18.7.11

DRAWING THE WRONG INFERENCES?  Over the weekend, the defenders of Our President's status quo have predictably mau-maued proponents of spending cuts in the absence of increases in tax rates or repeal of tax shelters (which they predictably call revenue) with invocations of Social Security and the G.I. Bill and other mid-twentieth century accoutrements of the welfare state that coincided with the Second World War.  Post hoc, nec ergo propter hoc?
“For decades, the Great Lakes states have subscribed to a high-tax, high-spend, closed-shop political model,” explains Continetti. “That hasn’t worked out.” That didn’t work out in Europe (whose welfare states the American left has always looked up to); that didn’t work out in American states such as California and Michigan; that didn’t work out in Detroit, which is becoming a wasteland in spite of massive infusions of government money, and that didn’t work out for General Motors, which turned in time into a retirement plan with a car company attached to it, which priced itself out of the general market while foreign car companies built factories in right-to-work states in the South, employed hundreds of thousands of people, and took its share of the market away. It probably won’t work out in Illinois, either, where the Democratic governor passed a massive tax increase, and the Republican governors of neighboring states invited Illinois businessmen to relocate there.

Was it wrong for the liberals to try to create an entitlement paradise when World War II ended? No, the war’s end seemed a good time to start over; the link between the rights that they fought for and the “right” to a middle-class standard of living seemed rather more plausible then, and they had no way of knowing it might one day prove too expensive. When Roosevelt signed Social Security into law, it was meant to start coverage at age 65 at a time when 58 was the average life span of male Americans. (Roosevelt himself died at 63 ten years later.) When President Johnson signed Medicare, life spans were still well below today’s standards, and most major medical breakthroughs were still in the future. (Johnson also would die in his 60s.) Neither imagined a world in which people routinely lived into their 80s and 90s, with knee replacements and heart transplants and home dialysis machines. Roosevelt opposed public employee unions, whose pension demands and early retirements are now driving some of our states and cities into bankruptcy. It’s easier to think of goods as rights when the costs are low, and they therefore take little from others. It’s when the costs rise—as in medical treatments—that the political trade-offs rise, too.
Everybody understands that the eligibility ages for Social Security and Medicare cannot coexist with contemporary actuarial tables on the recipient end and the extended adolescence and pre-adulthood on the paying-in end.  But rewriting the rules in such a way as to recognize that pilots and firefighters and miners and continuous caster operators and police officers might be worn out long before keyboard jockeys are will take a lot of work, and a lot of people will be relying on their private savings until the legislators and the  plan administrators get it worked out.

That's the easier problem.  The harder problem is disentangling the effects of the military and commercial victory in World War II, which gave Big Industry and its Big Unions temporary monopoly rents, from the policy effects of subsidized university education and housing and the rest.  It's probably not enough to ask whether a Soviet G.I. Bill would have offset the effects of Stalin, Khrushchev, and Brezhnev on the lot of the toilers.

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