Illusions of ‘Social Security’

October 17, 1949

Let’s consider a few more self-contradictions in the President’s steel fact-finding board report.

On page 61 we learn: “As to old age and unemployment . . . the government itself has stepped in to provide a minimum of protection.” But two paragraphs later we are told: “No one seriously contends that those sums could have provided a minimum standard of living even back in 1935 when they were fixed.” So they provided a minimum and they didn’t.

Obviously those sums can’t provide a minimum standard today, the board continues, “with the cost of living some 70 percent higher than in 1935.” One might have expected the logical moral that so-called social-security schemes financed or accompanied by inflationary governmental policies are a cruel deception. No such moral is drawn.

Then the board turns angrily on the Federal government that created it. It appears that the existing pensions provided by that government are “un-American.” Further: “Even if the increases now being discussed in the Congress were enacted, they still would not materially increase the purchasing power of the workers’ pensions over the original purchasing power provided in 1935.” In other words, they would still be un-American.

Turn now to page 62: “So long as government does not provide the security at all, we believe that industry should. So long as government fails to provide an adequate amount, industry should take up the slack.” This lily seems too lovely to gild. For sixteen years the New Dealers have been telling us that if industry doesn’t live up to its “social responsibilities” government must do the job. Now they tell us that “no thoughtful citizen . . . can expect labor to wait patiently by until government makes up its mind.” So private industry must take over these “social responsibilities” if government won’t! This is statism biting its own tail.

Still on page 62: “Social insurance, at least in its minimal form, should be founded on a universal base for all workers in the United States.” The board talks of “the danger of unbalanced, overlapping, and competing programs.” It finds it a “cause of great concern” that “there is growing up haphazardly all over the country this large number of unequal and uncoordinated insurance funds, with little or no public control.” All this would lead logically to a recommendation that the existing universal, “nationwide, compulsory” government insurance plan should be made “American” and “adequate.” Instead, the board recommends still more unbalanced, overlapping, competing, haphazard, unequal, and uncoordinated private-insurance funds!

The government’s social-insurance system is based on worker contributions. The board ignores this. For 67 pages it insists that the sole cost of pensions and insurance must be paid by the employer. But on page 68, in its eagerness to argue that such employer funds would not be raided or abused, it slips into a fatal admission: “So long as the cost of the plan is integrated into the labor cost structure . . . the worker will know that he is in fact paying for his own insurance.” He must do so for the simple reason that he cannot in the long run be paid more than he earns. But then why deceive him? Why try to tell him in all the rest of the report that the burden of his insurance can in fact be shifted entirely on employers?

In this sudden emotional flim-flam about pensions little attention has been paid to the experience of Britain and France. The British cradle-to-grave social services are far more comprehensive, far more expensive, and provide a far greater percentage of the worker’s real income than our own. In France the cost to the employer of social benefits has now reached a basic amount of 29 percent over and above wages, with even higher costs for particular firms and industries. But this crippling burden is precisely one of the reasons why the total income of the British or French worker is so much smaller than the American’s.

One of the primary causes of the grave social insecurity of our time is this fetish called “social security.”