Wheat and Chaff

I was reading a couple of articles on overpopulation, linked from Instapundit. One of them makes a fascinating suggestion:

Governments must also relieve parents from having to pay into social security systems. By raising and educating their children, parents have already contributed hugely (in the form of human capital) to these systems. The cost of their contribution, in both direct expenses and forgone wages, is often measured in the millions. Requiring parents also then to contribute to payroll taxes is not only unfair, but imprudent for societies that are already consuming more human capital than they produce.

I feel this very strongly right now, having just filed my taxes. As a self-employed person, I pay all of my own Social Security taxes, whereas most workers have the true cost of those taxes hidden because the government forces employer to pay half of those taxes (But of course the workers pay those taxes as well whether they realize it or not). At the same time, my wife stays home to raise productive members of society, at high cost to us, who will go a long way toward making up the "baby deficit" from others who have no kids, occasionally by necessity but mostly by choice.

Throughout history, younger workers have paid for the retirement of older workers. Previously, those younger workers were the children of the older workers they were supporting. This gave those older workers tremendous incentives to bear children and train them to be productive members of society. Now the system works on a society-wide basis instead of on an individual basis. That is to say, all of the nation's younger workers are paying for the support of all of the nation's older workers. When we changed that system from working on an individual basis to working on a society-wide basis, we created tremendous moral hazard. We created the opportunity for many to benefit tremendously at relatively little cost. Just like it used to be the case that wealthy, more productive people gave charity to the poor, but on an individual voluntary basis; now they do it on a society-wide, compulsory basis.

This has been the pattern of the welfare state, to take actions that used to occur on an individual basis and nationalize them; and actions that used to occur voluntarily and make them mandatory. And the result has been moral hazard. With no accountability to the individuals providing the support, many many millions abuse the system, profiting from it while giving almost nothing back. And it is disproportionately falling on the backs of those who produce the most. Of course, this is why those who support such a governmental system must constantly castigate and attack those most productive people as greedy and selfish, so that the rest of society will continue to vote to rob them.

So often, in so many ways, rich cultures use their wealth to break the causal chain between one's actions and the effects of those actions, thinking we create a better society by doing so. But reality always catches up. It's just that if you dodge reality for long enough, when she finally catches up to you, she's really mad, and by then is carrying quite a bill for you to pay. Anyone who doesn't think Social Security is just completely busted should come take a look at my tax return.