SOCIAL SECURITY – is our society (economically) secure?
There are going to be roughly twelve (12) million housing foreclosures over the next few years. The demographics of the Baby-Boom economy, combined with the blatant dishonesty of the financial industry, have assured that there are more houses than people want or need.
We no longer have the motivation to protect our homes – because they are no longer the places where our families live.
Our families are dead (or dying); they are living in homes purchased for retirement (or retirement homes & communities); or they simply cannot afford to maintain the larger home of their youth and are comfortable in down downsizing. In some cases, they financed their homes as an alternative to a reverse mortgage and now are motivated to walk away. In other instances, their economic eyes were bigger than their wallets and they got suckered by the institutions which are now, or soon will be, stuck with the properties – those institutions, and those who supported them, deserve to go broke.
What is in store for the general economy? Nothing that any decent economist, four decades ago, would not have reported to expect. Four decades have passed since “Zero Population Growth” (Paul R. Ehrlich, 1968) made the best seller list and became the topic (and goal) of societies around the world. In China they went so far as to institute a “one child” policy to ensure their nation could become the economic powerhouse it is becoming today. In America, we basically screwed up ... we listened to the Republicans and their anti-immigration crap ... we decided that the way to limit population was to close our doors to the young and ambitious around the world – to close our doors to those who wanted a part of, and to perpetuate, the “American Dream.” Thus we cheerfully voted to killed ourselves by killing off the roots of the American Economic Engine.
Funny thing – we haven’t yet seen the light! We are still supporting those who would ensure the death of America ... be they GOP or the “TEA PARTY” element. Of course, the Tea Party takes its name from the Boston Tea Party – which was also an attack on the import side of the economic foreign exchange engine which fueled the Colonial Economy. Back in those days, America was able to substitute coffee for the caffeine fix it received from tea – what are we going to substitute for the economic brain (and physical) power of immigrants? Hasn’t anyone noticed that the more we deny entry to those who take the entry level positions, the more we are in need of outsourcing our manufacturing and agricultural roots?
Every economy needs consumers, but those consumers also need to provide something intrinsic to support the economic elements which provide the physical (consumer goods) aspects of economies.
Historically, China (and for quality, Japan) has been the world’s manufacturing hub. Before 1400, China was the world’s economic superpower – specifically because they produced spices and silks that were in high demand and could demand in exchange the minerals of lessor nations. When wood was king – America was rich. When intellect was king – America gave it a home and became rich. But today, America is an import nation which excludes the immigrants who bring with them the brains of the future. That aspect of our Social Security can be addressed, and with it nonesense like housing busts and the collapse of the domestic construction industry.
Another aspect of Social Security is more mundane – the monthly Social Security check received by the aging, and soon to be received by the Baby-Boomer population.
No competent economist – nor anyone with the intellectual ability to speak, or simply intelligently listen, to economists – would deny there is an economic multiplier. Every dollar put into a healthy community will circulate seven to ten times before exiting that community. Give a person a dollar to spend, and if they spend it, it will generate seven to ten dollars of income among their neighbors. You do not give money to those who put it under their mattress – or deposit it in offshore banks and investments. You give money to those who have cause to want to spend it.
Thus, tax breaks for the wealthy – who don’t have need to spend their money and instead donate it to foreign charities or the aforementioned offshore economic mattresses – do NOT help the domestic economy. It is an economic impossibility that is well known to all competent and honest economists and which has been repeatedly proved throughout history.
If you want an economy to grow, direct the money to those you know will spend it – the retired of our society.
Those on Social Security, regardless of how otherwise rich they are, use their money within our economy. They are not “putting aside for their old age” because they are already there. They buy things for their own comfort; they buy things for their children, and for their grandchildren; they engage in local community functions and activities which are witnessed by their neighbors – they are not interested in the public relations benefits of flashy donations that proclaim to strangers that they are “good people”.
Think about what would happen if we directed the tax money now foregone in the form of reductions in taxation to the wealthy – imagine if we collected that money and paid it directly to our retired workers. For every dollar received in social security, seven to ten dollars would flow through elderly communities – those communities where the young have grown and left, or where the demographics of one child families have combined with an aging residual baby boomer population, to tilt the scales toward a higher average age. Each of those multiplied dollars would generate 15-35% in tax revenues – which is how our economy has always functioned and how we have always been able to collect taxes. There is no magic, no “something for nothing”, just a simple and straightforward acknowledgment of how economies function. Provide a dollar in Social Security income, to members of a community which is predominantly on Social Security, and you’ll collect $1.50 to $3.50 in increased tax revenue from that community. Cut Social Security payments, or have them only reflect an assumed inflation rate (which supposedly keeps the purchasing power level) and you drive businesses out of business – losing the tax revenue they represent and therefore undermining the economy.
In this blog, and my related newspaper columns, I have repeatedly accused the GOP of seeking to inflict “The Most Harm to the Most People.” The foregoing demonstrates how, over the next six years, they are going to ensure the economic collapse of the nation and inflict massive – permanent – harm on three hundred million people.