People who are producing nothing can feel a sense of grievance against those who are producing much, and being rewarded for it, if our basis for receiving economic benefits is supposed to be what we are all “entitled” to, rather than what we have worked to earn.
One of the most misleading uses of the notion of entitlement is to say that people who paid into Social Security for years are now entitled to the pensions they receive.
Really? The question is not how long you have been putting money in, but how much money you put in.
Social Security was created back in the 1930s, during the administration of President Franklin D. Roosevelt, one of the shrewdest politicians who ever sat in the White House.
President Roosevelt understood that, if you could convince people that they were entitled to a pension under Social Security, it could become politically impossible to ever put an end to that system.
The pensions promised exceeded what could actually be paid from the money that was put in by the recipients. But the first generation to enter Social Security would have their pensions paid by money received from the second generation, as well as its own money. The second generation would be paid with money that included what was paid in by the third generation, and so on.
This is the principle behind a “pyramid” scheme, in which the first investors can get a big return on their money by simply paying them money received from subsequent investors. But it is only a matter of time before reality catches up with us, since the pyramid scheme is not actually investing any money or saving any money.
With the money running out in the so-called trust fund for Social Security, reality is beginning to break through the fantasies, and is closing in on us.
No one wants to pull the rug out from under people already retired and dependent on Social Security, or on people nearing retirement age, and expecting a pension that is just not going to be there.
We can be both realistic enough, and decent enough, to rescue older people who have been victimized by political fantasies. We can pay higher taxes temporarily to rescue them. But, there is no reason to bankrupt the country by keeping the fraud going forever.
Younger people can be allowed to opt out and arrange their own pension plans in the private sector, where the kind of irresponsible pyramid schemes that politicians set up are illegal.
But we don’t need to ruin the whole economy, in order to preserve the illusions created by toxic words like “entitlement.”