Reisman: Social Security, Medicare must end


Last week George Reisman published an article that should be required reading for all who care about the future of our country. Titled How to Eliminate Social Security and Medicare, it will take more than a few minutes to read, but it holds the type of information we need to know as we consider reform of government entitlements. Reisman is the author of the monumental work Capitalism: A Treatise on Economics.

Reisman lays out a plan that would gradually, over time, end the Social Security and Medicare systems. It’s a detailed plan, and I don’t pretend to know enough to tell if the plan would work. But it seems like it would, and the important thing is that Reisman’s plan calls for an end to these programs. Most plans call for merely bringing these programs “under control” — whatever that means. And for all the courage attributed to House Budget Committee chair Paul Ryan and his Path to Prosperity Plan, he left the Social Security program for solution some other day.

What’s important about Reisman’s article is his explanation of the harm that these two programs have caused. Here I take the liberty of rewriting two sentences of his into one: Many of the elderly and infirm are incapable of caring for themselves in large measure simply because they had been promised that the government would care for them and thus that it was not necessary for them to save.

Social Security has reduced the need to save for one’s old age, Reisman writes: “The effect of Social Security and Medicare has been to remove the apparent need for much of that saving. Not surprisingly, in the conviction that the government was now providing for people’s old age, the rate of saving in the United States has declined precipitously over the years, falling all the way to zero in some years.”

The saving of individuals for their retirement would greatly increase our capital stock, which is vital for economic competitiveness. In fact, Reisman writes that if American industry had access to greater capital, it would be able to operate with lower costs, allowing it to compete more effectively with foreign countries that pay lower wages. But because government diverted Social Security taxes into consumption rather than saving, that capital has not been accumulated. Instead, our capital stock is becoming depleted.

It will become worse as young people learn they must pay off the national debt — not only the debt figures we see reported in the media, but the debt implicit in the promise of Social Security and Medicare. This debt, as we see, has been accumulated over the decades as politicians of all stripe have carried out what Reisman accurately calls embezzlement:

Two major lessons to be learned from the financial disaster constituted by Social Security/Medicare are that the government should be prohibited from incurring any significant national debt and that a governmental promise of pensions or provision of future medical care is a category of national debt. All levels of government should be constitutionally prohibited from incurring significant amounts of debt beyond a very short term, including, above all, pension obligations of any kind.

Hopefully, there is a special place in Hell reserved for all the political con-men and intellectual shysters of the last generations who endlessly dismissed the significance of national debts with such glib phrases as “we owe it to ourselves” and asserted that national debts need never be paid. These, of course, were the same con-men and shysters who again and again ignorantly denounced saving as cash hoarding and the cause of depressions and mass unemployment.

And in the case of all the government officials who over a period of decades and decades knowingly used the proceeds of Social Security taxes to finance current government spending, these con-men and shysters descended to the status of major criminals, guilty of the crime of embezzlement on a scale unprecedented in all of human history. They diverted literally trillions of dollars of what people were led to believe were their savings, set aside for their future benefit, into current government spending. The spending was for projects desired by these officials and designed to keep them in office by fostering the illusion that the officials had performed the miracle of providing seemingly valuable current benefits at no corresponding cost. Of course, the reason for the apparent lack of cost was that the costs were covered by the proceeds of embezzlement.

Besides dim prospects for the young, the mass of old people faces a grim future, too. While it is the individual who has the greatest motivation to see for their provision in old age, government has assured us that it will care for us in our old age. The individual versus the collective, in other words. While nearly every politician insists that the elderly will be cared for (“we’re not going to throw Grandma under the bus”), the political reality may become different some day as demographics shift towards a country with a higher proportion of elderly and fewer young people:

The actual fact is that while the lives of the elderly are of inestimable value, when taken one at a time, to the individual elderly person concerned, they are of no actual value to politicians and government officials. Indeed, from the perspective of the self-interest of all-powerful officials, contemplating the land and the people of their country as their personal possessions, existing for no purpose other than their — the officials’ — glorification, the existence of the elderly stands as an actual impediment. For the elderly consume substantial amounts of the resources of the collective that the officials control, and at the same time they produce little or nothing, and no longer have any prospect of ever doing so. If they ceased to exist, the officials would have resources available to put to other uses that they would certainly judge to be more important.

Could this lead to the “death panels” that some fear but ObamaCare supporters deny? Reisman cites a recent New York Times article titled When Ailments Pile Up, Asking Patients to Rethink Free Dialysis. The title is almost self-explanatory.

This is just scratching the surface of Professor Reisman’s article. Reading it and understanding what government has done under the guise of caring for us, I alternate between anger and depression. For me, the saddest realization is that Social Security and Medicare have not only reduced the motivation of Americans to save, their taxes have reduced the ability of people to save, even if they want. I recommend a full reading so that all may understand what the future looks like.


8 responses to “Reisman: Social Security, Medicare must end”

  1. sue c.

    We have become a nation of dependent freeloaders. As Adrian Brody said so well in 1931:

    “You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

    What one person receives without working for, another person must work for without receiving.

    The government cannot give to anybody anything that the government does not first take from somebody else.

    When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation.

    You cannot multiply wealth by dividing it.”

  2. Honest questions…

    Sue, could you please explain how getting benefits after a lifetime of paying into a system is “freeloading?”

    Which people , do you believe, specifically “receive” without working for benefits?

    Do you truly believe that Social Security and Medicare taxation has become so burdensome and overbearing that it has taken prosperity from the wealthy in this country?

    Is there no upside whatsoever to these programs, in your opinion?

  3. T. Rex

    Bob, death panels? Please. You don’t need to insult your reader’s intelligence.

  4. Anonymous

    Another content-free comment from T. Rex. Why does Bob allow crap like this to be left on his site?

    When the word “please” is used like this, it’s an admission that the writer has noting meaningful to say, and therefore concedes the argument.

  5. Anonymous Mike

    Hi T. Rex

    While you might balk at the idea of a “death panel” the use of a government bureaucrat to determine whether or not someone will be treated is, in it’s end condition, a “death panel”. If I decide it’s not worth my tax dollars to treat your granny’s liver cancer, she will eventually die from it. I didn’t personally kill your granny, but I did determine that she will die, and what she will almost certainly die from. In short, a death panel.


    Wichita KS

  6. Ha

    Anonymous really blasts T. Rex’s “content-free” comment with his own groundbreaking contribution, almost completely devoid of meaningful, relevant content itself. No irony here! +1 Anonymous!

  7. Honest questions…

    Still waiting, Sue…

  8. Lauren

    Paul Ryan has been quoted as a huge Ayn Rand fan.
    Bob, you might be interested in doing a critic review of Atlas Shrugged which will be released in theaters this weekend. I went to the world premier tonight with the movie actors and libertarian celebs and was impressed by the buzz generated. While it’s content is not the most clear for those that have not read Ayn Rand’s book, viewers will find parallels between the fictional tale and our economic-turn-to-government situation today chilling.

    The movie could foster a whole new generation of wannabe Dagny Taggerts and Hank Reardens.

    View the movie trailer at

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