Power & Market
Imagine a social system in which those contributing to the welfare of others are rewarded for it, and those contributing more get access to more resources—so that they can serve us better. Such a system would generate ever more welfare, and for more people.
Then imagine an alternative system under which we institute a central force in society with the object to make sure resources are always equally distributed regardless of how they are used and whether they contribute to welfare.
These are the two "ideal" but contradictory systems, the eternal conflict between economic and political means, that have generated our current state of affairs: a mixed system of social meritocracy and utter force.
Today, there are only limited rewards for serving others, often combined with a penalty for gaining access to resources, and a parallel system imposed on this order, in which those with influence but without the intention or track record of serving others can gain and retain access to resources.
This access is provided by the central force instituted to take resources used to serve us from those doing it better--to give to those who have little or poor track record in this service. The outcome is unsatisfactory for proponents of both "ideal" systems, both claiming the influence of the other system corrupts the workings and outcome of our present social order. And they are both correct: general welfare is hampered by the distortions of redistribution and regulation; equality is hampered by both the limited meritocracy and the distorted incentives due to the availability of non-welfare based access to resources.
The solution to the problems in our current state of affairs is to move to one of the ideal systems: markets or state.
The choice depends on what we prefer--general welfare or equality.
Either one offers only limited ability to satisfy also the other ideal, which is why these ideals are in eternal conflict.
Formatted from Twitter @PerBylund
While many of America’s founders are justifiably famous, others have received too little attention. St. George Tucker is one.
Born in Bermuda on July 10, 1752, Tucker was a militia colonel in the American Revolution, who even wrote Liberty: a Poem, on the Independence of America (my favorite line being “Freedom! thy joys alone are riches to the brave!”), that George Washington said “was equal to a reinforcement of 10,000 disciplined troops.” Afterward, his service included his appointment, with James Madison and Edmund Randolph, to the 1786 Annapolis Convention that led to the Constitutional Convention, and his opposition, with Patrick Henry and George Mason, to adopting the Constitution in the absence of a bill of rights.
Tucker’s greatest service to posterity, however, involved the law. Not only was he a law professor and judge on three different Virginia courts, historian Clyde Wilson noted that,
St. George Tucker’s View of the Constitution of the United States was the first extended, systematic commentary on the Constitution after it had been ratified by the people of the several states and amended by the Bill of Rights. Published in 1803 by a distinguished patriot and jurist, it was for much of the first half of the nineteenth century an important handbook for American law students, lawyers, judges, and statesmen.
David Kopel wrote, “St. George Tucker is perhaps the preeminent source of the original public meaning of the Constitution. His 5-volume American edition of Blackstone’s Commentaries was by far the leading legal treatise in the Early Republic.” Tom DiLorenzo summarized it as laying out “the Jeffersonian interpretation of the Constitution, which was replaced by the centralizing, big government … interpretation after 1865.” The fact that the Supreme Court has cited Tucker 40 times illustrates the importance of his work.
Today, with St. George Tucker’s commitment to limited government, states’ rights, and the judiciary’s role of preventing government oppression a too-dim memory, his insights into liberty and the original understanding of government under our Constitution are worth re-visiting.
In this country … the blessings of liberty have been … dearly purchased.
In a government founded on the basis of equal liberty among all its citizens, to be ignorant of the law and the constitution is to be ignorant of the rights of the citizen.
What can be more absurd than that a person wholly ignorant of the constitution should presume to make laws pursuant thereto?
A distinction … does exist between the indefinite and unlimited power of the people … and the definite powers of the congress and state legislatures, which are severally limited to certain and determinate objects.
All men being by nature equal, in respect to their rights, no man nor set of men, can have any natural, or inherent right, to rule over the rest.
Legitimate government can … be derived only from the voluntary grant of the people, and exercised for their benefit.
Every extension of the administrative authority beyond its just constitutional limits is absolutely an act of usurpation in the government.
Government originally founded upon consent, and compact, may by gradual usurpations on the part of the public functionaries … become a government of force. In this case, the people are as completely enslaved as if the original foundations of the government had been laid by conquest.
No people can ever be free, whose government is founded upon the usurpation of their sovereign rights.
If in a limited government the public functionaries exceed the limits which the constitution prescribes to their powers, every such act is … treason against the sovereignty of the people.
A constitution is a thing antecedent to a government. … Hence every attempt in any government to change the constitution (otherwise than in that mode which the constitution may prescribe) is in fact a subversion of the foundations of its own authority.
A written constitution … [is] a beacon to apprise the people when their rights and liberties are invaded, or in danger.
Abuse of power is despotism … the right of one man is at the mercy of another, and freedom in such a government, has no existence.
It is indispensably necessary … that there be a perfect equality of rights among the citizens. … Equality of rights necessarily produces inequality of possessions; because, by the laws of nature and of equality, every man has a right to use his faculties in an honest way, and the fruits of his labor, thus acquired, are his own.
The rights of property must be sacred.
A thousand … pretexts and arguments … form the ladder by which the agents of the people mount over the heads of their constituents … from whence they behold those who have raised them with contempt.
The American states have reserved to themselves … the administration of justice … in all cases whatsoever, in which they have not specifically consented to the jurisdiction of the United States.
[Federal] jurisdiction extends to certain enumerated objects, only, and leaves to the several states a residuary and inviolable sovereignty over all other objects.
This original compact … is to be construed strictly, in all cases where the antecedent rights of a state may be drawn in question … it ought likewise to receive the same strict construction, wherever the right of personal liberty, of personal security, or of private property may become the subject of dispute.
The authority of the federal government … ought therefore to receive the strictest construction. Otherwise the gradual and sometimes imperceptible usurpations of power, will end in the total disregard of all its intended limitations.
The federal government. … Having no existence but under the constitution, nor any rights, but such as that instrument confers … can possess no legitimate power, but such as is absolutely necessary for the performance of a duty prescribed and enjoined by the constitution.
Until, therefore, the people of the United States … shall think it necessary to alter, or revoke the present constitution of the United States, it must be received, respected, and obeyed among us, as the great and unequivocal declaration of the will of the people, and the supreme law of the land.
The powers delegated to the federal government … have no relation to the domestic economy of the state. The right of property, with all its train of incidents … and the rights of persons appear to be no further subject to the control of the federal government, than may be necessary to support the dignity and faith of the nation in its federal or foreign engagements, and obligations.
Since the citizen is on no other account obliged to pay taxes, or undergo any other public burden, but as they are necessary to defray the expenses of the state, it ought to be the singular care of the government to draw no further supplies than the exigencies of the public require.
The first question is whether the power be expressed in the constitution.
All governments have a natural tendency towards an increase and assumption of power; and the administration of the federal government, has too frequently demonstrated, that the people of America are not exempt from this vice ... parchment chains are not sufficient.
A representative democracy ceases to exist the moment that the public functionaries are by any means absolved from their responsibility to their constituents.
The right of self-defense is the first law of nature.
Every power which concerns the right of the citizen, must be construed strictly, where it may operate to infringe or impair his liberty.
In the United States, the great and essential rights of the people are secured against legislative as well as executive ambition … by constitutions, paramount to all laws: defining and limiting the powers of the legislature itself, and opposing barriers against encroachments.
The congress of the United States possesses no power to regulate, or interfere with the domestic concerns, or police of any state.
Absolute independence of the judiciary … [is] necessary to the liberty and security of the citizen, and his property.
The judiciary … is that department of the government to whom the protection of the rights of the individual is by the constitution especially confided, interposing its shield between him and the sword of usurped authority.
A law limited to such objects as may be authorized by the constitution, would … be the supreme law of the land; but a law not limited to those objects, or not made pursuant to the constitution, would not be the supreme law of the land, but an act of usurpation, and consequently void.
The object of the several states … was not the establishment of a general consolidated government … but a federal government, with powers limited to certain determinate objects.
Acts of congress to be binding, must be made pursuant to the constitution; otherwise they are not laws.
As the subjects upon which congress have the power to legislate are all specially enumerated, so the judicial authority … is limited to the same subjects as congress have power to legislate upon.
People of America have not thought proper to suffer the freedom of speech and of the press to rest upon such an uncertain foundation as the will and pleasure of the government.
Whenever [civil] liberty is, by the laws of the state, further restrained than is necessary … a state of civil slavery commences. ... This species of slavery also exists whenever there is an inequality of rights, or privileges, between the subjects or citizens … for the pre-eminence of one class of men must be founded and erected upon the depression of another; and the measure of exaltation in the former, is that of the slavery of the latter.
St. George Tucker searched for “the criterion that distinguishes laws from dictates, freedom from servitude, rightful government from usurpation.” And Clyde Wilson suggests that his answer is best summarized in his statement that, “It is the due [external] restraint and not the moderation of rulers that constitutes a state of liberty.” Given that today, the federal power to oppress has clearly increased at the expense of Constitutional restraints, we should give Tucker’s understanding as much serious thought now as our forefathers did when our great experiment in liberty began.
The US Supreme Court on Thursday ruled that the Trump administration cannot include a question about citizenship in the 2020 census form.
In response to efforts to add a census question asking respondents about citizenship, several large US states sued the administration, claiming the question would lead to under-reporting of the true number of residents in each state.
The court did not rule that the question could not be used under any circumstances, however.
The court's majority said the government has the right to ask a citizenship question, but that it needs to properly justify changing the longstanding practice of the Census Department. The Trump administration's justification was "contrived," Roberts wrote, and did not appear to be the genuine reason for the change, possibly implying that the real reason was political.
The case, Department of Commerce et al v. New York et al, was decided by a 5-4 majority, with Chief Justice John Roberts joining the four so-called liberal judges.
The Census Is Too Intrusive
The effect of the ruling is a good one: it limits the number of questions on the census form, and thus the amount of personal information collected by census takers. Nevertheless, the ruling offers no real relief from a long-standing tradition of the US government using the decennial census to collect unnecessary data nowhere mandated by the US constitutions census provisions.1
Designed initially as simply a means of apportioning members of congress and drawing congressional districts, the US census has morphed into a program designed to collect data that can help the US government justify and plan a wide array of government programs and initiatives.
The very earliest census forms don't collect much information beyond the total number of people, whether they are male or female, how old they are, and whether or not they are slaves.
Yet, by the 1870 census, the government was asking questions about birthplace and citizenship. Questions about occupation, literacy, and disability began even before then. In 1860, it was apparently essential for the federal government to know if a person was "deaf and dumb, blind insane, idiotic, pauper, or convict."
The Citizenship Question
The fact that citizenship questions began is 1870 is significant. Prior to the 1870s, it was widely believed that the regulation of immigration was not a responsibility of the federal governments. Some state governments — especially New York and Massachusetts — enacted immigration restrictions in the mid nineteenth century. But both Congress and the Supreme court balked at the idea of imposing federal limits on migrants.
[RELATED: " American Immigration Policy 160 Years Ago " by Ryan McMaken]
This changed with sweeping new federal immigration laws passed in 1882.
At roughly the same time, federal policymakers started instructing the census takers to keep track of matters related to birthplace, immigration, and citizenship.
As the role of government expanded even further, more questions were added. These included questions on employment, housing, ethnic group, and more.
In the 1920s, Herbert Hoover, who support expanding the statistical-date role of the census bureau, became head of the U.S. Commerce Department. Hoover used his position to push for more data collection. Not surprisingly, the role of census data expanded even more with the New Deal.
In other words, policymakers needed more and more statistical information to justify a rising tide of new federal programs, and to claim that resources were being distributed equitably and rationally.
Opposition to Census Data Collection
Recognizing this close connection between government planning and census data — as well as potential violations of privacy — some political activists and policymakers have encouraged refusing to answer census questions.
For example, at the time of the 2000 census, both Senate Majority leader Trent Lott and presidential candidate George W. Bush advised Americans not to answer questions "they believed invaded their privacy." That may have been good advice, especially since the Census bureau recently admitted it failed to protect the personal data collected on 100 million Americans.
The fact both Lott and Bush were republican policymakers is not a coincidence. At the time, there was a significant — albeit not overwhelming — movement among the conservative grassroots that insisted Americans ought to refuse to answer census questions — whether on the short form or the new ACS long form — which went above and beyond number the population.
The movement now appears to have been turned on its head with Trump supporters now insisting it is entirely appropriate to use census questions for purposes other than counting US residents — and to require honest responses.
Meanwhile, those who sought to keep the citizenship question off the census form were, for the most part, among the people who insist a wide array of census-collected data is necessary to distribute hundreds of billions of dollars of taxpayer-funded handouts to targeted populations.
They're fine with asking lots of questions on the census. They're just opposed to a citizenship question. While these opponents of the citizenship question claim to be motivated by obtaining an accurate count, the true reason is likely political: they don't want citizenship to become a political football in re-districting debates or debates over the size and scope of the non-citizen resident population.
That's an understandable position, but it would be best if opponents of the citizenship question were more honest about their motivations.
As it is, today's SCOTUS ruling has implications for partisan politics. But it does little to rein in the census bureau or return the decennial census to its originally intended purposes.
- 1. Not that a constitutional mandate would make additional questions desirable or moral. Government data collection has always been an important tool in augmenting government power. A constitutional provision authorizing data collection does not change this reality.
Social Security is going bust, a report released by trustees of the federal government’s entitlement programs claims. And without more money being poured into the system, the report argues, tens of millions of Americans will receive only three-quarters of their Social Security benefits in the near future. But even if trustees hadn’t figured that out by now, you would have known this was bound to happen. Unless you never heard any Austrian economist explain why Social Security is nothing but a Ponzi scheme.
According to the trustees, Social Security’s funds will be tapped out by 2035, meaning that this generation of working men and women may never see a dollar from what they “invested,” forcefully, over the years. In order to fix this problem and make Social Security solvent again, the report urges lawmakers to act.
“Lawmakers have a broad continuum of policy options that would close or reduce the long-term financing shortfall of” Social Security and Medicare, Treasury Secretary Steven Mnuchin, Health and Human Services Secretary Alex Azar, and other trustees wrote in their report to Congress.
Options include hiking up taxes and slashing benefits, two policies that seldom find any support from elected officials on both sides of the aisle. As such, it’s clearly impossible to work on any Social Security “reform” that will actually help to prevent it from falling apart.
But is there any way that Social Security can be actually saved?
Abolish Social Security
President Trump thought he wouldn’t have to do anything to the entitlement program. As a matter of fact, he claimed that his plans were going to boost the economy enough that Social Security’s problems would be easily solved.
But the U.S. government has long been in debt. Quite deeply, as a matter of fact. As a result, money is not being put aside in some special fund for Social Security. What the government runs on is borrowed and printed cash, as the Federal Reserve keeps postponing its plan to slow down on the expansion of its balance sheets. But as the number of Americans who are 65 or older is expected to grow by a third between now and 2040, the cost of Social Security will continue to rise.
Considering that the program both undermines economic prosperity and damages the average American’s relationship with money by giving beneficiaries incentives to remain dependent on the government, ending it shouldn’t be a tough call. Especially knowing it will no longer be capable of fulfilling its obligations in the coming future.
But Social Security still has friends in high places.
It is thanks to big businesses and their connection with the government that we have the program in the first place. After all, if President Franklin D. Roosevelt hadn’t listened to hot shots at the time, who were upset smaller businesses were not giving employees retiree pensions, the federal government may have not been used to force everyone to pay for similar programs.
As Murray Rothbard put it, Social Security didn’t hurt big, established firms but their competitors, as the program “penalizes the lower cost, ‘unprogressive’ employer and cripples him by artificially raising his costs compared by the larger employer.” Unfortunately, not many Americans see the program this way.
With generations relying on the failed system over the years, it is certain we won’t see any politicians doing much to gut it. But hopefully, Americans will finally refuse the system once they learn it is both ineffective and based on policies that benefit big corporations on the expense of the little guy.
What’s not to hate about such a dysfunctional scheme?
Socialism never stopped enticing young American minds. But the more Democratic Socialists such as Alexandria Ocasio-Cortez open their mouths, we learn the movement’s most vocal proponents simply ignore socialism’s incompatibility with democracy, as demonstrated by Austrian economist Ludwig von Mises in A Critique of Interventionism . Sen. Bernie Sanders is one of them.
With the Vermont senator announcing he’s running for president, his past comments defending socialism and socialist countries notorious for their failures become the type of material critics are eager to dissect. Especially because he still calls himself a Democratic Socialist while using Nordic countries as examples of what he defends.
Thankfully, political figures from the very countries the good senator from Vermont calls “socialist” are here to remind him that the ideology is nothing but a trap.
Prime Minister of Sweden from 1991 to 1994, Carl Bildt, took to Twitter to warn Sanders that socialism is not the key to creating a great society as he and Ocasio-Cortez seem to think.
After old footage showing Sanders and his wife, Jane, praising the Soviet Union for its programs targeting the youth went viral online, Bildt responded by saying “Sanders was lucky to be able to get to the Soviet Union in 1988 and praise all its stunning socialist achievements before the entire system and empire collapsed under the weight of its own spectacular failures.”
To the former prime minister, the damage socialism can cause is still fresh in his memory. After all, he was the first prime minister in 60 years to not subscribe to the ideology. And thanks to him, Sweden’s capital gains taxes were cut to 30 percent and corporate taxes to 28 percent.
Bildt also privatized several state-owned industries, deregulated multiple sectors of the economy, allowed people to invest portions of their pension, and introduced school choice policies, improving the country’s education system.
After Bildt, Sweden, which had completely lost its host of entrepreneurs thanks to business taxes that sometimes exceeded the 100 percent mark, once again flourished. Even as Social Democrat successor Ingvar Carlsson took over.
Seeing the wonderful changes just a few years worth of reform had done, Carlsson kept Bildt’s policies in place. And business start-ups rose nearly 25 percent as a result.
Unfortunately, politicians like Sanders like to use countries like Sweden as examples of how socialism can work.
The same politician who, in the late 1980s, praised breadlines and celebrated the Soviet Union for forcing its youth to dedicate their whole lives to communism, now tells Americans that the so-called “Nordic model” of socialism can and will work in America. And yet, he seems clueless to the fact that the policies he pushes don’t mirror those adopted by the countries he celebrates.
As explained by Danish Prime Minister Lars Løkke Rasmussen in 2015, countries like his Denmark “[are] far from [socialist planned economies].”
“Denmark is a market economy,” he added. And as demonstrated by Mises in Economic Policy: Thoughts for Today and Tomorrow , there’s “no western, capitalistic country in which the conditions of the masses have not improved in an unprecedented way.”
In other words, to claim the successes of Nordic countries are due to socialism is nothing but a lie.
As the Acton Institute pointed out, Sanders’ ideology, the same ideology upheld by Ocasio-Cortez and countless others who are now legislating in Washington, D.C., is about putting statism before freedom.
In order to apply the policies they push, we would have to relinquish complete control over our lives, allowing the state to squelch artistic expression, private initiative, and destroy any incentive left compelling people to serve each other better and more efficiently.
Is that the world we want to live in?
If you think that the “tax the rich” rhetoric from the left-wing of the Democratic Party is primarily about economics you would be sadly mistaken. After all, there isn’t enough tax revenue in the highest income bracket, even with a 90% marginal rate, to fund anyone’s pet social program for more than 48 hours. Do progressives know this? Of course they do.
The same observation holds true for the so-called ”Green New Deal” legislation recently proposed by Alexandria Ocasio-Cortez, the outrageous media darling from Queens. It’s true that this grab bag of environmental regulation, if enacted, would likely cost trillions and produce a systemic change in the American life-style. But you miss the deeper message if you think that the actual purpose of this legislative monstrosity is to save the planet before it expires in 12 years.
No, the current wave of extreme progressivism has a far more nefarious goal than simply higher taxes on the super-rich or carbon taxes to scrub down the environment. Indeed, the long-run objective of the new socialists and the gang of social justice warriors (SJW) is to gradually delegitimize the very foundations of modern capitalism by obliterating conventional notions of property rights, fairness and justice. If this sounds far-fetched you have not really been paying attention.
It is often assumed that capitalism is founded rock solid on economics. Not necessarily. Strictly speaking, economic considerations, though important, are secondary. Instead, it’s the relatively unique system of individual property rights that primarily legitimizes all capitalist institutions.
Take, for example, the most obvious and essential capitalist institution: the private stock corporation. It is solidly rooted in the notion that individuals have rights; that these rights include the right to incorporate; the right to instruct managers of corporations to maximize profits; and the right of owners to sell their shares. These individual rights (entitlements) are the “moral” foundation for the existence and operation of all modern business organizations.
This particular theory of property rights was made explicit in the 18th and 19th centuries by philosophers such as Adam Smith, John Locke and John Stuart Mill. It holds generally that it is morally appropriate for individuals to own property including, of course, their own labor; to exclusively determine its use; and to enjoy the benefits (income or otherwise) earned from production or exchange. Adam Smith, who taught “moral philosophy” (not economics) at Glasgow University in Scotland termed these rights “natural” and once famously observed that free markets and voluntary exchange were morally appropriate because they were “consistent with liberty and justice. ”
Modern progressives and socialists reject this classical approach to rights theory. They hold, instead, that rights to property (and capitalist institutions such as the corporation) are arbitrary constructs of an elite and conservative legal system; that there is nothing “natural” or legitimate about them; and that, therefore, they have no special moral status. But if they have no special moral status, then neither does the income and privileges that these “rights” currently generate for owners. Indeed, government may now alter these arbitrary property arrangements and redistribute income and privileges to, say, anyone in the name of fairness and social justice.
It is now apparent that this radically different approach to property rights can be employed by critics to rationalize higher taxes on the rich, a drastic reduction in CO2 emissions, an increase in the legal minimum wage to $15/hour, and even the federally chartering of corporations (an Elizabeth Warren pet proposal) in order to make them “socially responsible.” Indeed, there is almost no tax or regulation that cannot be justified from this perspective. And that’s precisely the point.
In conclusion, the social justice warriors and the new socialists are not primarily concerned with economics as such. The tragic lessons of, say, Venezuela are not their concern. Instead, their objective is to continue to delegitimize the classical foundations of property rights and then implement, through legislation and the courts, a radically different theory of justice in social affairs. Whether such a program will be successful has yet to be determined.
But it’s not just a fiscal crisis. Social Security is also an increasingly bad deal for workers. Especially minorities with lower average lifespans. When compared to what they would get from a private retirement system, people are paying in too much and getting out too little.
There’s also another major problem with the program.
Academic experts have quantified how older workers are lured out of the labor force when they get money from the government. And since economic output is a function of the quality and quantity of labor and capital, this means we’re sacrificing wealth and reducing prosperity.
Here are some excerpts from a study by Professors Daniel Fetter and Lee Lockwood.
Many of the most important government programs, including Social Security and Medicare, transfer resources to older people… Standard economic theory predicts that such programs reduce late-life labor supply and that the implicit taxation reduces the ex-post value of the programs to recipients. Understanding the size and nature of such effects on labor supply and welfare is an increasingly important issue, as demographic trends have increased both the potential labor supply of the elderly and its aggregate importance, while simultaneously increasing the need for reforms to government old-age support programs. …We address these questions by investigating Old Age Assistance (OAA), a means-tested program introduced in the 1930s alongside Social Security that later became the Supplemental Security Income (SSI) program.
Here are charts illustrating how people are retiring earlier in part because of government payments.
And here are some calculations from the study.
Our estimates indicate that OAA significantly reduced labor force participation among older individuals. The basic patterns that we explore in the data are evident in Figure 2, which plots male labor force participation by age, separately for states with above- and belowmedian OAA payments per person 65 and older. Up to age 65, the age pattern of labor force participation was extremely similar in states with larger and smaller OAA programs. At age 65, however, there was a sharp divergence in labor force participation between states with larger OAA programs relative to those with smaller programs, and this divergence continued at older ages. Our regression results, which isolate variation in OAA program size due to state policy differences, imply that OAA can explain more than half of the large 1930–40 drop in labor force participation of men aged 65–74. …Our results suggest that Social Security had the potential to drive at least half—and likely more—of the mid-century decline in late-life labor supply for men. …Taken as a whole, our results suggest that government old-age support programs can have large effects on labor supply, through both their transfer and taxation components.
This chart captures how old-age payments in various states were associated with varying degrees of labor force participation.
By the way, I’m not sharing this information because it’s bad for people to retire at some point.
I’m merely establishing that there’s academic support for the common-sense observation that people are more likely to leave the labor force when there’s an alternative source of income (though it’s worth noting that there should be a sensible and sustainable system for providing that retirement income).
Moreover, people are likely to stop working when government systems give them money before age 65.
Three academics, Andres Erosa, Luisa Fuster, and Gueorgui Kambourov, have a study quantifying this problem in European nations.
There are substantial differences in labor supply and in the design of tax and transfer programs across countries. The cross-country differences in labor supply increase dramatically late in the life cycle…while differences in employment rates among eight European countries are in the order of 15 percentage points for the 50-54 age group, they increase to 35 percentage points for the 55-59 age group and to more than 50 percentage points for the 60-64 age group. In this paper we quantitatively assess the role of social security, disability insurance, and taxation for understanding differences in labor supply late in the life cycle (age 50+) across European countries and the United States. … The social security, disability insurance, and taxation systems in the United States and European countries in the study are modelled in great detail.
Here’s a sampling of their results.
The main findings are that the model accounts fairly well for how labor supply decreases late in the life cycle for most countries. The model matches remarkably well the large decline in the aggregate labor supply after age 50 in Spain, Italy, and the Netherlands. The results support the view that government policies can go a long way towards accounting for the low labor supply late in the life cycle for these European countries relative to the United States, with social security rules accounting for the bulk of these effects… relative to the United States, the hours worked by men aged 60-64 is…49% in the Netherlands, 66% in Spain, 44% in Italy, and 29% in France. …government policies can go a long way towards accounting for labor supply differences across countries. Social security rules account for the bulk of cross country differences in labor supply late in the life cycle (with its contribution varying from 50% to 100%), but other policies also matter. In accounting for the low labor supply relative to the US at ages 60 to 64, taxes matter importantly in the Netherlands (6%), Italy (6%), and France (5%); disability insurance policies are important for the Netherlands (7%) and Spain (10%).
And here’s one of their charts comparing hours worked at various ages in Switzerland, Spain, France, and the United States.The good news is that we don’t push people out of the labor force as much as the French and the Spanish.
The bad news is that we’re not as good as Switzerland (probably in part because the Swiss have a retirement system based on private saving, so they have the ideal combination of good work incentives and comfortable retirement).
But it shouldn’t matter whether other countries have good systems or bad systems. What does matter is that America’s demographic profile is changing. We’re living longer and having fewer children and our system of entitlements is a mess.
We should be reforming these programs, both for fiscal reasons and economic reasons.
Originally published at International Liberty
For decades, Americans have been burdened with historic expansions in government control, including in areas earlier generations could not even imagine as possible. Such dictates violate Americans’ inalienable self-ownership.
That is why Lysander Spooner, born January 19, deserves renewed attention. Spooner laid out why our natural right of self-ownership, combined with its implied right to enter voluntary arrangements, made government coercion of peaceful people illegitimate. Since we have moved far away from that moral standard, we need to rediscover Spooner’s vision. In particular, his 1870 No Treason illuminates our situation:
- That men may rightfully be compelled to submit to, and support, a government that they do not want…[is] self-evidently false…a man, thus subjected to a government that he does not want, is a slave. And there is no difference, in principle…between political and chattel slavery. [Each] denies a man’s ownership of himself and the products of his labor; and asserts that other men may own him, and dispose of him and his property, for their uses, and at their pleasure.
- A man’s natural rights are his own…any infringement of them is equally a crime…whether committed by one man, calling himself a robber or by millions, calling themselves a government.
- To say that majorities, as such, have a right to rule minorities, is equivalent to saying that minorities have, and ought to have, no rights, except such as majorities please to allow them.
- The principle that the majority have a right to rule the minority, practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters, and which of them slaves.
- How does [a man] become subjected to the control of men like himself, who, by nature, had no authority over him…as if their wills and their interests were the only standards of his duties and his rights…force, or fraud, or both.
- A man finds himself environed by a government that…forces him to pay money, render service, and forego the exercise of many of his natural rights, under peril of weighty punishments.
- Governments…[are] tyrannies to that portion of the people…compelled to support them against their will.
- Getting the actual consent of only so many as may be necessary to keep the rest in subjection by force…is a mere conspiracy of the strong against the weak...a presumption that the weaker party consent to be slaves.
- Government, like a highwayman, says to a man: “Your money, or your life.” [But] The highwayman...does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit.
- No government…can reasonably be trusted for a moment, or reasonably be supposed to have honest purposes in view, any longer than it depends wholly upon voluntary support.
- If [governments] own us as property, they are our masters, and their will is our law. If they do not own us as property, they are not our masters, and their will, as such, is of no authority over us.
- On what ground can those who pretend to administer [The Constitution] claim the right to seize men’s property, to restrain them of their natural liberty of action, industry, and trade…at their pleasure or discretion?
- A tacit understanding between A, B, and C, that they will, by ballot, depute D as their agent, to deprive me of my property, liberty, or life, cannot at all authorize D to do so. He is…a robber.
In an era where what remains of our self-ownership is under continuous threat of further evisceration, Spooner’s clear-eyed understanding of it and its consequences provides an invaluable premise for our thinking. Being allowed to make our own choices and live our lives is no treason to any defensible idea of a government intended to advance the well-being of its citizens.