Yesterday we talked about the myth of the Social Security Trust Fund.
Popular lefty blogger Max Sawicky disagrees:
Under Capitalism, it’s Government and Law that render pieces of paper legally enforceable claims to wealth. Your little savings account book, your stock certificate, or your bond are worth something because the government makes it so. It is government that enforces contracts. For the same reason the Trust Funds are real.
Of couse, the government can unmake wealth by fiat as well. A Supreme Court Justice once noted, “the power to tax is the power to destroy.” So too is the power to legislate changes in Social Security benefits. To say the funds are not real is to say the benefits can be withheld because taxes that have been paid are not “there.” This is absurd. In titles to wealth, there is never any “there.” There are relationships regulated by law. You buy a share of IBM, the law says you own a piece of IBM. The law says that taxes in excess of expenses in Social Security, plus accrued interest, have been loaned to the Federal government.
Max conflates the notions of government-enforceable contracts with government-enforceable value. Yes, the law upholds your ownership of a share of IBM — but no act, no law, no mandate from heaven can dictate what that share is actually worth. Only the marketplace can do so.
By Max’s logic, if Congress passed a law dictating that the value of the NYSE must increase by 10% each and every year, then risk could be eliminated, capital gains could be dictated, and we could legislate ourselves into permanent prosperity.
Nations having tried such schemes include the Soviet Union, East Germany, Cuba, North Korea, etc. Hasn’t worked, doesn’t work, won’t work.
More interesting was a comment left at Max’s site by “vachon.” He says:
I was born in 1955. I cut my eye teeth on being tear gassed in New Haven at Black Panther rallies. I and 50k of my closest friends shut down the Bay Bridge in SF during the first Gulf War. These skills don’t go away. If Bush, et al try to screw one penny from any of us boomers, Florida, Arizona, California may as well cease to exist. They will be armed camps with greying tie-dyed types taking turns at the bullhorns with the hair-done-every-six-weeks crowd. You under estimate us, Max. Personally, I’m kinda looking forward to it.
Ah, yes — another damn-the-capitalists Baby Boomer who promises to shut down civil society if he doesn’t get the money his parents promised him.
What it comes down to is this. We either fix Social Security by some means people can generally agree on, or we face a generational war which will make the ’60s look tame. If “vachon” thinks he can raise my payroll taxes by 25-40% to pay for his tie-dye Depends, then cops with teargas will be the least of his worries.
(Hat tip to Hit & Run.)