Real Market Reformers Stand Against Bush
by Ari Armstrong, December 15, 2004
By now, I've made the basic case for phasing out Social Security without replacing it with accounts mandated and regulated by the national government. Yet I'll continue to address various details associated with reforming the system, and I'll continue to counter the various spin-off arguments made by both right and left.
Particularly bothersome to me is how many self-proclaimed advocates of the free market endorse forced savings significantly controlled by the national government. Mandatory, regulated accounts are not part of the free market. They have nothing to do with the free market. They are the precise opposite of the free market. They are the embodiment of political force. Yet Bush's backers -- including many alleged leaders of the free-market movement -- continue their Orwellian lie that threatens to strip the term "free market" of its very meaning.
I have too few allies, but they are good ones. For example, in an e-mail, economist Jeffrey Miron stated, "I totally agree about the negatives of mandated accounts, and I find it appalling that so many people who claim to value freedom, individual choice, and small government are so eager to impose a substantial new government program that restricts freedom and choice." Miron co-authored a report with Kevin Murphy for Liberty Fund that expands his critique.
Hans Sennholz, for a long time the leader of the Foundation for Economic Education, published an essay this month in which he criticized the plans favored by Bush, the Cato Institute, and others: "It is revealing and sad that not one of the proposals touches upon the basic flaw of the system: its coercive nature. None gives thought to an exit from the conscription and none ponders about ways of liquidation." Sennholz describes a phase-out plan that starts with means-testing. Other writers affiliated with the Ludwig von Mises Institute have also criticized mandatory, regulated accounts, including Dale Steinreich and Jeffrey Tucker.
In his massive book Capitalism, George Reisman endorses "the phaseout of the social security and medicare programs" via raising the pay-out age and other supportive measures (pages 976-7). At no point does Reisman consider replacing Social Security with mandatory, regulated accounts. Instead, Reisman argues against the sort of sell out represented by such accounts. He argues, "It is the grossest compounding of confusions to suggest that those who know truths that masses of impractical people refuse to hear, accept error as an unalterable given for the sake of which they must abandon or 'bend' their knowledge of the truth... The essence of a true political practicality consists of clearly naming and explaining the long-range political program that promotes human life and well being -- i.e., capitalism -- and then step by step moving toward the fullest and most consistent achievement of that goal" (page 971). Quite obviously, replacing Social Security with accounts mandated and regulated by the national government is far removed from the "consistent achievement" of free markets. In a 1997 article, Reisman points out the problems with mandatory savings and advocates "the gradual abolition of the whole [Social Security] system, accompanied by the restoration of conditions in which people can rely on the future buying power of their savings."
Against the true advocates of free markets rise the conservative statists, the Republican partisans, and the supporters of market socialism. David Brooks of the New York Times is merely the latest example. (His column was reprinted in the December 15 edition of the Rocky Mountain News.)
Brooks urges his readers to "be clear about what this Social Security reform debate is really about." But Brooks declines to tell us. Instead, he pretends, "It's about the market. People who instinctively trust the markets support the Bush reform ideas, and people who are suspicious oppose them." Thus Brooks turns the very concept of markets on its head. Bush's proposal to impose forced savings through mandatory, regulated accounts is the antithesis of free markets. Thus, only statists consciously support Bush's plan. True enough, many people with pro-market "instincts" also support Bush's plan -- but only because they are fundamentally ignorant of the relevant issues and misled by hucksters such as Brooks.
Brooks proceeds to offer a devastating critique of leftist opposition to Bush's plan. But in doing so he commits the fallacy of false alternatives. Just because the leftists are wrong doesn't imply Bush is right. Yes, Social Security is a fundamentally statist program, but so are mandatory, regulated accounts. True free-market reformers must stand against both. They must insist that Social Security be phased out and replaced by nothing -- except the fruits of liberty.
For additional analysis, please see Social Security: Collected links.