Mark Thoma on the Rhetoric of Social Insurance

Mark Thoma:

Economist's View: "Medicare Recipients Against Handouts": People believe they paid for programs such as Social Security and Medicare. They put in contributions each month, the government saves that money somewhere, somehow, and when they use these programs they aren't consuming from "government," they are consuming their own contributions.... [T]he people answering this question are actually answering whether they've consumed services they didn't pay for in one way or another. The answers reflect the fact that most people believe that anything they get out of the system is far less than what they put into it (though in many cases that isn't actually true).

So it's true that people want the budget cut, but only the parts where people are forced to pay for "underserving" recipients of these government services. The feeling is that they get up every day and do what's needed to support themselves and their families. They go each day to jobs they hate, hate, hate, hate with a passion because that's how life is, and they don't appreciate seeing their hard-earned money taken away and given to people who don't even try, people who could work if they wanted to, but rely on the system instead.

Now, I happen to think that is a very wrong view of the circumstances of the typical aid recipient, but true or not I do think it is the source of the opposition to many social programs. People don't object to Social Security and Medicare because they believe they paid for these programs in full, or close to it. Same for disability, food stamps, and other programs. They paid into these programs for years, just like medical insurance, and now it's their turn to consume some of the funds they put in. They won't object to that even if you point it out to them, it's the people who consume without contributing that raise their ire and cause objections to these programs. It's the "handouts" that are the problem.

Thus, I don't think the key to getting more support for these types of programs is to show the individual that they consume many services themselves. They'll simply say yeah, I know, I paid for them, so what? It's showing them that their neighbors are deserving.... There is a need for social insurance. I had hoped this recession would show people that it can happen to anyone, that high moral character is not enough to protect you from the vagaries of the market system. One day a job can be gone, morals or not, savings can evaporate as a result, and all those years of doing the right thing -- putting a little away each month for the future -- provides little protection against financial ruin when there are no jobs to be found.

Don't get me wrong. I think it's good to make people aware of the amount of government services they consume, and that such awareness could help some in getting support for social insurance and other programs.... But I really do think the key to more widespread support is to make people aware of the need... and the fact that insurance -- by it's very nature -- means that those people unlucky enough to need it will often consume more than they put in.... That's how insurance works and we shouldn't resent those unlucky enough to need it.

The key here is to overcome the belief that the majority of people using these services are "gaming" the system to get handouts they don't deserve. If we are going to successfully defend the social insurance system, it is this belief that must be countered...