When people talk about what economic ideas they’d like to see implemented, there’s usually an underlying assumption that “we” (whoever that is) are in control of our destiny. I noticed this when talking to Samuel Moyn about Gerontocracy in America, in which the author argues that America should be a socialist society in which government takes more money from its citizenry and provides more public goods and direct support. DSA activists are motivated by the same underlying model of reality. There will come a point when Americans will “choose” to overthrow the oligarchy and build a country that works in terms of improving the lives of everyday people.
I think this worldview is deeply naive about empirical realities. For Americans to propose new costly welfare programs is like a guy who is going bankrupt, and has additional expenses coming down the line that will make his financial situation much worse, thinking about how to begin an expensive new project of remodeling his house. We don’t have the financial flexibility, and this doesn’t depend on who exactly gets into office in the coming years.
Our financial future is largely set based on decisions that were made long before most Americans were born. Social Security and Medicare were established in 1935 and 1965 respectively. In 1970, they made up a combined 19% of the federal budget. Now, the number is about twice that. And if you don’t include the cost of interest on the debt, without major restructuring Social Security and Medicare will likely be over half of all federal spending within two decades.
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