“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Monday, February 7, 2011

The Public Safety Net In A Small Society

One of the apparent longstanding immutable truths of federal government spending is that Social Security benefits can't be touched. No matter what happens to the working populace of the US, retirees are to be unaffected by any economic difficulties.

I wrote about how foolish this seems in a recent post. Building on the theme of that post, I wondered how social security would look in a community of, say, 10,000 people?

Suppose we imagine a typical Eastern US small town or village. The sort that is often found, cheek-by-jowl, among other similarly-sized small communities with a town council and various public services, e.g., schools, trash collection, police and fire protection.

If such a town were an entity unto itself, would it design, or be able to afford, a scheme like our Social Security system?

When you can see and name the recipients of a community's welfare payments, I suspect you, as a taxpayer and worker, get a lot more sensitive to sharing the pain of economic dislocations. You become more interested in fairness, as I noted in the prior linked post.

For example, suppose the town endures a crop failure, or the departure of a major employer? Or flooding which requires substantial infrastructure repairs?

These things would affect the total income of the town and, thus, its ability to meet transfer payment commitments to its older citizens.

Wouldn't such a small community be far more likely to pay its retirees a flexible, variable stipend that was a fixed percentage of the town's annual budget? And wouldn't that budget be a function of the community's ability to pay, in the absence of external funding?

I think it would. I don't think, in such a small community, anyone would expect to escape commonly-felt economic pain, especially if they didn't work, and everyone knew they survived on the taxes of their fellow citizens.

Just because Social Security is scaled up across the country, thanks to an historic mistake in 1935, doesn't mean its principles should be different than they would, were it designed as a community-based transfer payment system to provide a safety net to the aged.

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