Michael Feroli, chief U.S. economist for J.P. Morgan, JPM +1.40% estimates that since the recession, the worker flight to the Social Security Disability Insurance program accounts for as much as a quarter of the puzzling drop in participation rates, a labor exodus with far-reaching economic consequences.
Pointer from Tyler Cowen.
This is one of those topics where the three-axis model correctly predicts that there will be no communication across ideological boundaries.
1. From the progressive perspective, an unemployed person is oppressed by a lack of aggregate demand, end of story. Anyone who suggests otherwise (I’m looking at you, Casey Mulligan) is going to be attacked without mercy. And these are people on disability, for crying out loud. If they are not members in good standing of the oppressed class, then who is?
2. Libertarians see government coercing some of us to give others incentives to be unemployed. In fact, if I were one of those libertarians who felt schadenfreude pleasure out of pointing out the stupidity and perversity of the way that government executes programs, disability insurance would make me happy.
3. Conservatives think that everyone should be like this guy:
Mr. Mann, age 30, said many disabled people can work with the right help, and he included himself. Paralyzed in a diving accident as a teenager, he graduated from Princeton University and earned a doctorate in economics from the University of Pennsylvania. He uses a motorized wheelchair to navigate Mathematica’s Princeton, N.J., offices.
Now that’s civilization for ya.
Since I do not think that there will be a meaningful debate or attempt to reach middle ground, I want to lie low on the issue. For substantive analysis, I outsource to Reihan Salam.
“I want to lie low on the issue”
I wonder what percentage of people, on what percentage of issues, “want to lie low”?
If only this could be measured – with some weighting for the importance of the issue at hand. It seems to me that creating a social environment where most opponents of your agenda feel they had better “lie low” would be an tremendous (if sinister) accomplishment, one worth doing almost anything to achieve.
Anyway, back to the real world.
I won’t argue that some (or even “many”) disabled persons can’t exist without taxpaper support. Some obviously can. Still … Mr Mann was bright enough to attend a top-rated university, to obtain a Ph. D., and to find an occupation that does not require a physically fit body. He was young enough when disabled that the cost of training him for this “alternative” or secondary career was not a consideration. I suspect that during his lengthy education, he was not faced with the need to make a living, support a family, or deal with pressing financial emergencies. He was not in the position of say a suddenly crippled 60-year old steel worker with a mortgage and a wife facing cancer treatments.
So. Should we dismantle the existing social security disability system on the grounds that Mr. Mann is a typical “welfare” recipient? Should we alter the system to provide financial support (including health insurance) and a first rate education to allow my steel worker an intellectually stimulating and well paying job in the years remaining till he qualifies for social security? Or should we just run around footing the bills for the current system and screaming about the cost, pretending that every single SSD recipient is a con artist intentionally stealing from the taxpayers?
I guess that Libertarians and Liberals (and Vegetarians and Rastafarians) think that all disable people “should” be like “that guy.” The question is how do we structure the program taking into account that not all are or can be like him.
I suspect on this issue, and no doubt others, there is no convenient liberal or conservative “solution.” We can all envision blatant frauds (“welfare queens in Cadillacs”) and cases where need is obvious (a steel worker who loses a leg, say). In between, things become murkier, as when manual laborers with “bad backs” are certfied as disabled because they lack the education and experience to qualify for office work in an era of high unemployment. People have been arguing about what’s fair since the Poor Law was enacted in England in 1601, and I have every confidence our descendents will be arguing about such things in centuries to come.
I’m coming to the conclusion that the right-vs-left debate here is nothing more than self-entertainment, or a mechanism for displaying tribal ties, or a form of venting steam akin to grumbling in the army. We can’t solve the problem, so screaming and pretending there are solutions is a social necessity.
Replacing SS disability (and a bunch of other programs) with a basic income guarantee might work better that the current system for progressives, libertarians and conservatives. Then we can just fight over the amount.
I’ve made this point, which I drew from an excellent NPR article on the disability system, on a few blogs, including MR.
States are responsible for funding a portion of Unemployment compensation.
The Federal government is responsible for all of the Disability payment system.
Thus, states have an incentive to transfer unemployed persons to federal disability.
It turns out there is what NPR calls the “disability industrial complex” that exists to do just that, and states hire these private companies to make it happen.