SACRED COWS

Real Reform for Social Security (David Brooks, New York Times, December 11th, 2004)

Before we get lost in the policy details, let's be clear about what this Social Security reform debate is really about. It's about the market. People who instinctively trust the markets support the Bush reform ideas, and people who are suspicious oppose them.

The people setting the tone for the opposition to the Bush Social Security effort depict the financial markets as huge, organized scams where the rich prey upon the weak. Their phrases are already familiar: a risky scheme, Enron accounting, a gift to the securities industry, greedy speculators preying upon Grandma's pension.

Gone is the day when President Clinton could propose another plan diverting 15 percent of Social Security reserves into the stock market. Now the Democratic Party's tone is much more populist and even antibusiness. Harry Reid has begun his tenure as Senate minority leader by doing his best imitation of Huey Long: "They are trying to destroy Social Security by giving this money to the fat cats on Wall Street, and I think it's wrong!"

What you hear these days is not liberalism. It's conspiracyism. It's the belief that the Bushite corporate cabal is going to do to domestic programs what the Bushite neocon cabal did in the realm of foreign affairs. It's the belief in malevolent and shadowy forces that will grab everything for their own greedy ends. This is Michael Moore-ism applied to domestic affairs, and it will leave the Democrats only deeper in the hole.

I don't deny that many business and Wall Street types would like to capture the system for their own benefit. As Theodore Roosevelt observed, every new social arrangement begets its own kind of sin, which has to be punished by law. But as Roosevelt and his great hero Alexander Hamilton understood, corruption is the price we pay for economic freedom, and the benefits of that freedom vastly outweigh the costs.

Hamilton and Roosevelt championed markets because they arouse energies, channel information, allocate resources and create enormous wealth. Plans to create private Social Security accounts aren't sops to the securities industry. They use the power of the market to solve an otherwise intractable problem.
The outline of the problem is clear. When the Social Security program was created, there were 42 workers for each retiree. Now there are about three workers per retiree, and in 2030 there will be two.

The instinctive distrust of the market that Mr. Brooks refers to is only half the story. The other half is a visceral rejection of personal responsibility and chance. Given the demographic math, the only way the current system can survive is for the government to print money and bequeath inflation. To preserve state dependency and universality, the left would much rather condemn the aged to the poverty those on fixed incomes will suffer than give them the opportunity to share in an increasing overall general wealth.