May 13, 2011
The Battle to Reduce Entitlements: Fight or Flight?
By Chuck RogérMany Americans recognize but want to ignore a huge problem. A new poll finds that 86 percent of us believe that Social Security and Medicare spending will create an economic crisis in ten to twenty years at most. Yet only 31 percent of Americans want Washington to take meaningful action to address Medicare alone, the bigger of the two cost burdens.Why?Classicist and historian Victor Davis Hanson offers food for thought.History’s revolutions and upheavals… are rarely fueled by the starving and despised, but by the subsidized and frustrated, who either see their umbilical cord threatened, or their comfort and subsidies static rather than expansive — or their own condition surpassed by that of an envied kulak class. Perceived relative inequality rather than absolute poverty is the engine of revolution.Domestic spending reductions that arise from Congress’s upcoming debt ceiling battle may or may not incite a revolution. But one thing is certain. Although America has no “starving and despised” class, we have “subsidized and frustrated” people. America’s SEIU (Service Employees International Union), teachers’ unions, and other public as well as private sector unions comprise one tier of subsidized and frustrated people. The “subsidized” part is obvious. The “frustrated” part deserves discussion.America’s nightmarish fiscal shape has focused attention on excessive union benefits funded by tax and business revenues. Taxpayers and business operators have begun pushing back with rapidly-shrinking senses of humor. The push-back is scaring organizations like SEIU, which are now reacting carelessly. For instance, SEIU is baring its dark soul. Some of the union’s members recently marched in solidarity with the Communist Party USA.Social Security and Medicare recipients are also subsidized and frustrated. Again the subsidized part is obvious. But unlike the case of union deals inspired by anti-capitalist sentiment, Social Security and Medicare recipients’ frustration is born of well-intended but doomed bargains. There never was a way in which the two mammoth Ponzi schemes could stand up to economic reality. Beginning with FDR, politicians promised more in return than contributions plus investment gains can deliver. The smooth talkers had better hope for a short run for the hills when a critical mass of “beneficiaries” wakes up to the scam.Which brings us back to our poll results. Is it rational for people to acknowledge a huge threat but resolve to do nothing? Answering the question comes down to defining “rational.” The Austrian Economics-based Ludwig von Mises Institute offers the following:Rational: Arrived at by the use of the peculiarly human mental processes by which man strives to connect his ideas as consciously, coherently and purposively as possible in order to plan the attainment of ends sought. In view of the human fallibility in selecting the best possible reasoning for attaining the ends sought, there is no implication as to the correctness or incorrectness of the reasoning. Consequently, all conscious human actions, whether or not appropriate for the ends sought, are rational.Essays could be written to defend or shred the Mises Institute definition. But for our purposes, we have something useful: rationality is relative.When people judge their incomes threatened, even if those incomes consist mostly of money confiscated from other people, fear is a rational reaction. And the rational reaction to fear is driven by a reflex which physiologists call “fight-or-flight.”When faced with harm, human beings are no different from the animals. The primitive brain kicks in. There is a choice to be made: stand firm and fight off the threat, or escape to fight another day. The fight-or-flight reflex helps explain why many otherwise libertarian-minded seniors persistently vote for wealth-redistributing Democrats. Rather than choose to address the danger that Ponzi schemes pose to their incomes, many seniors instead flee to the protection of ballot boxes labeled “D.” In other words, entitlement recipients are rationally inclined to vote their living.Victor Davis Hanson observes that America now has “a well-entitled but increasingly angry population, one ‘empowered’ and made more, not less, bitter by the last two years of governance in Washington.” The observation applies not only to people on Welfare, food stamps, and other government assistance, but also to current and future recipients of Medicare and Social Security. Almost any entitlement cuts will be rejected by “subsidized and frustrated” recipients who rationally see reductions as broken promises and lifestyle threats.Poll after poll continues to show that retired and soon-to-be-retired people are having trouble acknowledging that no proposed plan would cut entitlements for people currently fifty-five years old or older. Even if already-retired people were convinced that there would be no cuts to their entitlements, it’s still not clear that that they would grow more “rational” and back a plan with cuts of any kind. Solving the entitlement conundrum will require that politicians find courage and buck human emotionality. Rationality and emotionality live together in a murky gray realm.Americans face a choice: reduced long-term prosperity caused by tax increases to fund entitlements, a bankrupt government, or reducing entitlements to avoid tax increases and bankruptcy. While nearly 90 percent of us acknowledge the problem, only about a third seem open to taking action. Is such thinking rational?No, but also yes.