Towards A Good Samaritan World

Tuesday, March 15, 2005

THE CASE FOR REFORM: MORAL VALUES

Jonathan Chait has a point:

[S]elfishness has always been at the core of Bush’s economic agenda. He passed tax cuts by dismissing Democratic worries that it would burden future generations with debt. Remember him waving dollar bills and promising, “it’s your money”? He organized lobbies representing the affluent to push for the tax cuts that would benefit them disproportionately. Karl Rove’s re-election strategy was built on appealing to the narrow self-interest of a series of groups. Farmers got lavish crop payments. The steel, shrimp, textile and lumber industry got tariffs. HMOs and pharmaceuticals got lavish subsidies. Etc.

Unsurprisingly, Bush approached Social Security privatization in the same spirit. The strategy was to divide up the electorate and appeal to each segment in very self-interested terms. They would neutralize seniors with the assurance that their benefits wouldn’t be touched. The young would be lured in with promises of amassing great fortunes in private accounts. Blacks would be peeled off from the Democratic coalition with bogus claims that Social Security harms them disproportionately. And Wall Street and other businesses, who smelled large profits down the road, would pony up tens of millions of dollars to fund the whole campaign.

But it hasn’t worked. And the main reason is that the public is not quite as selfish as the conservatives thought.

The privatizers’ weakest assumption turned out to be their belief that the elderly would support privatization if they knew they wouldn’t be affected.

I partly agree. (On foreign policy, of course, it's the opposite: Bush cares about liberating enslaved nations; the Democrats want to keep the money for schools and fire departments back home.) People are motivated much more by moral concerns, and less by self-interest, than people give them credit for. To me, the case for Social Security reform is moral first, economic second. Moral because with the stock market, retirees are not insulated from the economic cycle, but take a bit of the pain with the rest of us when hard times hit. Moral because property is tied to work, because people would save for their retirement, because generations would not be born into the world with huge burdens of unfunded liabilities. Moral because if we could increase our savings rate, this would spill over into a reduced trade deficit and lower interest rates worldwide, and Social Security reform is the most promising way to do that. Moral because asset ownership and investorhood spread, people will be more open to letting in immigrants, since their welfare will depend not only on capital but on labor. Moral because if children can inherit, they will have a useful economic stimulus—and we all have mouths to feed, after all—to care for their parents in old age. And so on. If it were just higher returns, I’d be against it too.

That said, the pollsters are revolting against the distorted media coverage which makes Social Security reform unpopular. Here’s Zogby letting Republicans know they’re on the right track after all. And Rasmussen decided to write its own headline this time: “Just 28% Favor Leaving Social Security Unchanged: Plurality Prefers Personal Accounts Over Status Quo.” Yeah.

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