Negative Liberty

Involuntary participation was an issue in the legislative wrangling over the 1935 Social Security Act; some analysts and officials preferred a system of voluntary annuities. But since then, involuntary participation has spawned surprisingly little criticism, except from the libertarian position.^[17] This counterintuitive development may be an example of Americans' operational or pragmatic views overwhelming more Lockean abstract or ideological views. But social security has also represented an extraordinarily good investment. Recipients have to date received vastly more in benefits than they have contributed in taxes, and benefits have, particularly over the last fifteen years, offered protection against inflation that few private annuities could equal.^[18]

Social security taxes a fixed percentage of a given wage base—currently (1988–89) 7.51 percent on $45,000. Employers match the worker's contribution. This tax is minimally not progressive in that it takes an equal proportion of earnings from low- and medium-wage earners within the wage base, and it is regressive in that people who earn beyond the wage base pay a lower overall rate. SSA has argued over the years that the progressivity built into the benefit structure adequately compensates for this tax regressivity, but not all analysts are convinced on this point.^[19] One problem with SSA's interpretation is that low-income workers tend to spend a greater period of their lives under this tax structure than do high-income workers, who usually start working later in life. And low-income workers often die younger than do professionals, so the former spend a smaller portion of their lives under the progressive benefit structure.

Social security taxes clearly reduce discretionary income, and for many low-income workers social security taxes exceed their federal income taxes. But aside from the compulsory reduction of discretionary income, the program leaves recipients unconstrained. Because it is a national program, there are no residency restrictions; nor do workers forfeit any contribution credits when they change jobs—a penalty often levied by private retirement pensions.

One of the virtues of direct national government delivery of social programs without third-party intervention is that it obviates complaints about constraints on the liberty of providers. Whenever private physicians have to alter their customary and preferred practices in order to deal with Medicare or other public patients, they can complain that the state constrains their freedom. But social security does not divert providers from their normal tasks to deal with paperwork or transfer payments. Even in the disability program, where SSA relies on state-level vocational rehabilitation agencies, public restrictions on the liberty of private providers are inconsequential.