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Retirement before Social Security

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FlyingAxe posted on Sat, Feb 9 2013 10:00 PM

This article paints a rather bleak picture of retirement before Social Security. Does anyone have sources to dispute the economic allegations of the article?

What did seniors do before Social Security?
As late as 1932, only about 5 percent of elderly people in America had any kind of retirement pension at all. Most Americans working before Social Security had three options: work until they dropped, which many did; stop work on their own initiative or because their employer retired them, and suffer the economic consequences; or become a superannuated worker, someone kept on the payroll with reduced responsibilities and reduced pay in lieu of pension. Another option was institutionalization. Right up until Social Security was passed, there were more than 2,000 poor houses across America. The poor house was the place where old folks were sent for the crime of being old and poor and unable to support themselves.

Why did Social Security come about?
The Great Depression was undoubtedly the triggering event that caused America to adopt this kind of social insurance approach to the problem of economic security. Other factors included longer life expectancy – people really started living longer due to better public health and sanitation during the first three decades of the 20th century. Also because of industrialization, we became urban dwellers and wage earners dependent on a job for our economic security. Traditionally people had lived in extended families on farms where they could support themselves. After the Industrial Revolution, we began to see the appearance of the nuclear family, parents and kids, as opposed to these large extended families, which were more common in the period before industrialization. It was really that, I think, that set the ground for something like Social Security becoming necessary in the modern industrial world.

What was the importance of Social Security?
In the era before Social Security, retirement tended more often to be a period of fear and dread because there wasn’t a way to provide for your own economic security. And so Social Security was the empowerment of this social transformation that produced modern retirement as we know it today. Franklin Roosevelt said, we can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give the average citizen and his family protection against loss of a job and against poverty-stricken old age. That was the concept of the program more than 70 years ago, and that remains the concept today.

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I post these to illustrate the absurdity and effrontery of simply taking "retirement" as a given.  People not "retiring" from their working life was not the result of exploitative robber barons who somehow only "let" people stop working once government stepped in.  The whole point is that "it never even occurred to anyone that some day you could live in a society in which your labor was so productive (thanks to the capital goods at your disposal) that you could work, and earn enough purchasing power, so that your kids wouldn't have to."

And you can replace that last clause with "so that you could spend years and even decades of your life not having to work at all."

So even if that 5% stat is accurate (which, it sounds kind of suspect), it makes no difference.  Simply creating a compulsory system whereby the young are forced to provide for the elderly doesn't do anything to make society more prosperous.  If someone had no way to provide for himself in his old age, other people usually did provide for him anyway.  Institutionalizing theft and the redistribution of wealth, in addition to being immoral, does nothing to improve the situation. 

Honestly, how exactly does the existance of SS change those outcomes today?  Show me someone who doesn't fit into one of those categories mentioned in the first sentence, and I'll show you a guy who isn't living on social security.

This is one of the major holes in most "progressive" arguments.  They're so focused on their vision that they don't even stop to realize that the outcome they are arguing their idiotic policies allegedly improve on, hasn't changed.  In other words, they're so busy arguing "Look! Before Social Security old people were having to work until they died, or have other people take care of them!"...that they don't bother to notice that the same is basically true now...after Social Security.  Their program didn't fix the ills they complain about and use as a reasoning for a need of the intervention.  But of course they don't really care about results.  Intentions and presumed outcomes are much more important.


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The way I see it is... if there were no tax and no govt to cause inflation, then only those with high time preference would benefit from SS.

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