Monday, June 06, 2005
Social Security’s Real Problem
As the House and Senate return back to “work” this week, the talk of Social Security reform will once again return to the forefront of media coverage. Whether you are in
favour of Private Accounts or think the government provided defined benefit route is the best, there is one underlying issue that needs to be addressed.
There is a great little column today from Michael Barone, one of America’s leading watchers of politcs. Barone is right of center, but is well respected by everyone. In this article:
http://www.townhall.com/columnists/michaelbarone/mb20050606.shtml
he talks about the benefit increases that came around in 1972, thus propelling retirees out of poverty and the SS trust in the direction of insolvency. But even Barone misses the point of what came shortly after the 1972 change in benefits.
In January of 1973, the Supreme Court ruled in Rowe Vs. Wade that there was a constitutional right to abortion. Some states had already passed abortion laws, legalizing the practice, while placing some restrictions on timing and access.
In the new book, Freakonomics, the authors point out that the drop in crime is due in large part to that 1973 court ruling. They are probably right. The fact is that the elimination of 30 million children since 1973 has to have removed many potential criminals, especially if you take as starting point that most of these children would have been born into poverty (the link between poverty and criminality is generally accepted, though it clearly leaves out other social factors).
While 30 million abortion may have reduced the crime rate in America, it also eliminated 30 million potential taxpayers, individuals who would have helped to pay into Social Security, thus reducing the outstanding liability. Barone doesn’t mention it in his article, except to say that the “second baby-boom” never happened.
Whether you are for or against abortion, I think we have to admit that there are always unintended consequences. This is the major challenge for all of us who want to make the world a better place, because no matter how smart we are, our plans never turn out like they are supposed to.
In 1973 the Supreme Court removed the issue of abortion from politics at-large (there are millions of voters every two years who vote for candidates who hold different views on the topic, precisely because abortion is now judicially, not legistatively protected). Did Rowe Vs. Wade, in bringing abortion into the Amerian mainstream, also kill off Social Security?
