Good, but Depressing Point

EconLog brings up some good points about the social security debate (and other debates about various programs, like farm subsidies). People want the money:

From Ny Times: “The average retirement age in 1940 was 68. As recently as 1965, about two-thirds of workers did not begin drawing Social Security benefits until they were 65 or older. Now, more than half retire at 62 or younger, and three-quarters receive their first benefit checks before they are 65.”

The article says that raising the retirement age is the least popular option for dealing with Social Security. This tells me that people do not view Social Security as insurance. The insurance aspect of Social Security is that, like any annuity, it protects you against the risk of outliving your assets. If you were buying Social Security as insurance, then the premiums would be lower the later the age at which you chose to collect it. And if what people valued were the insurance aspect, then most people would prefer low premiums and benefits that kick in when they get really old. That would be better than high premiums and benefits that kick in when you are 60.

Just because the recepients value it as free money of course, doesn’t mean our government doesn’t implement it because of the insurance aspect. But for someone as pro-democracy as me (and as pundits often are when the issue supports them), it’s important to remember that most people vote very strongly with their checkbook.

Social Security still exists because it gives a lot of money to some people who are very well represented in our government. Farm subsidies still exist because they give a lot of money to some people who are well represented. There may be all sorts of economic arguments for why the programs were started, but once they were, no one wants to give up that free money. And the righteousness with which they defend their entitlement to it, can be dangerously convincing for the naïve and unfortunately dispiriting for the cynical.

Programs that give money to people who aren’t represented (which according to Democratic internal logic, would be the people who need it most) aren’t harder to make that other forms of government welfare– they’re just a lot easier to kill. Be it Welfare Reform or Congress’s recent gutting of Food Stamps.

[Edit:] To be clear, this does not mean raising the retirement age is a good thing, as Ezra effectively points out. However, there is nothing Ezra says that supports the view that SS is insurance. People can still be grasping for money in a greedy way, and also desperately deserve it.