Is Social Security Pro-Family; D. Lin

Such thinking shows a fundamental mis understanding of the role of the family in society. A family is more than just a group of people-it is a vital social and economic unit, distinguished from other human insti tutions by the responsibilities members have toward each other. For example, breadwinners have a duty to provide for themselves and their families. Parents and Mr. Lin, a graduate of UCLA, wrote this article while an intern at the Institute for Research on the Economics of Taxation. children have the responsibility to care for each other. Encouraging the fulfillment of these private obligations is the only way to fortify the family. In contrast, giving such responsibilities to government drives a wedge between family members and weak ens the ties that hold them together. Thus, Social Security, by seemingly relieving in dividuals of their responsibility to care for their elderly parents, is profoundly anti family.

Social Security's anti-family bias is not limited to its effect on responsibilities. Its funding mechanism, the payroll tax, also greatly burdens families. The total tax may not have been onerous at Social Security's inception, when the combined employee-employer share was two percent, but since then have come 22 tax increases. A majority of families now pay more in payroll taxes than federal in come taxes. Of course, there are no exemp tions or deductions to the payroll tax-the "pro-family" program feeds the govern ment before it feeds a worker's family. Thus, despite its appearances, Social Secu rity really doesn't eliminate the financial burden of caring for one's parents; it merely disguises it. "Share the Burden" The problem is not solved by dividing the total payroll tax between employers and workers. Politicians argue that this policy is "fair" because it makes employers "share the burden" of financing their workers' retirement. But government is unable to 91 92 THE FREEMAN. FEBRUARY 1996 make employers play Santa Claus, whatever legislators may hope. The payroll tax is in effect an excise tax on work, both discour aging job creation and depressing wages.

When government raises the cost of hiring a worker, employers are forced to offer lower wages, employ fewer workers, or go out of business. The employers' "share" is thereby passed on to the workers. Nevertheless, for years the system seemed to work. But the number of people available to support each retiree has been steadily falling, going from 16 workers per retiree in 1935 to three workers today. Within 30 years two employees will be supporting each retiree. So much for Social Security "saving" the average couple from the burden of providing for their parents. The Impact on the Elderly In the end, the biggest losers are the elderly, who are supposedly being cared for. Families form and prosper because survival and happiness are more likely to occur among people who love and care for each other. Socialized care offers none of these advantages. Instead, it places responsibility for the elderly on the general population, which cares nothing about anyone's individ ual wellbeing.

Moreover, socialized care is inevitably politicized care. Instead of individuals mak ing private decisions about their own fami lies, retirement care is shaped by political horse-trading. Politicians must sort through campaign promises, balance pressures from special interests, and assess the level of taxes that workers are willing to bear. Throwing the wellbeing of the elderly into this messy political arena is not pro-family. After all, true retirement security should not hinge on the next taxpayer revolt or the well-rehearsed promises· of politicians. Perhaps most strikingly, Social Security's tremendous effort to redistribute wealth across generations leaves the elderly worse off than if they had invested their payroll taxes privately. If the average 20-year-old worker pays $1 in payroll tax, he or she can expect to receive $1.70 in real (after infla tion) Social Security benefits by age 70.

Based on past returns, that same dollar invested in stock mutual funds over the same period would have swollen to $32. By forcing workers to pay into what amounts to a sucker's investment, Social Security is exacerbating the burden it is supposed to alleviate. Is Social Security pro-family? Only if increased unemployment, depressed wages, higher taxes, and forced participation in a bankrupt system help the family. A true pro family policy would remove these barriers, encourage work, and allow individuals to invest their own money. A government concerned about stable families would not come between adults and their elderly par ents. Given the government's track record at developing programs that strengthen the family, the best pro-family policy would probably be to restrain the desire of politi cians to make policy pro-family. D THEFREEMAN IDEASON UBERTY IncreasingAccessto Pharmaceuticals by Doug Bandow T he collapse of the campaign to essen tially nationalize America's healthcare system put a political stake through the heart of proposals to solve medical prob lems with new bureaucracies and more reg ulations. Health care remains a problem, however, because costs continue to rise and access remains restricted for many elderly and poor patients. Thus, we must continue looking for answers, only from a different direction-choice, competition, deregula tion, and privatization.