THE BLOG
02/21/2013 07:57 am ET Updated Apr 23, 2013

Paying for Some One Else

There is a general expectation that people are responsible for paying for themselves, that how able they are to do this - how well off they are – reflects the results of their individual efforts in life. But in all social groups, some people pay for others – their individual labor and assets are used for some one else's benefit. The most obvious example is in a typical family unit where parents support children and later in life children support parents. The same situation prevails in a more diffuse manner with extended families and tribal groups. In a larger society, responsibility is still more diffuse. Education is a prime example. It obviously benefits society as a whole to have well educated youth. Everyone pays for basic education and everyone benefits, though both the payments and benefits vary from person to person. For some, the responsibility is not directly felt or is even resented.

A central question becomes, to what extent is society responsible for supporting those with shortfalls. Handicapped and disabled people complicate the situation. In the lottery of life, they have come up short. Many can support themselves, but some depend to a lesser or greater extent on the support of others: family, community or society as a whole. To what extent are the people who have won out in life's lottery responsible to help those who have lost, those disabled at birth or by work accidents or medical challenges or war wounds? Welfare and food stamps support many people whose distressed situations are at least partly of their own making. But it makes no sense for society to let children in those situations fall into a vicious circle of poverty, frustration and often crime. And for adults it certainly makes sense to help them become productive citizens.

Natural disasters are a troublesome area. Where risks are shared more or less equally (e.g., in a broad zone of tornado activity), it makes sense for everyone to share in the costs. But in practice many people who suffer damage in natural disasters are people who choose to take risks (e.g., living on flood plains or in heavily forested areas) and inadequately supported themselves with protective measures and/or insurance. When real risks make insurance prohibitive, states may be induced to subsidize rates. So Florida, for example, has a total insurance exposure of over $2 trillion. Government support naturally goes to those who are better connected politically (and invariably better off), supporting them at the expense of the general (less well off) populace. This situation is further complicated by global warming and the wide range of increased risks associated with floods, storms, forest fires, and sea level rise. Millions of people now face much higher risks than they ever anticipated and are less financially able to mitigate them. In one assessment of sea level rise, a California study concluded that the only sustainable response might be “managed retreat” - essentially abandoning expensive seaside locations. It is clear that the government is responsible for protecting or re-locating its own assets, but what responsibility does it bear for individuals at increasing risk?

The basic principle remains, that everyone is ultimately responsible for themselves, that contributions to society during one's productive years should repay the support in formative years and provide the assets to support living in retirement years. Inevitably some people do not pull their own weight. One recent assessment sees the United States as “A Nation of Moochers,” a society focused on getting something for nothing, something that some one else is ultimately paying for.

Social security is an effort to balance out some economic disparities. Payments do reflect inputs, but not strictly. Especially with longer lives so common, many people get more out of the system than they put in. Health care is a larger challenge in this respect. Ideally each person uses accumulated assets to pay for their own care. But end-of-life expenses can be very significant and result in relatively little life extension. People spending their own resources obviously make their own decisions on how much such life extension is worth. When their assets run out, so does support. Medicare changes this calculation for the overwhelming majority of Americans, some disabled, most with a work history and others who simply pay Medicare premiums. Medicare does not pay for many quality-of-life items (e.g., dental care) but often provides extensive end-of-life care. Inevitably many people consume many more medical assets than if they were using their own money, and worry little if the care is cost effective – some one else is paying. It should not be a question of who pulls the plug on grandma, but of who pays for the plug. To what extent should society be responsible for paying for people who failed to save sufficient assets to pay for themselves. This is also complicated by the fact that economic conditions are stacked against many individuals who are simply unable to acquire assets to support saving.

The US economic situation has worsened considerably in recent years as globalization has shifted overseas not only manufacturing jobs, but also service jobs that can be performed competitively anywhere with an internet connection. At the same time productivity increases driven by computerization have significantly reduced the need for manual labor. As currently structured, the US economy simply cannot provide full employment to the working age population, particularly those
who lack skills in competitive sectors. And all of that is exacerbated by a financial system which methodically shifts wealth into the hands of the upper class. Wealth inequality puts the United States in the same league with the Ivory Coast and Cameroon, and it continues to worsen. Clearly the fewer people who can earn a comfortable living and save for the future, the higher the requirement for social support to people with limited resources.

Unemployment has become a contentious area. Employers pay unemployment insurance, but this often does not come close to covering the costs of unemployment benefits, so general taxes cover the shortfall. This is a particular problem when jobs are hard to find. Unemployment payments are necessarily short term, but unemployment may be long term. When the only jobs widely available are unattractive ones (e.g., low paying and hard work in agricultural fields), then the mooching approach naturally comes to the fore as people look to maximize unemployment benefits while minimizing actual work.

The underlying problem is not that social payments are too high but that comfortable
employment is too low. Certainly there are some abuses including too many moochers. But here are no simple cost-cutting solutions; rather there is a need for basic economic restructuring.


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