Why Paul Ryan is no Ayn Rand on Social Security

Mitt Romney's running mate Paul Ryan deserves credit for trying to tackle the coming entitlement crisis. But whatever you can say about his plan for Social Security, you cannot ascribe it to Ayn Rand. Rand did not want to save Social Security; she wanted to end it.

Opinion

Paul Ryan is one of the few politicians willing to talk openly about reining in America’s entitlement state, and he is the only one to put forward a serious plan purporting to do so. This, combined with Mr. Ryan’s professed admiration for the iconic novel by Ayn Rand, “Atlas Shrugged,” has led some commentators to label Ryan the “Ayn Rand candidate.”

Time for a fact-check. 

Take Ryan’s approach to Social Security, a program he views as fundamentally good, but fiscally unsustainable. “[R]etirement programs should guarantee real security, not empty promises,” he told supporters at this year’s Conservative Political Action Conference (CPAC).

Thus the Ryan plan to save Social Security. In his most recent budget, Ryan aims to strengthen Social Security by reducing benefits and raising the age of eligibility. (Earlier versions of the plan included “private” Social Security accounts, but Ryan has since scrapped that proposal.)

But the Congressional Budget Office concluded that under Ryan’s budget, Social Security spending would rise – from 4.75 percent of GDP in 2011 to 6 percent of GDP in 2030.

On this issue, Ryan is worlds apart from Rand. Rand did not want to save Social Security; she wanted to end it.

The theory behind Social Security is that the government should guarantee us “economic security” in old age by forcing us all to save today so that we have some minimum income tomorrow. (In reality, there is no saving: The money that’s taken from Americans while they’re working goes to support current retirees. Whatever money a person ultimately receives is not a return on investment, but something taken from other young workers.)

In Rand’s view, your life and wealth belong to you. In a free society, each individual gets to decide: Do I want to retire someday? What sort of retirement do I want? A few lavish, work-free decades? Or would I rather work as long as I’m able and spend my last few years in modest comfort? What sort of plan will enable me to achieve my financial goals? How much of my income should I save? How much should I invest? How should I invest it?

When Americans are forced to pay into Social Security, they are robbed of the freedom to make those sorts of assessments – assessments unique to each person’s life, goals, and values. Instead, the Social Security program herds everyone into a one-size-fits-all entitlement scheme where a sizable portion of people’s income is confiscated with nothing more than the government’s assurances that they’ll get something – whatever it decides is fair – back someday. It’s a losing proposition.

That’s why the supporters of Social Security have found it necessary to rewrite the facts concerning what life was like before Social Security. The myth: “People starved in the streets!” The reality: In the era before Social Security was passed, most Americans thrived.

Thanks to the unparalleled freedom of the time, Americans then were richer than ever before. Over the course of the 19th century, real wages for the average worker more than tripled, and in 1904 sociologist Charles Richmond Henderson estimated that, as of 1890, less that just over 1 out of a thousand Americans could be classified as paupers.

Indeed, this period – the era before entitlements – was the age during which America became known as “the land of opportunity” and immigrants flocked here by the millions. Many of these men and women prepared for their old age by working, saving, earning private pensions, and joining mutual aid societies (basically, private insurance against deprivation). Those who hit tough times turned to friends, family, neighbors, and private charity for help.

The reason Americans finally accepted the creation of Social Security was because of the strain of the Great Depression. But as modern economists such as Milton Friedman have shown, one could argue that the Depression was actually created by government intervention. The solution should have been more capitalism, not bigger government.

Setting aside the Depression, though, life was a struggle for some then, and it continues to be so for some now. Even with Social Security, people face financial hardship. Instead of ending poverty, in some ways, Social Security has made things worse. It has drained Americans of wealth they could have otherwise used to prepare for the future, and it has established the precedent: Your paycheck belongs to you…unless Washington has other ideas. Some security.

Who has a vested interest in perpetuating this scheme? Those who would sell their freedom in order to sponge off others – and the power-lusters who want to enlarge their power by appeasing that constituency.

(That’s not to say that anyone who accepts Social Security is a dependent who wants to live off others’ work. Rand stressed that so long as you oppose wealth redistribution programs, you have a right to accept government benefits as recompense for being forced into them involuntarily. And, of course, she believed that it would be wrong to abolish overnight a program on which so many were dependent.)

This is why Rand was an unapologetic opponent of Social Security. She regarded any program that stripped people of their freedom and wealth while funneling benefits to others as irredeemably immoral. Social Security could not be reformed; it would have to be phased out and ultimately abolished.

Paul Ryan deserves credit for trying to tackle the coming entitlement crisis. But whatever you can say about his plan, you cannot ascribe it to Ayn Rand.

Don Watkins is a fellow at the Ayn Rand Center for Individual Rights, a division of The Ayn Rand Institute. He is coauthor with Yaron Brook of “Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government” and blogs at freemarketbook.com.