Currently working my way through original source material (remember that?) on the Fascist economic theory while reading Mussolini's "Doctrine of Fascism" I just about fell out my chair when I found the following passage:
Against individualism, the Fascist conception is for the State; and it is for the individual in so far as he coincides with the State, which is the conscience and universal will of man in his historical existence. It is opposed to classical Liberalism, which arose form the necessity of reacting against absolutism, and which brought its historical purpose to an end when the State was transformed into the conscience and will of the people. Liberalism denied the State in the interests of the particular individual; Fascism reaffirms the State as the true reality of the individual. And if liberty is to be the attribute of the real man, and not of that abstract puppet envisaged by individualistic Liberalism, Fascism is for liberty. And for the only liberty which can be a real thing, the liberty of the State and of the individual within the State. Therefore, for the Fascist, everything is in the State, and nothing human or spiritual exists, much less has value, outside the State. In this sense Fascism is totalitarian, and the Fascist State, the synthesis and unity of all values, interprets, develops and gives strength to the whole life of the people.
The more I read, the more convinced I am that Fascism as it was practiced in Italy was undiluted quasi-religious statism. (That and T.S. Elliot must be pissed as greater individualism through submission was one of Elliot's reoccurring themes.) (9,405)
What a terrible and brutish era it is that we live in. With the last credible mote of hope having been shuffled off to the abattoir, all we can offer you is this fleeting reminder that not everything has always sucked :
In old Army parlance, a "forlorn hope" was a band of soldiers sent off on a mission that was deemed necessary but presumed suicidal. We're th' forlorn hope. We're being sent out into a burning hail of deathspittle in an attempt to wrench humanity's future from the weasel class. The kicker is, of course, that we know there is no future. The weasel class and we are going to shriek and wail together, in broken sorrowful awe of the horror we've hewn out for ourselves.
On th' positive side, th' new Massive Attack record is really excellent -- expect a review of that puppy tomorrow! (10,193)
We are trying out the economics of fascism without having suffered all the social and political ravages. - George Soule (famous writer for The New Republic) on the New Deal
George Soule was an influential writer in the early 20th century progressive movement and proponent of the New Deal. (55,658)
Dr. Thomas E Woods covers a random bunch of topics in this fascinating talk.
Why child labor isn't so bad Why the monocle-wearing robber-barons were American Heroes Why the Native Americans were the scourge of the environment... until they adopted capitalism Why poverty is not the fault of low-paying employers Why the government can't create, but can only destroy Why even the poor are getting richer Why the Wild West was actually fairly mundane
[slide 1]Spending, Printing, and Debt are all interrelated. As I illustrated in part one, poor fiscal policy can lead to a inflation and even hyperinflation. I will briefly review this again.
[slide 2] Everybody knows that the more our government spends, the more indebted it becomes. This is because tax revenue doesn't come close to our spending. [slide 3] What most people don't know however, is that some of the fiscal shortfall is paid for by printing money. The government does not do this directly, as I will explain later, [slide 4]however the net effect is identical, and that is inflation.
[slide 5] Inflation decreases the value of currency, including the currency loaned out by lenders. [slide 6] The interest on bonds and loans then increase to entice the lenders back into lending. [slide 7] Higher interest rates mean higher service must be paid on any future debt. Since government bonds are mostly short term nowadays, this effects spending within a matter of months.
[slide 8] More spending leads to more debt, [slide 9] more debt leads to more interest payments, and [slide 10] you can see we're trapped in a vicious cycle.
[slide 11]You're probably wondering why, if this is going on, are we seeing some of the lowest interest rates ever.
[slide 12]Interest rates are determined by 3 things: The supply of loans, demand for loans, and inflation.
[slide 13] In an effort to stabilize the economy, The Federal Reserve is currently printing trillions of dollars and pumping it directly into the banks. [slide 14] In the short term, this will reduce interest rates. [slide 15] In the long term, however, all this newly printed money will lead to MASSIVE inflation. Eventually, interest rates will rise to an equilibrium with infaltion. At this point, we will be in a state of stagflation. [slide 16] The only way to get us out of [slide 17]it will be to do what we did the last time,[slide 18] and that's to stop printing money. This will lead to a record increase in interest rates, far greater than those we saw in the 1980's.
[slide 19] The high interest rates will lead initially to fewer people being able to take out loans to buy homes and cars. This will lead to a sharp and dramatic fall in home prices--possibly the lowest home prices ever. Since banks have tens of thousands of homes on their balance sheet, this will lead to massive mark-to-market losses. This, combined with the inability to loan money, will lead to massive bank failures and recession.
In addition, the government will be forced to raise interest rates on treasury bonds. You should know where it goes from here: The more debt service, the more spending, and therefore the more borrowing and printing. This will lead to a viscous cycle further exacerbating the situation.
[slide 20]To give you some perspective on the fiscal situation, the debt service for 2009 will be under $300 billion. The deficit will be about $2 thousand-billions. Keep in mind the current deficits include defense, social security, medicare, those enormous bailouts, as well as lots of other things.
After 2009 ends, the national debt will be at around $13 thousand-billion.
Interest rates will easily reach 15% at some point within the next few years, but let's be optimistic and say it happens in 2010. 15% of 13 trillion dollars is nearly $2 thousand-billion. Keep in mind, the deficit for 2010 would have to include all the other fiscal shortfalls we had in 2009.
[slide 11] Because of the nature of the relationship between these forces, many believe that a high rate of inflation and maybe even hyperinflation could occur quickly and without much warning from the economic numbers.
[slide 12] Unlike the stagflation that occurred during the late 1970's and early 1980's, we will not be able to escape from the inflation by borrowing money instead of printing it. Instead, the only option will be to do what many have suggested for years and just [slide 13]cut spending.
[slide 14a] As I explained in part 2, cutting spending has always been unpopular, which is why the government budget rarely does anything but grow. Americans overwhelmingly agree that they want to keep expanding [slide 14a-ss]social security, [slide 14a-med]medicare, and [slide 14a-sd]a strong defense--all while paying low taxes.[slide 14b] It is undeniable that this situation is unsustainable. What's scary is imagining what it will take for this cycle to meet its end.
[slide 15] During the Great Depression, many unusual laws and regulations were enacted in an attempt to restore our economy. This is likely to be repeated in our current crisis, however, like then it will be disastrous.
[slide 16]In the 1930's under presidents Hoover and Roosevelt, government grew enormous and struggled to find revenue. [slide 18a - US import tax w/hoover face] Herbert Hoover enacted record tax increases on income and imports. The Smoot-Hawley Tariff passed in 1930 was the largest peacetime tax increase on imports in American history. [slide 18b - foreign import tax] This lead to a retaliation in the form of import taxes in other countries and therefore ultimately meant a reduction in US exports. In 1932, Hoover doubled the income tax, raising the tax rate on the wealthy especially.
[slide 17a-'it all started with tires'] Already, we can see that our current president is following the historical example set by Hoover. Obama has increased income taxes on those he deems 'wealthy' and recently, he sparked an international trade dispute by placing a 35% import tax on tires. [slide 17b-retaliation] Like the Smoot-Hawley tariff, this assault on free trade was met with threats of reciprocation in tariffs. If these countries follow through, this would have a devastating effect on our already vulnerable economy.
[slide 18] When FDR took office in 1933, he continued to increase taxes and spending, but not before he issued an executive order to confiscate all privately owned Gold. In total, 500 tons of gold were taken from private United States citizens.
[slide 19] Based on these facts, it's logical to assume that when facing a severe enough recession, government may again attempt to seize property in order to fund the ever-expanding government without having to inflate the currency.
[slide 20] Historically, countries that have attempted to seize the wealth from the wealthy end up experiencing what is referred to as "capital flight." This is where rich people lead a mass-exodus out of the country in an attempt to evade persecution. [slide 21] To prevent the wealthy from simply leaving, laws may be enacted to keep their fortunes here, and possibly to prevent the sale of certain types of property like large homes and to forestall high-volume stock trades.
------------------------- [slide 23] It should be noted, however, that our current crisis is very different from the one in the 1930's. Back then, the dollar was still on the Gold standard and therefore the government was limited in its ability to print money, that is no longer the case today.
[slide 25]I believe that eventually the rate and cause of inflation will be recognized by the media, political candidates, and most importantly, the American people.[slide 26] As Reagan identified the stagflation in the 1970's and ran on a platform to shrink government and curtail inflation, I believe that so too will the candidates of 2012 or 2016.
[slide 27]Of course, the sacrifice endured by people participating in the 1980's economy will pale in comparison to the sacrifices of our generation. [slide 28] In the 1980's, Reagan's government was cowardly and irresponsible. Instead of cutting spending and suffering the consequences, he was able to issue a record amount of debt to therefore defer his fiscal crisis to another generation. [slide 29] Unlike the 1980's, our current government will not have the credit rating to issue as many bonds.
[slide 31]Unfortunately, the elderly who rely on the government for support will suffer the most during this transition. After decades of politicians telling them not to save for retirement, America will finally wake up one morning to find no government check in the mail box. This will be devastating for these retirees who are no longer able to earn a decent wage. If we acted today on a campaign to taper-off the citizenry from these programs before they disappear, it would drastically reduce the suffering of these people. [slide 32] I do not, however, feel this is possible under the current mindset.
[slide 30]Regardless of our history, I think it will be politically possible for the necessary spending cuts to take place after we slam into the tip of the inflation iceberg. (74,379)
We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this Administration we have just as much unemployment as when we started. ...And an enormous debt to boot. - Henry Morgenthau, Jr. (1939) Secretary of The Treasury for FDR Speaking to the Ways and Means Committee
On May 4, 1989 a peaceful protest marched on Tienanmen Square demanding democratic reform. There they gave speeches on freedom and love of country, reaching numbers in excess of 300,000. On May 20th martial law was declared and the protesters ordered to disperse, and a fair number of them refused.
On June 3, elements of the 27th and 28th Armies of the PLA began the crackdown, killing 1000-7000 and wounding tens of thousands with small arms and tank treads. The bust would culminate with a bayonet and bullet sweep of the Square itself ending early in the morning of June 4.
The CCP had the event expunged from their history books, and we here in the free world have in large part expunged it from our collective memory.
I hate politics. I happen to believe that whenever someone writes about political issues they actually care about, their IQ drops at least 35 points before they put the first word on the page. This is why most comments on political YouTube videos are fragmented and incoherent: Someone with an IQ of 110 decided to jot down a thoughtful political opinion, and was temporarily deprived of the ability to form sentences. This is simple emotion clouding over reason and intellect. It's just human nature.
To therefore write effectively about politics, you've got to either not care at all, or just not have human emotion to begin with. This is why most professional political pundits are actually sociopaths. The pundit's ability to look apocalypse in the face and say "Fuck it." is the secret to readable copy. It's not that these people are especially smart, it's that they're emotionally distant enough to keep their heads on straight when writing about the metaphorical rape of all their espoused beliefs.
I, on the other hand, can't even be in the same room with a TV with a talking head on it without getting acid reflux and foaming at the mouth. I had to stop watching televised news years ago for the sake of my physical health. And that is the reason why this article is going to suck. I did it anyway though, and I may never know the reason why.
The problem with the vast majority of voters is that they know a sum total of "dick" about history. This is one of the many reasons it's totally pointless for any intelligent person to vote (less intelligent people may enjoy the free stickers, so it's a good deal for them). In the case of economics, the US has made so many ridiculously idiotic mistakes that we have plenty of past experiences to draw wisdom from, provided we look at history through the right lens. The Great Depression should have been the end of economic intervention. Unfortunately it's apparently become the beginning. Part of this stems from the total distortion of the history of the Great Depression, which is what will be addressed here.
Popular History
The popular view of the Great Depression is as follows: It started with the crash of 1929 and lasted up until World War II. According to the history books, our economy was "unequally distributed" to rich people and the crash of 1929 was the culmination of the inequity of the "bubble" in markets such as luxury goods (think dot com era). Moreover, our president at the time, Herbert Hoover, was against interference in the markets and therefore passed up his opportunity to save the day through intervention, which lead to the deep depression that lasted "over a decade." After Hoover's beleaguered term ended, idle government gave way to FDR's promises of interventionism and reform. FDR's activities, combined with that of the Federal Reserve and the seemingly fortuitous entrance of the US into WWII lead to the end of the depression.
To be clear: The above paragraph is total bullshit, with a few spacklings of horseshit and "WTF".
Pseudo-Austrian Theory on What Went Wrong
First of all, the Great Depression didn't start in 1929, it started in the credit bubble of the 1920's. A "credit bubble" is where lenders, on a massive scale, lend too much money without taking proper care to see that the borrower can pay it back. Giving more money to people who are going to waste it means that the useless goods that these people buy are going to have an "increase in demand" (DEMAND = more will be sold, and they will be sold at a higher price). Investors will see this rise in prices (caused by the artificially-inflated demand) and think this is an exploding market and haphazardly stuff their money in as fast as they can, maybe even borrowing to do so. This will further drive up demand until such time as the supply of credit goes away. 1) Lower supply of (inflated) credit -> 2) Higher interest rates ---> 3) less borrowing -----> 4) less money for buying (overvalued) crap -------> 5) less demand for crap ---------> 6) price of crap declines -----------> 7) investors cash-in to avoid losses -------------> 8) Go to 5 and repeat for a while ---------------> 9) investors go bankrupt, can't pay back loans -----------------> 10) Lenders lose money -------------------> 11) Go to 1 and repeat until prices are normalized.
This violent return to normalcy is referred to as a "crash." As you can see, interest rates are a key component of normalization, and that's exactly what the Fed messes with.
The stock market crash of 1929 was not what started the Great Depression, it simply signaled the start of a market correction. The crash of 1929 was the solution to the bubble. The falling prices and the deflation were necessary forces in stabilization of the economy. These forces were fought tooth and nail by the Hoover and FDR administrations (I'll talk about this later), because they meant a decline in economic activity over the short term.
Where did this credit bubble come from? Well something happened during the 1920's that had never happened before in American history. A massive, mismanaged lending force came into play that would haunt the American economy the next 90 years (and counting). Of course I'm talking about the Federal Reserve. Though the Federal Reserve was founded in 1913, they did not participate in open market operations until 1922. The stated objective of "The Fed" is to stabilize the economy by injecting money when markets are down, and deflating when markets are up. They do this by printing money that doesn't exist and loaning it to banks, which it trickles down in a massive, cascading manner (through loan after loan after loan) to consumers who use it to buy crap with. This sounds simple enough, except that in doing this, they flatten out the market corrections which are necessary for normalization. It also makes the arrogant assumption that a handful overeducated academics can make God-like pontifications based on whatever criteria they feel like. All The Fed seems to be able to do is create credit bubbles, which lead to bubbles in everything else. This is exactly what happened in the years prior to the market crash of 1929.
Think about it: It's true, by 1929, the US had seen a few depressions and recessions over its ~150 year history. However, just 7 short years after the Fed starts tinkering with the money supply, we see the largest and deepest depression ever...?? That's coincidence in the same sense that 90% of lung cancers being found in the bodies of smokers is coincidence. What's also not coincidental is the biggest economic intervention in US history (at the time) occurred right at the beginning of this--the longest depression in US history. [Did you see that segue? Was that not awesome?]
Herbert Hoover: The Interventionist
The next myth I'mbout-ta-bust about the Great Mf'ing Depression is that President Herbert Hoover was some kind of coward who refused to intervene. This is almost certainly a case of politics totally f'ing up history. Pay attention boys and girls: this is what it looks like. These 'Court Historians' [*cough* Paul Krugman *cough*] want to blame the "free market" for the Great Depression, and to do that, they have to paint Hoover as a slimy, good-for-nothing, free market Republican (to be fair, he was a Republican, and he looked pretty slimy). Presumably, they're distorting history so they can blame the depression on Hoover and also so they can attribute this country's salvation to FDR's "economic reform." This lends credence to the government power-grab ("bailout") that's going on right now, since conceptually FDR's stimulus was the same thing. Luckily, the claims about Hoover's "non-interventionism" are so ridiculously false that the debate ends in the 2 seconds it takes to load the Wikipedia article.
One thing the pop-historians like to point out (apparently to further this myth) is that the chairman of the fed at time (Andrew Mellon) was pushing to let the recession run its course. Can you imagine? After years of tinkering with the economy, the Fed acknowledges it had 'screwed the pooch' and clamors for natural free market correction. Amazingly, that's totally true. At first, the fed was quite reluctant to intervene*. In fact, according to Hoover's memoirs, Mellon (Fed guy) strongly suggested to Hoover that he stay out of it. Not to be swayed by little things like reality, Hoover ignored Mellon and promptly embarked on the largest ever peacetime increase in government spending. He even brags about it in a speech he made near the end of his term:
We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action. - Herbert "Give Me a Kiss, Krugman" Hoover
Convinced yet? Too bad, I'm not done! To pay for this "fiscal stimulus," Hoover ran huge deficits until 1932, at which point he doubled the income tax (Revenue Act of 1932) and instituted a tax on checks (this is a lot worse than it sounds, by the way). He even pushed forward a bill to force the Fed to inflate the money supply. Finally, not content to leave it alone, Hoover rammed through congress the largest import tax of the 1900's, the infamous "Smoot-Hawley Tariff." Non-interventionist my ass! Hoover's plans were basically slightly less ambitious versions of "The New Deal" (which would occur later, under President Roosevelt).
If you want to place some blame on Hoover for the Great Depression, you can't blame him for doing too little.
Franklin Delano Roosevelt: The Non-Interventionist ... What?
Sort of a fun facet of the whole Hoover Vs FDR thing is that history remembers it as a standard run-of-the-mill socialist Vs free-market debate. The reality, of course, is slightly more complicated.
By the end of Hoover's presidency, it seemed that voters were pretty fed up with all this progressive interventionist hogwash. They knew what Hoover did, they knew it didn't work, they wanted "change," and they wanted it in the form of economic freedom. It seems strange then that they elected FDR--probably the most "progressive" president of all time, according to the history books.
How we explain these ostensibly contradicting facts is not actually all that complicated: FDR was a liar.
FDR ran on a platform of economic non-interventionism. During his 1932 campaign, he berated Hoover for his stimulus actions. FDR's own running mate in 1932 (and later Veep), John Nance Garner said that Hoover was "taking the country down the path of socialism." In fact, the stated Democratic party platform of 1932 was to reduce federal spending by an astounding 25%. No wonder FDR won by such an enormous landslide (57% to 39%)!
Heck, I would've voted for him. Did you know FDR publicly referred to Hoover as a "fat, timid, capon" (a capon is a castrated rooster which is fattened up and raised for eating)? How awesome is that!?
Naturally, the first thing he did was ignore his campaign promises. Starting the very same year he was inaugurated (1933), FDR started creating hundreds of different massive government programs designed to 1) extend government's control over the economy and 2) stimulate it back to health at the same time. Only one of those goals ended up coming true, can you guess which? Hint: the depression continued for 13 years after that, so that leaves...
This package of economic clusterfuck is what is commonly referred to as "The New Deal."
As an aside: In a particularly despicable "dick move," a disproportionately larger amount of the New Deal money was poured into the swing states, which kept them relatively fat and happy while the depression trotted along. FDR effectively bought his first two re-elections this manner. As the New Deal raged on, FDR lost some control over it (legislators found their balls and got in on the money train), which directly correlated with a wider distribution among the other states. Funny how that all works.
Yeah, These Clowns Raped the Free Market, but... Did it Work?
Of course it worked! Why wouldn't it? It's so brilliant: I'm going to inflate the currency through printing, suck tons of money out of the economy through taxes, pour it into wealth-destroying projects, and I'm going to do it all while we're in the heat of a freakin depression!... I mean, where's the problem, am I right guys? WHAT COULD GO WRONG?
Well, what ended up going wrong is that our depression lasted roughly from 1929 to 1946. Popular history says our numbers were turned around at the start of WWII (1941), but that's totally ignoring the fact that you can't ship 11 million unemployed men out of the country and call the ensuing fall in the unemployment rate a "turn-around."
By that notion, Obama could just wait until midnight tonight, use his Santa Claus magic, jump in his reindeer-driven Escalade, and do a drive-by on every unemployed household in America, killing at least half the unemployed in one fell swoop. Wouldn't it be great if it were just that easy? Too bad it isn't (though that may not stop him from trying...). Yeah, it'd make that particular economic indicator jump back into the green, but the smell would be horrendous after a few weeks, plus it wouldn't exactly restore consumer confidence.
No, by most relevant measures, our economy did not reach pre 1929 numbers again until 1946, and this was due to one reason and one reason only: Our shit didn't get fucked up during the war.
Imagine: all of europe and lots of Asia, even including some of the shitty little islands (England), had planes flying over it for YEARS bombing factories used to make war toys as well as necessary consumer goods. What happens after the war when trade barriers are lifted and everyone needs to buy shit? They turn to the one country who still has factories all clean and shiny with no unexploded munitions lodged in the roofs: America. We exploited the living crap out of these countries who needed stuff they couldn't build, it was awesome.
There's a reason why the US forgave most of the loans they made to Europe to rebuild: They made out like bandits.
The production capacity of Europe was shot to shit by the end of the war. By the time everyone had caught up to speed, the United States had become an economic superpower. They would remain that way until idiotic politicians of latter half of the 20th century (and 21st, it seems) could mess all that up. Way to go!
Good Thing This is All Ancient History... Right?
If you accidently leave your TV on for any length of time these days, you probably know that what they did back then to try and "fix the problem" are the exact same types of things they're doing now. You hear about a new Bailout plan just about every month now, and every idea they have isn't exactly new.
You'd think that maybe they would've learned something.
* UPDATE/CORRECTION [Dec. '09]: I left this passage as it was originally for simplicity's sake. I recently completed Bob Murphy's Politically Incorrect Guide to The New Deal (which, btw, can be used as a source/reference for all the material in this article). Subsequently, I found out that the advocates for monetary intervention (eg Krugman, Bernanke, and yes, Milton Friedman) have twisted history and I had been unwittingly duped by it. They would have you believe that The Fed did essentially nothing to correct the MASSIVE monetary contraction at the beginning of the Great Depression. In fact, the Fed of 1929 and the 1930's expanded the money supply more than any American central bank ever (until Greenspan/Bernanke). Krugman, Bernanke, and Friedman basically either deny this or pretend like the actions of the Fed at the time were "too little, too late." The facts, however, speak for themselves. (150,380)
This video introduces Austrian Business cycle theory--which accurately predicted the Great Depression, the dot com bust, and the housing bubble burst. When everyone in 2006 was predicting a rebound, people like Peter Schiff and the speaker here were seeing a recession. It's presented by the NYT bestselling author of "Meltdown," Tom Woods Jr. He does a great job of keeping it simple and entertaining.
This video is half economic theory, and half history (starts w/history). It has a lot about the "depression" of 1920 [sic]. 1920 was actually far worse than the first year of the Great Depression (faster rate of unemployment, etc), but somehow the economy turned around in only 18 months (the Great Depression lasted for over a decade). This was not due to government intervention by the fed or spending, but by an intentional reduction in the size of government.
We're told the government must act through bailouts and whatnot to end the depression, but by doing so they are lengthening and deepening it, just like they did in the 1930's under Presidents Hoover and Roosevelt. We're also told that if we don't bail these banks out, the depression will last decades. This is wrong, and in fact the opposite is true. Enjoy!
I've wanted to rant about Social Security for a long time, so I'm just going to get right into it. Here's a couple of things you believe:
- Without social security, many old people would be destitute.
- The gov't "owes" you social security.
- SS is a trust fund and you're guaranteed a check when you reach retirement age.
- SS was designed from the beginning as a way for all elderly to retire.
The above statements are misleading, naive, and/or flat out false.
Things You Know
First off, let me tell you some things you already knew but are unwilling to apply to this situation. If you give people money, they're not going to need/want to work more. The more you give, the less drive they have to make their own money.
Put simply: Give a man a fish, he'll eat for a day. Don't give a man a fish, he'll get off his ass, and get a fucking job so he can buy his own damn fish.
I know I'm making it sound like people are generally lazy... Well, aren't they?
Social Security makes the assumption that people are going to first and foremost have kids, work hard all their lives, and make good financial decisions. The problem is, with this financial safety net, people end up doing less of all those things--with less thought to the consequences of their actions or inaction, because they know that somebody will take care of them.
The self-defeating nature of SS comes from the fact that people only work as hard as they have to. Retirement is incredibly expensive, and with that already paid for, people are much less productive. The economy relies on growth, hard work, skilled labor, and risk. If Jimmy works at Burger Shack and chooses to flip burgers instead of work hard and become manager, it hurts the economy as a whole since he is creating less wealth. There's the inherent loss of labor or skills due to apathy, slowing the rise in wages and standard of living, hurting the impoverished even more so.
It may seem silly that Jimmy could do all that, but imagine taking that incentive away from 100 million people. That's what SS does.
So to say that SS is important to keeping the elderly from being destitute is misleading, because it actually contributes to poverty in the first place by altering human behavior. Social Security is the most expensive program of the most expensive government of the wealthiest nation in history. It has a profound effect on the way people in the US live their lives and it's insane to think otherwise.
Things You Don't Believe
The government doesn't "owe" you shit. That's not just my opinion, it's actually law.
In the 1960's, President Johnson was spending boatloads of money on social programs and war. He called it "The Great Society." Economists called it "bat-shit nuts". He expanded the nat'l debt to new heights (sound familiar?) and that wasn't even enough to pay for all of it, so he busted into Social Security.
This raised some eyebrows, because everyone was so sure SS was untouchable--some 'lockbox' that couldn't be molested. Well it went to the Supreme Court, and they decided that any money the government takes is the property of the government, and that they have no need to pay it back if they don't feel like it.
What does this mean? Well we all know SS is a failing program, it's slated for bankruptcy within the next 30 years or so. When it goes away, this decision means that there wont be any repercussions--the gov't is not required to cut pork spending or retract troops from Botswana to divert to SS in order to save it. Nothing will happen, apart from all those old people who were banking on their gov'mint checks coming next month (and I'll probably be one of them) will be totally fucked. Oh, and somebody's not going to get reelected... or they'll blame it on their rival political party and they wont get reelected.
The government isn't responsible for jack shit in your life. Nobody in government is responsible or even thinks they're responsible for anything that happens to you. The sooner you realize it, the sooner you'll stop entrusting your future to them.
Things You Don't Know
Most people believe SS was designed so that every elderly person could live a life after 65, and have a decade or two of moderate dignity until they kick it.
Where did this age of 65 come from? Do you know?
Well back in 1935, when SS was created, age 65 was *drumroll* the LIFE EXPECTANCY. I guess back in those days, 'retirement' referred to 'retirement from your corporeal state'.
In essence, they were expecting a huge portion of people to actually have died before they get the chance of receiving benefits. You work until the day you're supposed to die, and if you beat the averages, you get a prize.
SS was never meant to be on this kind of scale--not that I credit the people who conceived this idea in the first place to have an over-abundance of forethought.
If we were to keep SS within the spirit of its original design, we'd raise the 'retirement' age to 78--the current average US life expectancy. Amazingly, this would correct the solvency issue and drastically cut the size of the program at the same time. With a few tweaks to other government programs, we could balance the budget, start paying off the nat'l debt, and stop passing on our mistakes to our children/grandchildren like a bunch of assholes... but that's an article for another day.
Closing Libertarian Love-Fest
Growth in the economy has done more for the poor than any government program ever could. It's an outright lie that the rich get richer and the poor get poorer. The rich get richer, obviously, but the poor have NOT gotten poorer in this country. Take ANY twenty year period (and almost all 10 year periods) and chart the median wage. Poverty is progressively being eliminated on its own, and through no act of government. The poor in this country are the richest in the world, and it's due to our economy, not wealth redistribution through government. It boggles the mind to think that anyone would hinder the ultimate cure for poverty (economic growth) in favor of temporary alleviation of the symptoms of poverty through government intervention.
The war on poverty, to steal a term from the royal prick LBJ, is a journey, not a destination. Poverty can't directly be attacked through government, and it likely wont ever go away completely. Taxing and giving to the poor, especially on the scale of social security, is like building a roof on a house by taking material from the foundation. To help the poor on this kind of scale, new wealth must be created, and robing the economy via taxation is contrary to this goal. (15,682)
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To therefore write effectively about politics, you've got to either not care at all, or just not have human emotion to begin with. This is why most professional political pundits are actually sociopaths. The pundit's ability to look apocalypse in the face and say "Fuck it." is the secret to readable copy. It's not that these people are especially smart, it's that they're emotionally distant enough to keep their heads on straight when writing about the metaphorical rape of all their espoused beliefs.
The next myth I'mbout-ta-bust about the Great Mf'ing Depression is that President Herbert Hoover was some kind of coward who refused to intervene. This is almost certainly a case of politics totally f'ing up history. Pay attention boys and girls: this is what it looks like. These 'Court Historians' [*cough* Paul Krugman *cough*] want to blame the "free market" for the Great Depression, and to do that, they have to paint Hoover as a slimy, good-for-nothing, free market Republican (to be fair, he was a Republican, and he looked pretty slimy). Presumably, they're distorting history so they can blame the depression on Hoover and also so they can attribute this country's salvation to FDR's "economic reform." This lends credence to the government power-grab ("bailout") that's going on right now, since conceptually FDR's stimulus was the same thing. Luckily, the claims about Hoover's "non-interventionism" are so ridiculously false that the debate ends in the 2 seconds it takes to load the Wikipedia article. 
By the end of Hoover's presidency, it seemed that voters were pretty fed up with all this progressive interventionist hogwash. They knew what Hoover did, they knew it didn't work, they wanted "change," and they wanted it in the form of economic freedom. It seems strange then that they elected FDR--probably the most "progressive" president of all time, according to the history books.
By that notion, Obama could just wait until midnight tonight, use his Santa Claus magic, jump in his reindeer-driven Escalade, and do a drive-by on every unemployed household in America, killing at least half the unemployed in one fell swoop. Wouldn't it be great if it were just that easy? Too bad it isn't (though that may not stop him from trying...). Yeah, it'd make that particular economic indicator jump back into the green, but the smell would be horrendous after a few weeks, plus it wouldn't exactly restore consumer confidence.
If you accidently leave your TV on for any length of time these days, you probably know that what they did back then to try and "fix the problem" are the exact same types of things they're doing now. You hear about a new Bailout plan just about every month now, and every idea they have isn't exactly new.
