The Heritage Foundation has released the 2013 Index of Dependence on Government and they are displeased:
“The great and calamitous fiscal trends of our time—dependence on government by an increasing portion of the American population, and soaring debt that threatens the financial integrity of the economy—worsened yet again in 2011 and 2012. This rise in government dependence happened despite the nation undergoing an economic recovery after the economic collapse of 2008 and 2009. The United States has reached the point at which it must reverse the direction of both trends or eventually face economic and social collapse.”
The report shows that 44.7% of the population pays no Federal Income Taxes (down from 48.5% in 2010), but while this is legitimately disturbing, it may not be for the reasons the authors believe.
Among the government programs that they consider causes of dependency are Social Security and Medicare:
“…the Index is designed to measure the amount of federal spending on programs that assume the responsibilities of individuals, families, communities, neighborhood groups, religious institutions, and other civil society institutions. Clearly, Social Security has greatly encroached on the responsibility of individuals for providing their own retirement resources.”
The document seems to ignore key factors in American history, which is regrettable. In colonial times and well into the 20th century, long-term needs were managed on a family basis, with help from private organizations. Occupations and businesses were routinely inherited, and as one generation aged, the next stepped in to take responsibility for the final years. Life span was shorter, so that the transfer of responsibility was a bit easier.
This pattern ended with the industrial revolution, when factories and mass production replaced the individual tradesman. The marker in this base may have been 1932 and the publication of the Berle & Means report, “The Modern Corporation and Private Property.” The factory or mill replaced the extended family.
An example would have been the Maytag Company of Newtown Iowa, founded in 1893. The New York Times wrote, “…most residents have worked at Maytag at one time or another, married someone who worked at Maytag or, at the very least, had a lot of friends who worked at Maytag.”
Maytag was a family business and then the business became the family. That ended when Whirlpool bought the company in March 2007 and announced, less than two months later, that the company would leave town.
The concept of a corporate family had actually ended earlier, perhaps 1970, when Milton Friedman said, “There is one and only one social responsibility of business — to increase its profits.”
Friedman has also said:
“When unions get higher wages for their members by restricting entry into an occupation, those higher wages are at the expense of other workers who find their opportunities reduced. When government pays its employees higher wages, those higher wages are at the expense of the taxpayer. But when workers get higher wages and better working conditions through the free market, when they get raises by firm competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody’s expense.”
But he’s referring back to the colonial and 19th century systems that had long ceased to apply.
A Colonial weaver might succeed by creating new patterns and textures, but competition between workers stops at the assembly line. Some occupations reward hard work and creativity, but the person who separates potatoes from rocks as they pass on a conveyor belt isn’t likely to get a chance to show his skill and win promotion. Still, Friedman provided the philosophic underpinnings for corporate abdication of responsibility for workers’ welfare.
The Heritage Foundation writes of a period where many of the social safety net functions were provided by voluntary mutual aid:
“…a considerable share of the Masonic mutual aid involved employment-seeking assistance, short-term housing, and character references. Other organizations, such as the Ancient Order of United Workmen, offered life insurance to members…. Can this republican form of government withstand the political weight of a massively growing population of Americans who receive government benefits and who contribute little or nothing for them? How seriously have these federal programs eroded civil society by eroding once-social obligations, and by crowding out services that used to be provided by families, congregations, and community groups?”
The “contribute little or nothing for them” is false, since it’s based only on Federal income taxes. Even the poorest people pay sales and payroll taxes, which represent a greater share of their income than they do of wealthier people.
While the Heritage Foundation notes, “This rise in government dependence happened despite the nation undergoing an economic recovery after the economic collapse of 2008 and 2009,” the economic recovery was inequitably distributed, in accordance with the Milton Friedman approach.
Corporations had increased earnings, which raised the value of their stocks, but the earnings were either retained or distributed to the top corporate officers without any distribution to rank and file workers. The Bush tax cuts favored profits made on stocks rather than salaries.
The Washington Post reported in 2012, “The recent recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with -middle-class families bearing the brunt of the decline. The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.”
The megacorporation decimated the family business, briefly became the family business, and then walked away from that responsibility. The churches, burial societies, lodges and benevolent organizations did what they could to support those in need, but ultimately were unable to cope.
The Heritage Foundation is afraid that by accepting a government check we’re becoming dependent. Among elderly Social Security beneficiaries, 52% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security. Of this group, 22% of married couples and about 47% of unmarried persons rely on Social Security for 90% or more of their income.
Sorry guys, it’s too late.
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