Diluting the Purchasing Power of the Dollarby
Vin Suprynowicz
Last time, visiting Rep. John Spratt, D-S.C., ranking minority member of the House Budget Committee, was explaining the Democratic objections to President Bush's proposal to "allow" workers to shift a small portion of their Social Security levies into (government supervised) private retirement accounts. But
so far in our discussion, no one seems to be talking about a major
evil of the status quo, that being the way the overheated government
printing presses – struggling to keep congressional promises not
just on retirement benefits but on those really massive budget-busters,
Medicaid and Medicare – have perversely damaged those who do try
to provide for their own retirements. "What of the millions of people who through long years of thrift and saving have been providing their own security? What of the millions who have been scratching for years to pay for their life insurance and annuities, putting money in savings banks, commercial banks, buying government and corporation bonds to protect themselves in their old age?" Mr. Flynn asked, nearly 60 years ago. "These thrifty people have seen one-half their retirement funds wiped out by the Roosevelt inflation that has cut the purchasing power of the dollar in two." Yes, Roosevelt and the "New Dealers" pretty much invented inflation as we know it today. And where Mr. Flynn could refer to the value of the dollar being cut "in half" from 1933 to 1948, we can now substitute "to a twentieth." In 1931, a $20 bill would buy you an ounce of gold. Under Roosevelt, about half an ounce. Today? With the American dollar well on its way to becoming a world laughing stock on the order of those wheelbarrows full of Weimar reichsmarks, make that a mere 20th of an ounce of gold. When Roosevelt installed his first old-age pension plan, it promised Americans $8 a week. In 1934, Americans could live on $8 a week. How would you be faring today if that's what granddad had set aside for your retirement? Why save at all, if what you save will be nearly useless to your grandchildren? Meantime, what alternative plan would the Democrats offer? Rep. Spratt told me if he had his druthers, the money managers at the Social Security Administration would invest the "Trust Fund" directly into private stocks and bonds, "to increase the rate of return." But in a practical sense, I objected during our conversation a week ago, the federal government can't hold "minority interest" in a corporation, any more than the Mafia can. Once they've "invested" in you, you can't be allowed to fail, which means the federal bureaucrats would, de facto, manage all those companies whose stocks they had purchased. "Wouldn't that be fascism?" I asked the 22-year veteran congressman. "No; it might be socialism," he replied, cheerfully. I doubt Rep. Spratt actually knows the economic definition of the word fascism – the juncture of syndicalism and nationalism popularized by Mussolini after 1925 (and borrowed by Roosevelt for his "National Recovery Act" in 1933), allowing private (though "cartelized") corporate ownership of the means of production but under close government supervision and "partnership" – but that's exactly where his proposed "solution" would lead. "It would be very dangerous to have the government invest the Trust Fund in the stock market and have the government manage it," agrees assistant secretary Mark Warshawski at Treasury. "Alan Greenspan spoke out very strongly against it. A lot of people thought that ended that idea." To slow the bankruptcy of the various federal "entitlement" schemes, Rep. Spratt would also like to see the federal government, as the biggest buyer, "negotiate" drug prices with manufacturers so the Congress can afford to continue promising "cheap" prescription drugs to just about everyone. "But what does 'negotiation' mean when one party at the table actually makes the laws?" I asked. "Doesn't that amount to the federal government just dictating the prices?" I expected Rep. Spratt to heatedly deny this. Instead, astonishingly, he agreed. "We can establish a fair price," he replied. "We know what the price is in France; we know what it is in Canada." This is precisely how the Soviets used to figure out how things should be priced, of course – what multiple of the price of a head of cabbage to assign to a pair of shoes or a hammer or a tractor. They just checked the newspapers from London or Paris. So – once doctors are required to offer "health care" at rates set by the government – what salaries shall they be assigned? Will surgeons by G-12s or G-14s? Next
week, in our final installment: Is Social Security really "mandatory"?
Vin Suprynowicz [send him mail] is assistant editorial page editor of the daily Las Vegas Review-Journal and author of The Black Arrow. Copyright © 2005 Vin Suprynowicz |
