CASHING IN OUR SOCIAL CAPITAL (via Tom Morin)

Honor Thy Fathers: A Family-Friendly Reform of Social Security (J.P. Zmirak, June 16, 2003 , The American Conservative)

Before the federal government became the pension plan of first resort for most Americans, the elderly relied upon two more traditional sources of support: accumulated wealth and their grown children. These twin pillars have for millennia been the mainstays upon which retirees depended, and our current system erodes them both. By pretending to serve as what it was never meant to be-an all-purpose, complete national system of social insurance-the Social Security system has long drained away funds from private pension plans and diminished the perceived necessity of savings. It has also created in the minds of the younger generations the perception that elderly parents are meant to be financially independent in their old age, safely collecting back the contributions they made over their working lives, plus a healthy return on investment-instead of depending, in part, on the support of their adult children.

The German social philosopher and economist Wilhelm Ropke saw that the growing importance of the state as the ordinary guarantor of well being for the individual must come at the expense of the family-the bedrock unit of any healthy society. He made that point with an anecdote:

"A short time ago, a member of the House of Commons movingly described her father's plight in order to prove how inadequate the welfare state still is. But this is no proof of the urgency of public help; it is merely an alarming sign of the disappearance of natural feelings in the welfare state. In fact, the lady in question received the only proper answer when another member of Parliament told her that she should be ashamed if her father was not adequately looked after by his own daughter. "

The state, by removing the financial impetus to family unity and rendering personal responsibility for one's family unnecessary, attacks two important virtues: loyalty and accountability. Such virtues, which some have called "social capital," are the very ground upon which a free society is built. Ropke, an architect of the postwar German economic "miracle," saw that the free market is an amazingly efficient producer of wealth and distributor of goods, which cannot be replaced by the state. (He was a student and lifelong friend of Ludwig von Mises.) But Ropke argued that the government had a larger role than simply playing "night watchman," protecting private property and enforcing contracts. For the market to survive, the state must take what minimal steps were necessary to insulate individuals from market failures, to promote the cohesion of the family, and to support the very virtues that make the market economy and a liberal society possible.

Following Ropke, a genuinely social conservative approach to reforming Social Security would aim to strengthen the family, encourage individual savings, and generally contribute to creating social capital-the non-economic, apolitical reserve of spontaneous order and co-operation that predates, underlies, and makes possible the survival of a free civil society. No society that refuses to save, indeed one that lives on an extended credit-card spree (as many Americans have been encouraged to do), can remain prosperous for long. It is sobering to recall the prone, bankrupt nation of Argentina was once-as late as the 1920s-almost as prosperous as the U.S. Reckless state spending that punished thrift helped impoverish that naturally rich country; can we avoid a similar fate?

Not content with just a terrific essay, Mr. Zmirak also gets off one of the best lines of the year: "I have long said, half in jest, that the future of Europe is a brown hand pulling a white plug out of the wall." Posted by Orrin Judd at June 17, 2003 9:57 PM