October 2011 issue of Freedom's Phoenix magazine - fr33aid

Continued from Page 20 - How to Eliminate Social Security and Medicare*
Japan and China. These capital goods can be
seen not only in masses of foreign-made components
and parts used by American producers,
but also in numerous factories, such as the automobile
plants built by Japanese and Korean
firms in the United States. The influx of foreign
capital can also be seen in the fact that it is that
foreign capital that largely finances the budget
deficits of our spendthrift government and prevents
those deficits from consuming still more
of the previously accumulated capital of the
United States.
Thus, the cause of America’s industrial decline
is not investment outside the country. Nor, of
course, is it exclusively the result of Social
Security and Medicare and the decline in saving
and investment that they in particular have
caused.
There are numerous additional causes of America’
economic decline. However, all of them
share with Social Security and Medicare the
fact that they represent instances of government
interference in the economic system that serve
to undermine capital accumulation and the rise
in the productivity of labor. First and foremost
among them is the government’s limitless appetite
for spending and the unending expansion
of its powers and activities that growing spending
feeds. The additional spending is financed
to an important extent by arbitrary increases in
the money supply, i.e., inflation, and the closely
related policy of credit expansion and its consequent
massive waste of capital. Along with inflation
and credit expansion, there is the confiscatory
taxation of income that otherwise would
have been heavily saved and invested, most
notably, profits, interest, dividends, and capital
gains, as well as inheritance taxes, which are a
tax on capital already accumulated. In addition,
there is the granting of monopoly privileges to
labor unions and all other government interference
and regulation that arbitrarily serve to raise
costs of production and reduce output per unit
of input, insofar as the output being reduced is
the production of capital goods. 7
The Special Problems of Eliminating Medicare
The elimination of Medicare, especially after age
70, requires that steps be taken to make medical
care for the elderly affordable outside of Medicare
(and outside of most private medical insurance
plans as well). This requires eliminating as
far as possible all of the government intervention
that over the generations has been responsible
for increasing the cost of medical care. In
my essay “The Real Right to Medical Care Versus
Socialized Medicine,” I present a detailed
explanation of the various ways in which government
intervention has been responsible for
the rise in the cost of privately provided medical
care and a program of pro-free-market reform
that would dramatically reduce the cost of such
medical care and make it affordable for the most
part to people without medical insurance.
7 For elaboration of this last point, see “The Undermining of
Capital Accumulation and Real Wages by Government Intervention,”
pp. 636-39 of the author’s Capitalism: A Treatise on Economics (Ottawa,
Illinois: Jameson Books, 1996).
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Though written in 1994, in order to help prevent
enactment of the so-called Clinton Plan, its findings
are as applicable today as they were then,
and should be considered as an essential part
of my proposals for eliminating Social Security/Medicare.
The only significant details that
would need to be changed are the replacement
of the absurdly and unnecessarily high costs of
privately provided medical care in 1994, reflecting
all of the government intervention in medical
care up to that time, with the still far more absurdly
and unnecessarily high costs of privately
provided medical care today, which incorporate
the effect of the massive inflation of the money
supply that has taken place in the intervening
years.
Reform in the Spirit of Classical Liberalism
An important feature of the program of reform
that I have presented is that it need not be accepted
in toto. Its advocacy of a rise in the Social
Security/Medicare retirement age to 70,
and even to 75, could be accepted by those who
wished to retain these programs but limit them
to an older population than is the case at present.
The enactment of either of these limitations
would be an important victory. One that would
take nothing away from the goal of the ultimate
total elimination of Social Security and Medicare
and would serve as an important step on
the way to the achievement of that goal.
This program will undoubtedly seem much too
slow for some supporters of individual rights
and freedom. Nevertheless, I believe that it is
in fact the most rapid means of achieving its ultimate
goal that does not entail a revolutionary
overthrow of what have come to be established
rights in the law, however wrong-headed the law
has been in establishing those rights in the first
place. Proceeding in this way is an essential aspect
of Liberalism in its classical sense. Fundamentally,
rights to entitlements of any kind, that
must be paid for involuntarily by other people,
are no more legitimate than the alleged property
rights of slave owners in their slaves. Yet
to avoid civil war, Liberalism would have urged
a policy of compensated emancipation rather
than one of violent emancipation. Today, in fundamentally
similar circumstances, Liberalism
must limit as far as possible the disturbance that
would otherwise be caused by the elimination
of illegitimate, perverted rights.
Individualism Versus Collectivism
At the most fundamental level, what this discussion
of reform serves to bring out is the conflict
between the philosophies of individualism
and collectivism. Social Security and Medicare
are monuments to collectivism. Both rest on the
premise that the individual cannot make his own
provision for old age by means of saving and
that instead he must rely on that great collective,
Organized Society, i.e., the Government,
to make provision for him.
The individual, of course, is the party with by
far the greatest interest, indeed, the only real-
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