Disability: One Giant Scam


Oh, so Bloomberg’s OpEd columnists are finally willing to talk about something real with other than a “gimme more handouts” line?

The conversation in Washington is shifting from taxes to entitlement spending and, in particular, how to slow the unsustainable growth of Social Security and Medicare.

Central to that discussion should be an overhaul of Social Security Disability Insurance, a vital safety-net program for millions of disabled workers. It has gotten too big and too costly. Worse, it has shifted the incentive for those with physical impairments to choose government dependency over work. Oh, and it will be insolvent in three years if nothing is done.

Notice how they’re dancing around this — the definition of “disabled” no longer really means disabled, as in “unable to perform any sort of renumerative work.”

The program blew $124 billion last year, with more than 10 million “beneficiaries.”

Now I don’t doubt for a minute that some people who receive benefits actually are disabled.  However, many people — and I’m willing to bet that this is the majority of recipients — could perform some sort of market-based work (that is, something that earns at least minimum wage.)

The problem with any combination of “benefit programs” that provide more, on a tax-adjusted basis, than a minimum wage job is that there is some percentage of the population who would prefer to sit on their ass rather than work for that minimum wage. As soon as you make it possible to do that all of the persons who are willing to do so immediately leave the workforce and choose to do exactly that.

A “minimum wage” in and of itself sets a floor below which labor is unable to be deployed.  It is a non-market function that states as a matter of law that if the work you can perform provides less benefit to an employer than $X/hour that work has no value in the marketplace at all, because it is (by fiat) illegal to pay less than that amount of money for labor.

This by definition means that those who are able to contribute something to the economy instead contribute nothing.  That’s bad enough.

But what’s worse is when you then put together a “social welfare” program that provides more than said “minimum wage” in tax-adjusted income.  As soon as you do that those people who can work for a wage all the way up to to the parity level between those benefit programs and the private-sector parity wage have every reason to sit on their ass instead.

There is no means available to prevent this other than reducing benefit programs and prohibiting “stacking” of benefits such that any of these alleged “social benefit” programs never exceed the mandatory minimum wage in tax-adjusted terms.  You can try to allegedly “test” for the so-called “disability” but there are myriad people who will scam the system if they’re able and it’s profitable to do so, and there will always be some who can.

The only way to stop this is to make it unprofitable.

But that’s “mean”, you see, which makes “inappropriate” a public debate about exactly where that parity level is (hint: It’s about $45,000/year for a single person with dependents!), as that would likely lead to a taxpayer revolt and demand that these practices be ended.

The Market-Ticker

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