Think Freely Media presents Common Sense with Paul Jacob

Giving Up on the Future?

Social Security, wealth transfer, young, old, elderly, Germany, Japan, baby boom

Both Germany and Japan now transfer money, on net, from the young to the old. Austria, Slovenia, and Hungary, The Economist reports, do the same.

The instrument of this transfer? Well, the elephant in the room: those nation’s entitlement programs — their versions of our “Social Security.”

John O. McGinnis, George C. Dix Professor in Constitutional Law at Northwestern University, explains how unnatural the direction of the transfer is. Normally, societies “give more to the young than the young can ever repay.” Remember the truism, “the children are our future”? Families, McGinnis explains, “exemplify this principle. Socially too, the intergenerational flow of resources is what creates civilization as each generation receives benefits from the previous one.”

Taking from the young to give to the old, on the other hand, is not just counter-intuitive. It stifles innovation, entrepreneurship, progress itself.

What drives the trend? It is complicated. But the politics behind redistributionist programs is the main culprit:

The elderly vote more than the young, who have more distractions, and politicians are thus all too eager to give them goodies. And while individually the elderly would like to direct more resources to their young relatives, when they act in politics they face a kind of tragedy of the commons. They cannot prevent others from living off the state, so they might as well do themselves.

As my generation, the infamous Baby Boom, retires, the demographics turn Social Security against society’s main purpose: building a future. The culture refocuses on retirement . . . preparing for death.

Another way — on top of growing debt and increasing regulatory burden — we’re leaving our kids with less than we had.

This is Common Sense. I’m Paul Jacob.

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Social Security, wealth transfer, young, old, elderly, Germany, Japan, baby boom


By: CS Admin


  1. Don Pritchard says:

    I have often described the present Social Security system as a Ponzi scheme, which I believe it to be, but as one who is now 15 months away from getting my first check, I just hope it lasts long enough to keep me going. I agree with much of what you said, but I would argue taking care of one’s elders is not universally counter-intuitive. Maybe it is in our culture, but there are numerous examples of cultures where the elderly are highly respected and provided for. One other thing, if the Social Security system was set up as an investment plan, where individual contributions were reserved and set aside, it would have been a much better system than what we have today. However, just like the qwerty keyboard, once the system is in place, it is very difficult to change it.

    • Eddie says:

      Confused about “object” and “consequences”? The former is the primary intent by design, the latter is simply a result whether intended or not. 

  2. Brian wright says:

    Regardless of their actual benefit to real people now–and I’m one of them, sadly–the object of all these compulsory plans is further enslavement to the centrally dominating collective. And the dominators’ ends are transparent. 

  3. Rogue apostrophe in the third sentence. Sorry, pet peeve of mine.

  4. Pat says:

    Boomers didn’t create Social Security. For that matter, neither did our parents. When it was created, few people lived to 65. Society is a victim of its own success – in increasing life spans and moving away from a time when the elderly lived with their children and grandchildren. Now active older people want to maintain their independence. That costs money and it ties up housing that might be better directed to the young. Society stopped ‘planning for the future’ in the early days of the New Deal. The federal government grew inexorably and now IT is spending our children’ts future. Those of us who saved and planned were the fools and we are realizing it now. We might have reached this point sooner were it not for WWII. In 1945, the US was the last economy not totally destroyed. Our subsequent prosperity was because we had little or no competition Everyone assumed the good times would last forever and the Great Society was born. Those days are gone. Eventually the government will run out of other people’s money (maybe when President Bernie Sanders institutes his desired 90% tax on income and people realize that work no longer pays) and then we’ll simply have to start all over again.

  5. Kenneth H. Fleischer says:

    If I had not been forced to “contribute” to Social Security, I’d have saved/invested about three times as much, spending the remainder of what SS had actually taken from me, and would have had enough in my IRA to support me at the level of my highest-earning year, ever, for an indefinitely long time. As a man turning seventy-two, I’m in the beginning of the age range where Social Security is a net loss, or as youngsters put it, a “complete rip-off,” and it’s worse for those younger than I am. It is, indeed, a Ponzi scheme.

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