and there never was a contract. The plain language of the law enabled anyone who wished to end his life of self-deception.

What should be done about Social Security? Simply repeal it. The law was passed sixty years ago by the generations living at that time. The law can — and should — simply be repealed sixty years later by the generations living today.

Is this unfair for those who have “paid into the system”? No. Their generation and their parents’ and grandparents’ generations decided to change the economic and political system of our ancestors — and without even the semblance of a constitutional amendment. In effect, the elderly living in the 1930s said: “Can we come up with a system that will enable us to retire with pay? Yes, we’ll retire and force the young people to feather our nest with this new German system of political plunder.”

Then, each succeeding generation, after having had their money stolen from them to fund the previous generation, has taken the position that it is okay for them to steal from the younger generation.

But everyone knows — and has known — that one generation cannot bind future generations into accepting the same type of political system. Thus, everyone knew that as each year and decade went by, there was always a possibility that some generation along the way would say: “We reject the socialist welfare state of our parents and grandparents. We have decided to move toward the principles of liberty on which America was founded. As a first step, we have decided to repeal the Social Security Act.”

Thus, even those who deceive themselves with “promises” and “contracts” realize that an implicit condition of the “promise” and “contract” was that a future generation has the right to repeal a law founded on principles of stealing. Any generation has the right to form new government founded on principles of liberty and property — and the right to reject political schemes erected by their predecessors.

What would happen to the elderly if Social Security were simply repealed? Some would live off their savings. Others would work. Some would depend upon their children. Others would look to their neighbors, churches, or other forms of charity.

“But there would not be enough money to handle all of this,” the critic exclaims. But of course there would. After all, the Social Security tax would also be repealed. And so the money that is currently transferred from the young to the old would remain in the pockets of the young — for savings, spending, or charity — and all of the money currently wasted on running the Social Security system would be saved. Bastiat writes:

You say: “There are persons who have no money,” and you turn to the law. But the law is not a breast that fills itself with milk. Nor are the lacteal veins of the law supplied with milk from a source outside the society. Nothing can enter the public treasury for the benefit of one citizen or one class unless other citizens and other classes have been forced to send it in. If every person draws from the treasury the amount that he has put in it, it is true that the law then plunders nobody. But this procedure does nothing for the persons who have no money. It does not promote equality of income. The law can be an instrument of equalization only as it takes from some persons and gives to other persons. When the law does this, it is an instrument of plunder.

How do we know that people would do the “right” thing with their money? We don’t — that is what liberty is all about. But we do know that whatever they do with it — save it, spend it, or give it away — someone else is benefited. And we also know that U.S. bureaucrats are not the only caring people in American society.

Today, people say that it is politically impossible to repeal Social Security. Thus, they argue for halfway measures. For example, one popular scheme is to allow people to set up their tax-deductible retirement accounts.

But notice that implicit in this and all other reform schemes is the concept of force. Through income taxation, the government essentially claims ownership of each person’s income. It either takes it from you by force to provide for other people’s retirement (and ostensibly will do the same to others when you get old) or manipulates you, through income-tax deductions, to use “your” money in an approved fashion.

America’s welfare-state way of life that was adopted in the 1930s is in shambles. Everywhere you look — Social Security, Medicare, Medicaid, public schooling, welfare, public housing, regulation, government debt, income taxation — the welfare state is in crisis. Yet, the proponents of control, central planning, and socialism refuse to let go of their beloved system. They are fighting desperately to save the legalized plunder to which they have become accustomed.

But they can never overcome one basic moral principle: Stealing is stealing, regardless of the label placed upon it. More and more young people are discovering this fundamental principle and are moving toward ending, not saving, Social Security. And as more and more elderly people come closer to the end of this life and the beginning of the next, they are beginning to reflect on the moral (and economic) consequences of supporting Social Security; hopefully, before they die, many of them will advocate ending, rather than reforming, this political evil.

But regardless of how other Americans choose to go, the advocate of liberty must not assist the advocate of socialism with “free-market proposals” to save socialism. The advocate of liberty must advocate liberty. And this means, quite simply, the repeal, not the reform, of Social Security.

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    Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.